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The possibility of interference in the medical operational structure of Sarasota Memorial Hospital has been an ongoing topic in the local political arena. It has been reported that some folks want SMH to operate without adhering to federal standards. Instead, they want the hospital to follow certain guidelines issued by a controversial state physician who is operating with Tallahassee’s acquiescence – and who has suggested ignoring or bypassing federal rules and recommendations.

Another element lurking in the background is a politically motivated movement to privatize Sarasota Memorial into a for-profit institution. This is not the first attempt: I contributed to the effort to protect SMH when privatization was previously under consideration.

I believe the relevant concerns about this can be divided into two categories: financial and health care.

The financial impact

Currently, Sarasota Memorial has respectable investment-grade credit ratings that allow the hospital to obtain tax-exempt municipal bond financing at low cost. Furthermore, similar scrutiny is used by professionals who advise philanthropic clients about donating to institutions like Sarasota Memorial.

The terms of gifting agreements and the financial due diligence required to achieve the benefits of philanthropy may not be in full public view – but they are there. Well-intended wealthy donors do not just write checks without some scrutiny; indeed, those I know and work with use gifting agreements and due diligence. 

Any schemes to undermine medical systems, or to encourage bypassing federal standards, will be identified and scrutinized during internal due diligence reviews. When I personally see such schemes, I am concerned that there may be some building liability exposure to the institution and that it is being threatened by some political motivations. If such concerns prove to be valid, donors may just decide to quietly walk away from making a donation – and an institution like Sarasota Memorial may never know why it didn’t get the financial assistance.

The rating agencies for debt issuance work the same way: They don’t say, “Don’t do this, don't do that” – they just make notes about the turmoil or risk factors they're seeing and, inevitably, their future credit ratings are not as strong as before. Meanwhile, an institution like Sarasota Memorial may never know why the market has suddenly imposed a higher cost on its financing.

Finally, bypassing federal standards is an invitation to lawsuits and litigation, which eventually force hospitals and other health care institutions to use funds to defend themselves instead of devoting those dollars to medical care for their patients and communities.

The health care impact

Identifying skilled medical professionals and enticing them to practice in Sarasota – instead of somewhere else – is an important part of SMH's recruiting operations. But while highly credentialed medical specialists may like the Sarasota area, they may like other places, too. When they are invited to visit Sarasota Memorial, they meet nice folks, tour top facilities and are hosted in a warm and welcoming manner. (Indeed, I have personally joined in some of these informal conversations.)

But when these candidates go on to visit other, competing institutions, they may well be handed folders containing press clips about SMH and the much-publicized prospect of future disruption at the hospital. And when those competing institutions give their recruiting pitches to these candidates, they may sound something like this:

“I know you are looking at Sarasota Memorial Hospital, and that is a good institution. But I want you to know what is going on there. You are a very skilled specialist, and everybody wants you. Do you really want to go and practice medicine in a place where this type of stuff goes on?"

And Sarasota Memorial may never know why those candidates ended up taking jobs with other hospitals.

At the moment, Sarasota Memorial has a fine reputation and is highly regarded. It is a public hospital, which is one of the reasons it has maintained such an extraordinary reputation. In fact, Sarasota Memorial has been designated a “’magnet” hospital on five separate occasions. 

However, a change in the status of SMH from a public hospital to a for-profit institution could have huge potential costs, and every business and professional service company in Sarasota County could experience an adverse impact. In addition, health insurance rates for local firms and their employees might be put at risk for premium increases. 

Put all of the above factors together and one thing is clear: messing around with a stellar public hospital system for political purposes is dangerous to everyone’s health and well-being. 

David Kotok is the co-founder and chief investment officer of Cumberland Advisors in Sarasota. The opinions expressed in Kotok's guest column are solely his and do not represent the views of Cumberland Advisors, Cumberland’s management, employees or clients.