LANCASTER — As the Antelope Valley Healthcare District governing board works through its options for fulfilling the provisions of the voter-approved Measure H to form a nonprofit corporation to operate Antelope Valley Hospital under lease from the district, it is also looking at potential legislation to increase the size of the district governing board as a step toward greater stability.
In the year since voters approved Measure H in 2017, the nonprofit Antelope Valley Hospital, Inc. has been formed and steps have been taken to facilitate the transfer of hospital assets to it.
The intent was to provide greater stability for the hospital governance by turning management of the hospital over to a nonprofit corporation with a nine-member governing board. This board was to include the five elected directors of the healthcare district, three appointed community members and the hospital chief executive officer. This structure was intended to provide benefits of operating the hospital as a nonprofit entity, with greater stability through a larger board directing it.
The board brought on new counsel in November, San Diego-based Procopio, and asked them to review the transfer agreement for an opinion on options facing the district and the corporation. The review found a number of obstacles to the plans.
One stumbling block is that the corporation was structured to attempt to receive a favorable opinion from the federal government regarding employee pensions, something Procopio attorney Greg Moser is pessimistic will be obtained.
Moser said their review looked to see if the transfer agreement as currently stated would deliver on the what voters were promised with Measure H.
“It’s pretty clear you wouldn’t be able to operate as a private, nonprofit community hospital would,” he said. “The prospect of trying to close this deal by the end of the year seemed impossible.”
The board agreed on Dec. 19 to postpone the transfer until July 1, an extension from the original deadline of Dec. 31.
Another alternative under consideration is to request legislation that would expand the size of the healthcare district board in order to build the stability promised in Measure H with a partly elected, partly appointed board, Moser said.
“A way to get there that might be a little less complicated, that doesn’t have all of the difficulties of actually transferring the assets, and that is to get the Legislature to change the law for you to allow you to do directly what you would like to be able to do” with the corporation board, he said.
Existing state law for healthcare districts allows for expansion of the board to seven elected members, according to Moser’s report.
The board on Dec. 19 reviewed a proposed draft of legislation that local lawmakers could be asked to support through the state Legislature that would preserve the nine-member board of Measure H, in which five would be elected and four appointed by the elected directors.
Under this proposal, the hospital chief executive officer would not be a member of the expanded board, but a fourth community member would be appointed instead. The three community members appointed earlier this year could remain in the new board format and a fourth would be added.
The benefit of pursuing this option instead of transferring assets to a nonprofit corporation is that the hospital will not have to pursue new contracts or obtain new licensing for the corporation, or worry about pensions or union negotiations in hiring personnel to the corporation, Interim CEO Paul Brydon said.
“But we get the benefit of the nine board members, four community and five elected,” he said. “It’s a very elegant solution.”
“I do know it’s much easier to pass legislation for a district. It’s certainly a viable option,” Director Dr. Don Parazo said.
A representative of state Sen. Scott Wilk’s office said they could no comment on any such plan until it has been actually presented in a final form.
The board did not take specific action on the proposal, but gave direction to staff and counsel to continue to pursue the legislative option.