Avalon Raising Taxes to Keep Community Hospital Open

Now that Avalon has decided to take over management of its community hospital, the tiny island city is raising taxes to generate $400,000 needed to keep the facility open.

In a series of tax steps to be phased in over the next 12 months, the City Council is hiking wharfage fees for cross-channel ferries and cruise ships and imposing a 5% utility tax on electricity consumption, City Manager Chuck Prince said.

The new tax revenues, a total of $728,000 a year, will also help finance harbor department operations and tourist marketing programs by the island’s Chamber of Commerce, Prince said.

Avalon decided to take over management of the 12-bed, city-owned hospital after Long Beach Memorial Hospital, which has been operating the facility at a loss since 1984, announced plans to pull out when its contract expires Dec. 31. The city had run the hospital before 1984 but contracted with Long Beach Memorial in an effort to save money.

The hospital, which serves island residents and visiting tourists, is losing as much as $338,000 a year, records show. Since 1984, losses have totaled $2.2 million, primarily because of low occupancy. Officials say that on average, there are only two patients a day. The outpatient clinic recorded 4,500 visits last year, they say.

Facing steep losses if it took over, the City Council voted last fall to close the 30-year-old hospital and replace it with a “super-clinic” to meet the emergency needs of islanders and tourists.

However, island residents protested and the council reversed itself, agreeing to try to keep the facility open. The only way to finance the hospital’s operation was to raise taxes, Prince said.

The new tax package calls for adding $1 per passenger to the wharfage fees charged cross-channel ferry boats. This will raise $350,000 a year. Cruise ship operators will have to pay a $1.50 per passenger wharfage fee, bringing in $278,000.

Island residents will pay the utility tax on their electric bills, raising $100,000, Prince said.

“It is clear that the community wanted to keep the hospital . . . (so) it should be a shareholder in the solution,” Prince said.

With the revenue moves approved, the city is searching for a full-time staff doctor and hospital administrator. The council Tuesday authorized $380,000 from the city budget to fund the two staff positions and the cost of the takeover.

The council also hired a consultant to help the city get started in the hospital business and to ensure that it qualifies for special state and federal subsidies set up to help small, rural hospitals.

City officials point out, however, that if hospital operations prove too costly, the city will have to change its plans.

Starting Jan. 1, the hospital and the outpatient clinic will be operated by the city on a test basis for three years, Prince said. “At the end of that time, we’ll evaluate where we are and see how it goes,” he said.