Winneshiek Medical Center’s (WMC) property tax rate will increase 33 cents per $1,000 of taxable value in the upcoming fiscal year.
After a public hearing Wednesday night, the WMC Board of Trustees approved the budget that increases the property tax from 44 cents to 77 cents per $1,000 of taxable value. It’s the first time the rate has been increased in more than 25 years. WMC will collect an estimated $1,026,294 in property taxes for fiscal 2020 up from the $568,393 in property taxes collected for the current fiscal year.
Based on the latest tax rates provided by the Iowa Department of Management, WMC has the fourth lowest tax rate out of 42 county-owned hospitals in Iowa. With the increase approved Wednesday, WMC moves from the fourth lowest to seventh lowest, according to Lynn Luloff, WMC chief financial officer. She presented the operating and capital budgets for fiscal year 2020, which starts July 1, during Wednesday’s hearing.
Luloff said the budgets are fiscally responsible while meeting the needs of the Medical Center.
WMC provides more than $5 million in community benefits annually, she said. As a major employer in the county, WMC generates over $7.7 million in retail sales and over $462,000 in sales tax for Winneshiek County each year, she said.
The budget projects net revenues of $67.3 million and operating expenses of $66.1 million for the year, which is a 1.8 percent net operating margin or an “operating gain” of $1.2 million, Luloff said.

Tax impact
Based on the latest published Winneshiek County assessor’s report on residential property values, the rate increase means the average property owner’s taxes for WMC will increase by about $28 for the year. Taxpayers will notice the increase this fall, Luloff said.
Luloff explained to the Board why the increase in the tax rate is needed.
“Over the last 26 years, Winneshiek Medical Center has expanded operations and services in Winneshiek County providing community benefits of over $5 million. Cash reserves have been able to support operations and capital expenditures for over 10 years without incurring additional debt, but the healthcare environment has changed and become more unstable,” she said.
“Reimbursement for services provided has decreased creating wider gaps between the costs of providing services and reimbursement to cover those costs. Examples of such services are: Winneshiek Medical Center’s 24-hour physician staffed Emergency Department and the costs of serving the ambulance needs of the county. WMC incurs the cost of operating and owning three ambulance units and employing the EMS staffing for those ambulance calls,” Luloff said.
“I’ve noticed contractual deductions (the difference between what the hospital bills and what insurers or government programs actually pay) have increased each year. We have to pick up income to counteract that,” Board member Rick Burras commented.

Instability
“The instability in healthcare reimbursement has created a greater need to ensure WMC remains financially sustainable to meet the healthcare needs of the community. Over the last 10 years due to an increase in uninsured and underinsured patients, unreimbursed care has increased by double digits,” Luloff said.
“Benefits of an increased tax levy will ensure a full scope of services can be available for patients. This reduces healthcare risks and travel costs for patients by having access to immediate services locally. It reduces the burden on Winneshiek County or the city of Decorah to provide ambulance/EMS services. It allows the capacity to keep critical non-profitable services locally. At this time, it will aid in financial stability by minimizing additional financial risk. It is important to residents of the county that the county remains financially stable and has a healthcare facility to attract new growth and employers,” Luloff said.
The proposed capital budget for the fiscal year starting July 1, 2019 projects a total of expected capital expenditures of $3.3 million. The primary source of funding for these capital expenditures will be cash generated from operations, Luloff said.
“There are 82 Critical Access Hospitals in Iowa. We are the second largest Critical Access Hospital, but the fourth lowest for tax levy rate,” said Board member Roger Huinker, chair of the Board Finance committee.
“We need to have a profitable hospital so we can reinvest in local health care.”
“This is an investment in our future,” Board member Karl Jacobsen said.