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![handle is hein.sag/sagmn0028 and id is 1 raw text is: Minnesota Legal Register
(Attorney General Opinions Issue)
JANUARY 1990
Opinions of the
Attorney General
Hubert H. Humphrey, III
***** *****
COUNTY HOSPITAL: MEDICAL DOCTORS: INCEN-
TIVES: Subject to certain qualifications and conditions,
county hospital has power to provide medical doctors with
office space rent-free, or at rate below fair rental value, and
interest-free loans, but has no power to provide funds for
payment of personal obligations or to supplement incomes to
guaranteed levels. Minn. Stat. §§ 376.01 et. seq., 144.581 and
317.16 (1988).
James E. O'Neill 125a-27
Pipestone County Attorney January 18, 1990
P. 0. Box 128
Pipestone, Minnesota 56164
In your letter to Attorney General Hubert H. Humph-
rey, III you submit the following:
FACTS
Pipestone County owns and operates a hospital author-
ized and organized under the provisions of Minnesota Stat-
utes, Chapter 376. The hospital complex consisting of a
number of interconnected buildings is located in the City of
Pipestone, the county seat. No other hospitals are operated
within the county. One of the buildings, which is part of the
complex and known as the clinic, contains offices and
examining rooms used by some, but not all, of the medical
doctors having practices in the county.
For the last twenty-five years Pipestone County has
experienced a shortage of medical doctors as have most rural
areas. In 1978 the board of directors of the county hospital,
consisting of the same persons who serve on the board of
county commissioners, determined there was a need for
additional medical doctors in the county and embarked on a
program of incentives to induce medical doctors to locate
and establish practices in the immediate area of the county
hospital and to apply for medical staff membership and
privileges at the hospital.
The incentives used by the county hospital acting
through its board of directors initially consisted of interest-
free loans of $36,000.00 to each of two medical doctors who
agreed to locate in Pipestone County. The loans were to be
repaid at the rate of $1,000.00 per month for 36 months, and
provided that no interest would be owing as long as the
doctors continued the full time practice of medicine within
the county during the repayment period. The loan agree-
n.ents also provided that each of the doctors would office in
the clinic portion of the hospital complex for a period of
eleven years. These loans have been repaid and the doctors
who received them contin'e to practice medicine in Pipestone
County and continue to maintain offices in the clinic portion
of the hospital.
In addition to the interest-free loans, the county hospital
also considered an incentive consisting of a guarantee that
the first year income of a newly recruited medical doctor will
not be less than $60,000.00. This incentive has never been
implemented, but is still under consideration.
In This Issue ...
Subject Op. No. Dated
COUNTY HOSPITAL:
Medical Doctors:
Incentives: 125a-27 1/18/90
In 1987 the county hospital entered into an agreement
with its corporate administrator to recruit additional medical
doctors. Shortly after that a third medical doctor agreed to
locate in Pipestone County in exchange for receiving a
$36,000.00 interest-free loan and in exchange for payment of
approximately $3,500.00 in moving expenses without any
obligation to repay that amount. The corporate administ-
rator, acting as recruiter, made the loan and paid the moving
expenses. As provided by the agreement with the recruiter,
the county hospital immediately reimbursed the recruiter for
the funds loaned and expenditures incurred. The loan to the
third medical doctor is being repaid to the recruiter which
remits all amounts to the county hospital at the rate of
$1,000.00 per month. Approximately $24,000.00 remains to
be paid on the loan.
The third medical doctor, who is not using the clinic
portion of the hospital complex, now indicates he may leave
the community unless he receives additional financial assis-
tance. Faced with that possibility,the county hospital has
offered to pay a debt he owes to another creditor in the
amount of $21,000.00 without any obligation to repay, if he
locates his office in the clinic portion of the hospital and
continues the full time practice of medicine within the county
for a period of two years. The county hospital is also
considering providing office space to the third medical
doctor without requiring the payment of rent or at a rate
below fair rental value. Although none of the medical
doctors who practice in the county are employees of the
county hospital, the county hospital benefits directly from
the maintenance of their practices within the county. It is
estimated that the third medical doctor's practice generates
$50,000.00 to $55,000.00 per month in revenue for the
county hospital.
You ask substantially the following.
OUESTION
Does the county hospital have the power under any law,
including Minn. Stat. § 144.581 [Hospital Authorities], to
provide medical doctors with any or all of the following
items conditioned upon the doctors' locating and establishing
practices in the immediate area of the county hospital for
specified periods of time:
I. Office space rent-free or at a rate below fair rental
value.
II. Interest-free loans.
III. Funds for payment of personal obligations.
IV. Funds to supplement incomes to guaranteed levels.
OPINION
With certain qualifications, your question is answered in
the affirmative with respect to items I and II. Your question
is answered in the negative as to items III and IV.
Before elaborating upon these answers, some general
observations are in order. The county governments of this
state can exercise only such powers as are expressly granted
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