“This is an assessable plan, meaning that member hospitals could have to bail out the plan if it is troubled,” said Coleman. She added that the KESA plan has $9 million in reserves, but sold $63 million in premiums.
“We may be at risk to stick with KESA, but the finance committee recommends we do so,” added Coleman. She said that the non-assessable plan from the Minnesota Hospital Association would cost the hospital $34,000 more than the $35,000 KESA plan.
Board Member Linda Burnham said, “I’m not in favor of the KESA plan, but we have to do what we have to do because of limited money. I’ll defer to the finance committee on this.”
QHR Hospital Management Group Representative Herb Winters said that the risk for assessment was a “calculated risk.” In the past, insurance company AIK had assessed the hospital for $50,000. Winters told Board Member Dan Jurgens that there was no cap on the amount of a potential assessment.
“I feel the same (as Burnham) but if we don’t know how much we can be assessed, how can we call it a calculated risk?” asked Jurgens. “They could assess us for $4 million.”
Winters said that the risk was based on previous experience. He noted that an assessment, if any, could be less than the increased premium of the non-assessable plan.
The board passed the KESA plan with Jurgens as the lone vote of dissent.
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