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Imagine owning a business that is in cut-throat competition with a similar enterprise across the street. Your rival undercuts you at every turn and ruthlessly tries to steal your customers. And it not only doesn't pay taxes but it benefits from an infusion of near limitless public dollars. While you struggle to break even and can't enrich your anxious shareholders, the boys across the street are paying dividends on profits that don't exist.
It may sound surreal, like an entrepreneur's nightmare -- but it's exactly what Richard Famiglietti has endured since he opened his Weston Medical Pavilion. And his deep-pocketed, merciless competition is paid in part by you and me. It's the tax-assisted North Broward Hospital District (NBHD), the nation's sixth-largest public health system. The gigantic, $800 million-a-year district was intended decades ago to serve as a community safety net but over the decades has morphed into a monopolizing force that uses unfair, possibly illegal business practices to destroy its competition in the private sector.
After opening its Weston Regional HealthPark across North Commerce Boulevard from the Pavilion in 2000, the district began luring away Famiglietti's doctors and offering low rents made possible by its tax-exempt status. But the Pavilion owner charges that NBHD -- which recently raised North Broward's property tax rates to the maximum allowed by law -- is itself a tax cheat. And he appears to be right.
I called the Broward County Property Appraiser's Office last week and found evidence that the district has avoided paying hundreds of thousands of dollars of real estate taxes on HealthPark as well as -- apparently -- other private aspects of its business. County Property Appraiser Rocky Rodriguez has responded by starting an investigation to determine how much the NBHD owes the county.
But the damage has already been done to Famiglietti, whose business lost hundreds of thousands of dollars before finally turning a profit in the latter part of 2003. And he isn't the only one who has suffered financially because of the $28 million HealthPark. So have taxpayers. Though NBHD promised that it would make money after two years, the place continues to bleed cash. By the end of this year, operational losses will total $16 million. Combined with the construction cost, the public is looking at about $45 million in medical waste.
And district officials knew -- or should have known -- they were embarking on a financial disaster before they ever built it.
"The district made false representations, lied to me, and lied to the public to justify building this thing," Famiglietti complained recently in his Pavilion office. "They said there was a need and that Weston pays taxes and isn't getting services, so they sought to establish some presence in Weston. They saw that Weston was developed, and they missed the boat, so they made a big plan in Weston, but private enterprise had already taken control of the situation. It made no financial sense. This was more about politics."
Famiglietti, whose Pavilion deal was completed before HealthPark's approval, tried to warn the district that Weston didn't need two medical centers, especially not within a stone's throw of each other. But the NBHD steamroller was not to be deterred. In July 1997, the district hired the consulting firm Hammes Co., which has done millions in business for NBHD, to conduct a study. The consultants reported in October that the HealthPark was "a highly feasible project." Amazingly, Hammes didn't note the crucial fact that the Pavilion was also being built. District CEO Wil Trower presented the flawed study to the board, and NBHD commissioners approved purchase of the land in October 1997.
During that same year, two other developments made the HealthPark project even more obsolete. The state approved a 150-bed Cleveland Clinic hospital in Weston and NBHD's counterpart, the South Broward Hospital District, announced that it was expanding in nearby Pembroke Pines. In December 1997, Trower wrote a letter to the board about the new competition but still didn't mention the Pavilion. "While these approvals are disconcerting," he wrote, "they emphasize the need for the district to pursue its niche and secure its position in the Weston community."
Talk of niches and positions aside, HealthPark might still have made sense if the clinic would have primarily served financially disadvantaged people. But it wasn't located in a poor area. Like the name says, it's in Weston, the suburb on the edge of the Everglades where well-to-do folks fled to get away from places that really need a public health clinic. The same Weston where the poverty rate is half that of the county and the median household income, at a healthy $80,000, is double the average. I asked the district for the number of uninsured patients at HealthPark, but nothing had been provided by publication time.
When it was completed in 2000, Famiglietti's $10 million, 30,000-square-foot Pavilion couldn't compare with the district's showpiece. After all, he didn't have the luxury, as NBHD does, of $174 million in annual tax dollars. His building is functional and comfortable for patients but looks like a tenement next to HealthPark, which came complete with a giant water fountain, imported marble, wrought-iron finishes, and a brick-tiled veranda on the lake in back.