Kootenai Health on track for nonprofit conversion

COEUR d’ALENE — Kootenai Health is on track to complete its conversion to a nonprofit by the end of the year, officials said Wednesday.

Trustees voted in May to assume the operations of Kootenai Health, Inc., a nonprofit organization. Since, hospital district staff and outside advisers have worked to implement transition plans, including employee benefits conversions and financial asset migration.

Deadline for the conversion is Dec. 31. Once complete, the board of trustees that was in place in May will remain intact. Future board members will be appointed rather than elected.

The 501(c)(3) board will assume full responsibility for all hospital matters Jan. 1, 2024. After that, the elected board will preside over a district with no assets.

“This is a once-in-67-years conversion,” said Joel Hazel, chief legal officer for Kootenai Health. “We want to do it once and we want to do it right.”

Michele Bouit, chief financial officer for Kootenai Health, said during Wednesday’s trustee meeting that conversion costs have totaled roughly $1.3 million between 2022 and July 2023.

The costs are associated with legal counsel acting as advisers during the process, Hazel said, including Polsinelli Law Firm, Davis Wright Tremaine, Coeur d’Alene-based firm Hawley Troxell and healthcare management consulting firm Kaufman Hall.

“We have intentionally chosen to get very good consultants and the costs are within what we would expect,” Hazel said. “The payments to outside law firms will go down from here because the plan is in place and it’s up to us to implement it.”

The Dec. 31 deadline is intentional and “tactical,” Hazel said. For example, switching Kootenai Health’s hospital license will happen close to the final day, because a hospital can’t have two licenses. The transition will continue over the coming months and will not be completed early.

“It would be detrimental to try to complete the work early,” said Kim Anderson, director of communications for Kootenai Health.

Even if unexpected delays leading up to the Dec. 31 deadline were to interrupt the conversion process, Kootenai Health would continue to operate as a hospital district.

“I don’t foresee us having to do that, but we would obviously take the best interest of our patients and employees into account and do whatever we needed to do to make sure hospital operations are not disrupted,” Hazel said.

Finance director Karrie Robertson said Wednesday that Kootenai Health had a net loss of $1.9 million for the month of May.

“This month, we’re down by a couple million,” said Trustee Robert McFarland. “But if you look at our financial turnaround plan, we’re on par for that and, by the end of this year, we’ll be back where we want.”