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ChatGPTClaudePerplexityStoryline · 20 events · May 7, 1996 – about 2036
Amarillo Hospital District: the 1996 indigent care agreement, its investment fund and the 2036 deadline
Quick answers
- What happens next with Hospital District fund?
- about 2036: The 1996 Indigent Care Agreement is scheduled to end. Read the event
- What is the latest on Hospital District fund?
- Aug 19, 2025: 2025/26 budget projects the fund at $109.9 million; reported gap $180 thousand. The board adopted a 2025/26 budget beginning with $119.3 million available, with $2.8 million in revenue and $12.2 million in spending, leaving $109.9 million. Read the event
- How far back does this record of Hospital District fund go?
- To May 7, 1996: Hospital District sells Northwest Texas Hospital and signs the Indigent Care Agreement with UHS. The storyline has 20 dated events in all. Read the event
The Amarillo Hospital District, whose Board of Managers is appointed by the City Council and whose finances are run by City staff as fiscal agent, sold Northwest Texas Hospital to Universal Health Systems of Amarillo in 1996. Under the Indigent Care Agreement of May 7, 1996, the hospital provides indigent care and the District pays it from an invested fund (the "corpus") instead of levying a property tax. City staff told the board in 2020 that the corpus should last until the agreement ends in 2036, after which a tax would be needed, and the board dropped its spending policy. The board hired a consultant to review the hospital's indigent care documentation in 2021, and after rising interest rates left the corpus about $6 million short of its projected obligations in late 2022, it moved all of the fund to one manager under an asset-liability matching strategy; the reported gap fell to $180 thousand by June 2025. It terminated the frozen employee pension plan of the former hospital in 2024 by buying annuities, sets the yearly Local Provider Participation Fund assessment on local hospitals, and in 2024 formed a legislative committee to work toward a future tax rate.
A storyline groups dated events in order. It is a chronology, not an argument; it does not say why anything happened. All storylines
- Public health
- Budget & taxes
- Debt & financing
- Contracts & procurement
- Leadership & governance
- Audits & oversight
- Federal & state funds
- Courts & law
- Downtown & development
· Origin
Hospital District sells Northwest Texas Hospital and signs the Indigent Care Agreement with UHS
The Amarillo Hospital District sold Northwest Texas Hospital to Universal Health Systems of Amarillo, Inc. (UHS) in 1996. Under the Indigent Care Agreement dated May 7, 1996, UHS agreed to provide health care to eligible indigent residents of the District at no charge to them. Later board minutes refer to it as the 1996 Indigent Care Agreement and say no hospital district tax has been levied since 1996.[1][2]
- ✓ Verified
A 2004 Texas Attorney General opinion states that the Amarillo Hospital District, established by the Legislature in 1959 with the same boundaries as the City of Amarillo, sold its hospital, Northwest Texas Hospital, to Universal Health Systems of Amarillo, Inc. in 1996. [1]
- ✓ Verified
The opinion cites the Indigent Care Agreement dated May 7, 1996, under which UHS "generally agrees to provide indigent health care 'at no charge to' the indigents," determines whether an applicant is eligible, and is subject to review of that decision by the District. [1]
- ✓ Verified
Dean Frigo, Amarillo Hospital District Board of Managers (investment officer): At the August 11, 2020 board meeting, the District's investment officer stated that there will have been no hospital district tax from 1996 to 2036. [2]
· Precursor
Board moves half of Herring Bank's corpus portfolio to Happy State Bank and reopens the search
After a request for proposals for part of the District's corpus investments drew four responses, the Finance Committee on May 4, 2020 recommended moving half of the roughly $77 million managed by Herring Bank to Happy State Bank and issuing a new request for proposals for the rest. The Board of Managers approved the recommendation 7-0 the next day. Amarillo National Bank managed about $95 million at the time.[3][4]
- ✓ Verified
The Finance Committee minutes record that Amarillo National Bank managed $95 million and Herring Bank $77 million of the corpus; the request for proposals covered only Herring's portion and drew responses from Happy State Bank, Herring Bank, Amarillo National Bank and Chandler Investments. [3]
- ✓ Verified
On January 28, 2020 the Finance Director reported a District fund balance of $182,204,806 at December 31, 2019, with total expenses of $5,943,941 so far that fiscal year, the largest being a $4,487,952 LPPF intergovernmental transfer to the State. [5]
- Fund balance
- $182,204,806
· Starting point
Board drops the corpus spending policy as staff project the fund will last to 2036
City staff told the Finance Committee and the Board that cash flow projections showed the corpus would cover the District's obligations through the end of the Indigent Care Agreement in 2036 with about $21 million left, and that the District would then need to levy a tax; the board would need to act in 2029 to set a property tax rate for indigent care. The board removed the spending policy from the corpus investment policy, hired Sage Investment Managers for the remaining Herring Bank funds (about $38 million), and approved a fiscal 2020/21 budget with line items for the District to fund Texas Tech pediatric subspecialties and Tobacco Free Amarillo again after Northwest Texas Healthcare System ended its funding of them.[6][2]
Laura StorrsSage Advisory Services (Sage Investment Managers)
- ✓ Verified
Staff projections presented in August 2020 showed enough corpus funds to meet all obligations until 2036 with approximately $21 million left. These are projections, not results. [6][2]
- Projected 2036 reserve
- $21,000,000
- ✓ Verified
The Finance Committee minutes record staff saying the board would need to take action in 2029 to set a property tax rate to fund indigent care and begin, in 2031, the request-for-proposals process for a new indigent care contract; the Deputy City Attorney said legislation to reinstitute an indigent tax would likely take at least three legislative sessions. [6]
- ✓ Verified
Staff said the original plan assumed the District could earn 7% and spend less than 0.75% of the corpus each year, but the fund had not always achieved 7%; the Finance Committee (3-0) and the Board (7-0) approved removing the expenditure policy from the corpus investment policy and adding that the Public Funds Investment Act prevails in a conflict. [6][2]
- ✓ Verified
The fiscal 2020/21 budget estimated $165.7 million available at the start of the year, revenues of $4.2 million and expenditures of $13.3 million, leaving $156.6 million. It passed 5-0-1, with one member abstaining because of employment by Texas Tech. [2]
- Budget expenditures
- $13,300,000
- ✓ Verified
Texas Tech's Department of Pediatrics told the board that NWTH had given notice it would end its pediatric subspecialty contract on September 30, 2020; the District had supported the program through NWTH since October 1, 2007 at $1.2 million a year, later $1.4 million. Texas Tech asked the District to fund the contract at $1,350,000. [6][2]
· Context
Board sets a 2.45% Local Provider Participation Fund assessment on local hospitals
After a public hearing, the Board set the mandatory payment on local hospitals under the District's Local Provider Participation Fund (LPPF) at 2.45% for the state fiscal year ending August 31, 2021, up from 2.22% the year before. Staff said the rate would produce $20,230,863 in assessments, used for intergovernmental transfers that draw Medicaid supplemental payments. The vote was 7-0.[8]
- ✓ Verified
Staff said the 2.45% rate (2.22% the prior year) would produce $20,230,863 in assessments with an anticipated net intergovernmental transfer of $20,170,523, payable in four installments in 2021. A representative of the private hospitals said the dollars go a long way with Medicaid supplemental payments. [8]
- Lppf rate
- 2.45%
- Assessments
- $20,230,863
- ✓ Verified
The Deputy City Attorney told the board in August 2020 that under state statute LPPF money may be used for intergovernmental transfers, costs associated with indigent care and administrative expenses. The Assistant City Manager said the LPPF budget is set at the 6% maximum so no budget amendment would be needed. [2]
· Related development
Board hires BKD to review the Indigent Care Agreement
An ad hoc subcommittee formed late in 2020 to do due diligence on the Indigent Care Agreement interviewed two firms and recommended BKD on February 2, 2021; the board authorized contract negotiations. On February 23, 2021 it approved the engagement letter, pending the City Attorney's approval, after the City's lawyers asked that an indemnification clause and a confidentiality provision be changed.[9][7]
- ✓ Verified
The subcommittee chair told the board the review was routine due diligence on the Indigent Care Agreement and that healthcare costs had been rising; the subcommittee looked at five consultants, interviewed BKD and Health Management Associates, and chose BKD. [9]
- ✓ Verified
The Deputy City Attorney said a governmental entity cannot indemnify a contractor and that the clause should be struck or qualified "to the extent allowed by law," and raised the Public Information Act on the confidentiality provision; BKD agreed to the changes, and the contract was approved unanimously. [7]
· Context
Board raises the 2021 LPPF hospital assessment from 2.45% to 6% at the hospitals' request
Adelanto Healthcare Ventures, on behalf of the local hospitals, asked the District to amend the LPPF rate for state fiscal year 2021 from 2.45% to 6% because of increased Medicaid spending and added state supplemental programs. Representatives of Northwest Texas Hospital and BSA spoke in favor at the public hearing, and the board approved the amended resolution unanimously.[10]
· Related development
Consultant reports gaps in case management documentation for indigent patients
BKD CPAs & Advisors reported on its review of Universal Health System's documentation and utilization management for the indigent patients it serves: of 78 sampled encounters, 56 had no discrepancies or observations, all were medically necessary, and 22 of the 39 inpatient encounters lacked case management documentation. The board accepted the report and asked Northwest Texas Hospital to document the steps it would take. It also approved the annual indigent care funding resolution at $1,925,041 per quarter.[11]
- ✓ Verified
BKD tested a sample of 78 encounters: 56 contained no discrepancies or observations, all 78 were medically necessary, and 22 of 39 inpatient encounters did not contain case management documentation. BKD said all encounters should contain case management documentation. The board chairman said it was the first audit of this nature the District had engaged. [11]
- ✓ Verified
The board increased the BKD contract by $5,000 for additional time needed to gather information for the report. [11]
- Contract increase
- $5,000
- ✓ Verified
The annual indigent care funding resolution for fiscal 2021/22 showed flat funding to Northwest Texas Hospital of $1,925,041 per quarter; in October 2020 staff had said the payments were determined by CPI. [11]
- Quarterly payment
- $1,925,041
· Resolution
Northwest Texas Hospital tells the board all indigent patients now receive case management
Northwest Texas Hospital's chief medical officer and director of case management presented a written response to the review. The hospital said all indigent patients had been added to its case management high-risk trigger list and had been receiving case management since January 2022.[12]
- ✓ Verified
The hospital's director of case management provided a written letter for the report and said all indigent patients had been added to the case management high-risk trigger list and began receiving case management in January 2022. [12]
· Trigger
Analysis shows the corpus about $6 million short of its obligations to 2036
With bond values down as interest rates rose, the District's money managers presented an asset-liability analysis. Sage put the future value of the District's known liabilities through the 2036 end of the Indigent Care Agreement at $167.7 million, with a present value of $132.8 million, against current assets of $126.8 million, a gap of about $6.0 million. The board voted to seek a single money manager with actuarial support for the whole portfolio and changed the corpus investment policy to match assets to liabilities.[13][14]
Laura StorrsSage Advisory Services (Sage Investment Managers)Wells Fargo Advisors
- ✓ Verified
Amarillo National Bank (District money manager): At the December 2, 2022 Finance Committee meeting, Amarillo National Bank said the District had about a 16 cent loss per dollar on its current bond holdings because of the inverted yield curve and was taking out more each year than the investments earned. [13]
- ✓ Verified
Sage (District money manager): Sage's analysis put the future value of the District's liabilities to 2036 at $167.7 million and their present value at $132.8 million, against current assets of $126.8 million, and said the total deficit was approximately $6.0 million and could be spread over the years through 2036. [14]
- Liabilities present value
- $132,800,000
- Assets
- $126,800,000
- Deficit
- $6,000,000
- ✓ Verified
Laura Storrs, Assistant City Manager: Asked why the liabilities were no longer covered, the Assistant City Manager said market interest rates had not performed as projected, which resulted in the deficit. [14]
- ✓ Verified
The investment counselor reported the corpus portfolio down 12.6% for the year ended September 30, 2022, against a policy benchmark down 9.8%. [14]
- ✓ Verified
The revised corpus investment policy identifies the funds as being for indigent care and other health care services and changes the investment objectives to matching the District's assets to its liabilities. Both the policy and the request for proposals passed unanimously. [14]
· Related development
Sage selected to manage all of the District's corpus funds
Of two responses to the request for proposals, the Finance Committee recommended Sage on the basis of fees, with direction to use existing investments to match liabilities rather than liquidate and reinvest. The board approved Sage as manager of all corpus funds and directed Amarillo National Bank and Happy State Bank to release their funds by March 15, 2023. The same day it set the LPPF assessment at 4.17% for state fiscal year 2023.[15][16]
Sage Advisory Services (Sage Investment Managers)
- ✓ Verified
The committee evaluating the request for proposals (two board members and the Assistant City Manager) received two responses, both favorable, and the recommendation came down to fees. The anticipated shortfall had improved to around $3 million in a January 31, 2023 analysis. [15]
- ✓ Verified
Dean Frigo, Amarillo Hospital District Board of Managers (Finance Committee chair): The Finance Committee chair said the board must do its part to watch expenses and that it would not be wise to take on any new programs. [16]
- ✓ Verified
Earlier, in August 2022, Texas Tech had asked for an additional $550,000 a year for pediatric programs; staff said that amount would strain cash flows near 2036, and the Finance Committee approved $250,000. Staff then projected about $12.9 million in reserves in 2036, before the added amounts. [18]
· Related development
Audit shows the District's net position fell $48.6 million in fiscal 2022
CMMS CPAs and Advisors presented the District's audit for the year ended September 30, 2022, with a clean opinion: net position of $150.0 million, down $48.6 million from $198.6 million a year earlier. The board accepted the audit with added information about the expected shortfall in the management's discussion and analysis. Sage reported 98% coverage of liabilities by assets and a gap of about $3 million.[17][19]
CMMS CPAs & Advisors PLLCSage Advisory Services (Sage Investment Managers)
- ✓ Verified
Net position reported by the District's auditors at fiscal year end (September 30): $198.6 million in 2021 (up $17.8 million), $150.0 million in 2022 (down $48.6 million), $140.2 million in 2023 (down $9.8 million) and $136.7 million in 2024 (down $3.5 million). Each audit received a clean opinion. [17][19][20][21]
- Net position 2022
- $150,000,000
- Change 2022
- -$48,600,000
- ✓ Verified
The May 23, 2023 minutes do not record a stated reason for the $48.6 million decrease; they record that the board asked for information about the expected shortfall to be added to the audit's management discussion. [19]
· Related development
Board votes to terminate the former hospital employees' pension plan and buy annuities
At a special meeting the board approved a pension risk transfer agreement with Gallagher (not to exceed $88,000), authorized the chairman to contribute up to an additional $3.4 million from the corpus, and adopted an amendment to terminate the Retirement Plan for Employees of Northwest Texas Healthcare System, a frozen plan the District kept after the 1996 sale. The actuary said about $2.9 million more would be needed to terminate the plan as of September 12, 2023.[22][23]
Arthur J. Gallagher & Co. (Gallagher Benefit Services)
- ✓ Verified
The board approved the risk transfer agreement and authorized the chairman to enter into the risk transfer up to an additional $3.4 million contribution from the corpus; it then approved the amendment to terminate the plan. All three votes were unanimous. [23]
- Max contribution
- $3,400,000
· Context
LPPF assessment set at the 6% maximum; indigent care payments to stay flat to 2036
The board raised the LPPF assessment from 4.17% to 6%, the maximum, for state fiscal year 2024 after the hospitals' representative cited two new federally approved programs; the chief financial officers of Northwest Texas Hospital and BSA spoke in favor. It also approved the annual indigent care funding resolution, with four quarterly payments flat at $1.9 million that staff said would stay flat through 2036, and Public Health funding of up to $2.0 million.[24]
- ✓ Verified
Adelanto HealthCare Ventures said two new programs approved by CMS gave hospitals increased eligibility for federal dollars and that it expected the rate to float between four and six percent in future years; the board approved 6% unanimously. [24]
- Lppf rate
- 6%
· Resolution
Pension plan terminated with a $2.6 million final contribution; assets go to One America
The plan was terminated in March 2024. The full balance was transferred at the end of March to One America, which paid May benefits, and staff notified the Texas Pension Review Board. The final contribution was $2.6 million, below the $3.4 million authorized.[20][25]
Arthur J. Gallagher & Co. (Gallagher Benefit Services)
- ✓ Verified
The investment counselor reported the plan terminated with a $2.6 million final contribution, down from the $3.4 million previously estimated; staff reported the full balance transferred to One America at the end of March and the Texas Pension Review Board notified. The plan's audited net position was $0 at September 30, 2024, down $18.8 million, as annuities were bought for all members. [20][21]
- Final contribution
- $2,600,000
· Context
Board amends the Indigent Care Agreement for LPPF compliance
The board approved a resolution amending the Indigent Care Agreement with Universal Health Systems. Staff said the State recommended the amendment to stay in compliance with Local Provider Participation Fund requirements, and that it was drafted by Universal's legal team and approved by the District's attorney. The vote was unanimous.[20]
· Related development
Board forms an indigent care committee and adopts a budget drawing the fund toward $120 million
The board appointed three members to a new Indigent Care and Funding Priorities Committee, kept the LPPF at 6% for state fiscal year 2025 and adopted a 2024/25 budget starting with $129.5 million available and ending at $120.4 million. Indigent care payments were set at $7.7 million a year. Sage reported a $330 thousand anticipated deficit through 2036. Members asked for an item on a committee to work on legislation.[25]
Sage Advisory Services (Sage Investment Managers)
- ✓ Verified
Staff said the four quarterly indigent care payments are flat at $1.9 million, an annual total of $7.7 million, and will remain flat through the end of the agreement in 2036. [25][26]
- Annual indigent care
- $7,700,000
- ✓ Verified
The 2024/25 budget estimated $129.5 million available at the start of the year, revenue of $3.0 million and expenditures of $12.2 million, leaving $120.4 million. The vote was 5-0. [25]
- ✓ Verified
Sage (District money manager): Sage said there was a $330 thousand anticipated deficit through 2036 at the end of the June 2024 quarter, that liabilities were 99% funded with the updated budget estimates, and 98% funded if Public Health funding grows 3% a year. [25]
· Related development
Board appoints a legislative committee for the District's future tax rate
The board appointed three members to a Legislative Committee to work on legislative priorities for the District, after the Finance Committee in August had discussed working with the Legislature on a tax rate and an exemption for residents over 65. It also amended the 2023/24 budget for the pension plan termination.[27]
- ✓ Verified
The August 20, 2024 Finance Committee minutes record that the committee discussed needing to work with the Legislature on implementing a tax rate and looking into an exemption for those over 65. [28]
· Related development
Gap narrows to $356 thousand as the board discusses a tax plan by 2036
The fiscal 2024 audit showed net position of $136.7 million, down $3.5 million, and Sage reported a $356 thousand deficit of estimated liabilities over assets at March 31, 2025. Under an item on the future need for a property tax rate, the board discussed working with local representatives on the ability to levy a tax with relief for residents over 65, to have a plan in place by 2036.[29][21]
CMMS CPAs & Advisors PLLCSage Advisory Services (Sage Investment Managers)
- ✓ Verified
Sage reported a $356 thousand deficit of estimated liabilities over assets at March 31, 2025, compared with a $3.1 million deficit at January 31, 2023; the Finance Committee had the audit's page 16 revised to show the $356 thousand gap. [29][21]
- Deficit
- $356,000
- ✓ Verified
The board discussed addressing the ability to levy a tax and provide relief to citizens over 65 by working with local representatives to have a plan in place by 2036. No action was recorded. [21]
· Related development
2025/26 budget projects the fund at $109.9 million; reported gap $180 thousand
The board adopted a 2025/26 budget beginning with $119.3 million available, with $2.8 million in revenue and $12.2 million in spending, leaving $109.9 million. It renewed indigent care payments of $7.7 million a year, Texas Tech pediatrics ($1.6 million) and psychiatry ($100,000), Tobacco Free Amarillo ($425,000) and Public Health funding up to $2.06 million, and kept the LPPF at 6%. The reported gap of liabilities over assets was $180 thousand at June 30, 2025.[26]
- ✓ Verified
The 2025/26 budget: $119.3 million available at the start, revenue $2.8 million, expenditures $12.2 million, $109.9 million at the end. The vote was 5-0. These are budget estimates. [26]
- Budget ending available
- $109,900,000
- ✓ Verified
The investment counselor reported a $180 thousand deficit of estimated liabilities over assets at June 30, 2025, down from $356 thousand the prior quarter. [26]
- Deficit
- $180,000
Scheduled
The 1996 Indigent Care Agreement is scheduled to end
Board minutes from 2020 through 2025 give 2036 as the end of the current Indigent Care Agreement. Staff told the board it would need to act in 2029 to set a property tax rate for indigent care after 2036 and begin a request-for-proposals process for a new agreement before then.[2][10][25]
- Pending
Staff told the board in 2021 that the District would need to start working with the Legislature in 2029 to set a property tax rate to fund indigent care after 2036 and start a request-for-proposals process for a new indigent care contract before 2036. The exact end date of the agreement is not stated in the minutes read. [10]
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