Idaho AG probes relationship between St. Luke’s, taxing district in McCall area
AI-generated summary reviewed by our newsroom.
- Idaho AG probes hospital district for funneling funds to St. Luke's McCall.
- Complaint alleges misuse of millions in public funds for workforce housing.
- District disputes claims, cites long-standing legal partnership with St. Luke's.
A citizen advocacy group filed a complaint in June alleging the McCall Memorial Hospital District was illegally funneling taxpayer money to St. Luke’s McCall without public input or competitive bidding processes.
Now, the Idaho Attorney General’s Office is investigating.
St. Luke’s McCall has used money levied by the hospital district over the past decade to help buy a new ambulance, build an ambulance garage, construct workforce housing and remodel an existing building to house an urgent care clinic.
But the group, called “Give Us A Vote!,” said it was concerned that the public funds were subsidizing a private, nonprofit health system. St. Luke’s McCall is a subsidiary of St. Luke’s Health System. The group argued in its complaint that $3 million the hospital district awarded to St. Luke’s McCall for its workforce housing project is a “wage subsidy.”
Since 2016, all of the hospital district’s funding, minus operational expenses, has been allocated to projects benefiting St. Luke’s McCall, the complaint said.
That’s partly by design.
Group says hospital district is outdated
The relationship between the hospital district and St. Luke’s McCall goes back decades, but the two entities became intertwined about 15 years ago. The hospital district, which had long operated the struggling rural hospital independently, transferred all of the hospital’s assets to the newly created nonprofit St. Luke’s McCall through an agreement with St. Luke’s Health System. The move had overwhelming support from voters at the time.
But the “Give Us A Vote!” group says the hospital district is no longer needed. McCall resident Tomi Grote, a representative of the group’s steering committee and the former publisher of The Star-News in McCall, told the Idaho Statesman that the hospital district is an antiquated artifact of a bygone era.
“When the independent hospital merged with St. Luke’s, the taxing district lost its mission,” Grote said by email. “Instead of being a backstop for the operating losses of the independent entity — essential to its survival — it simply became a slush fund.”
The group filed the complaint with the Idaho Attorney General’s Office after it asked the district’s board last year to hold an advisory vote on funding for the workforce housing project, a request it says the board declined to even discuss.
It accused the hospital district of violating two sections of the Idaho Constitution, including a clause prohibiting the use of public funds to support private organizations. It cited a 1974 case in which the Idaho Supreme Court determined that such financing does not violate the state Constitution if the public benefits of delivering health care services outweigh any incidental benefits conferred to the private health care operator. The group said the money awarded to St. Luke’s McCall fails this “public benefit test.”
“St. Luke’s McCall facility turned a $15M profit on operations in 2023, so it’s hard to see the need for the public to fund this project,” the group said in the complaint.
Idaho Attorney General’s Office investigates
The complaint includes a petition signed by Grote, the former newspaper publisher; state Rep. Faye Thompson, of McCall; state Sen. Christy Zito, of Hammett; and Dr. Curt Meske, the medical director of Valley Countywide EMS and a former St. Luke’s McCall physician. Thompson told the Statesman that the community wants more of a say in where its tax dollars go.
“All we have been asking for is a vote,” Thompson said by email. “St. Luke’s is a major business that should be providing their own employee housing, and not the local taxpayer. That is not the intended purpose or responsibility of the taxing district.”
A few weeks after the citizen advocacy group filed the complaint, Deputy Attorney General Stephanie Guyon sent a letter July 7 to Andy Laidlaw, chair of the McCall Memorial Hospital District, saying the Attorney General’s Office shares Thompson’s concerns. Guyon requested a written response to the complaint and a litany of documents, including all agreements between the hospital district and St. Luke’s, its quarterly financial reports and any requests for funding in the last five years.
She also requested the names, addresses and contact information for each person who served on the hospital district’s board since 2020, and all documents related to buying the ambulance, constructing the ambulance garage, building workforce housing and the urgent care remodel, as well as public notices, agendas, minutes and resolutions.
Guyon asked the hospital district to respond to Thompson’s complaint and the requests for information by Aug. 1.
What does the hospital district say?
Attorneys for the hospital district said in a lengthy letter responding to Guyon’s inquiry that the district takes issue with “the factual assertions and legal conclusions” offered by Thompson and the citizen advocacy group.
It said the complaint made several inaccurate statements regarding the history of the hospital district and it’s relationship with St. Luke’s McCall.
“McCall area voters established the district to provide a means to better support medical facilities and services that otherwise may be difficult in the rural community of central Idaho,” the lawyers wrote. “… Since its creation, the district has focused on ensuring the surrounding community has access to reliable and meaningful health care and its most pressing needs are met, while following the various statutory and constitutional requirements governing its work.”
Amber Green, the chief operating and nursing officer at St. Luke’s McCall, said in a statement to the Statesman that the hospital is confident the agreements in place benefit local health care and align with state law.
“St. Luke’s values the opportunity to work with the hospital district in addressing our community’s health needs,” Green said.
A history of agreements
St. Luke’s McCall was founded in 1956 as the city-owned McCall Memorial Hospital. Before its opening, people in the area had to travel to Cascade or Council for hospital services, and there were no ambulances for transport, just a local hearse, according to the hospital district.
Ownership of the hospital was later transferred to Valley County.
In 1984, voters created the McCall Memorial Hospital District to manage it instead.
But in 2010, after several years of operating losses, the hospital district’s board concluded that the standalone rural hospital, with its aging facilities, was not viable. The district began talking with St. Luke’s, which it already had an agreement with for management services, about a more significant partnership that would provide up-to-date facilities and financial stability for the district’s patrons and taxpayers, the district said in its letter to Guyon.
In a special election in 2010, the hospital district held an advisory vote on the proposal, where 86% of votes favored creating the nonprofit St. Luke’s McCall. As part of the agreement, the hospital district would continue providing tax revenue to the hospital.
But in 2015, then-Idaho Attorney General Lawrence Wasden sent a complaint to the hospital district, challenging whether its agreements with St. Luke’s McCall complied with the Idaho Constitution.
Wasden brokered a deal with the two parties in 2016 that formalized the hospital district’s merger with St. Luke’s and enabled the hospital to apply for taxpayer funds. All property owners within the hospital district pay in. The hospital’s land and assets are now leased to St. Luke’s McCall.
