NATCHEZ &045; A decision to seek legislation allowing Natchez Regional Medical Center to opt out of the state Public Employee Retirement System was not made lightly, said Walter Brown, attorney for the hospital board of trustees.

&uot;The board for a year and a half or so has been considering, like hospitals across the nation, how to meet their obligations and provide quality healthcare services in a highly competitive market,&uot; Brown said.

In PERS, the employer pays 9.75 percent to the employee’s 7.25 percent of employee income into the system.

However, in 2004, the state Legislature mandated an increase, effective July 1, 2005, to 10.75 percent for the employer. Natchez Regional now pays $1.5 million to PERS annually.

The increase to 10.75 percent would be significant for the hospital to absorb, Brown said. And the figure may rise to 11.75 in 2006.

When the Legislature authorized PERS to increase the contribution, the hospital board realized that with all the cutbacks in Medicare and Medicaid reimbursements and other factors having an impact on hospital income, getting out of the program was a way &uot;to avoid laying off people and asking people to take cuts in their salaries,&uot; Brown said.

Employees were informed Monday of the board’s decision to ask for the legislation, Brown said.

One hospital employee, who asked not to be identified, said many employees are upset about the PERS decision and fear losing money they have put into the system for up to 20 years.

Hospital CEO Jack Houghton said, &uot;Our employees are our greatest asset. However the reality of how much it costs to participate in PERS is a very real concern of the board of trustees. We are working to see that as few employees as possible are adversely affected by this potential transition to a new pension plan.&uot;

Bills (HB 1106 and SB 2842) were introduced into the House and Senate on Monday. Even if the legislation passes and has an effective date of July 1, any changes to the system at Natchez Regional likely will not take place until at least January 2006, Brown said.

Houghton said the board’s decision on PERS is a demonstration of good stewardship of the hospital’s resources and shows a sense of responsibility to Adams County taxpayers.

&uot;The trustees believe that continuing to participate in PERS puts this hospital at an extreme disadvantage in competing with other private hospitals in our service area.&uot;

Brown said in private industry, retirement programs average 6 percent by the employee and a 3 percent match by the employer.

Of the 383 employees of Natchez Regional who are in the PERS system, 194 are employees of fewer than four years; 59 have five to 10 years; 100 have 11 to 25 years; and 30 people over 25 years.

Of the 48 public county hospitals in the state, Natchez Regional is one of only 14 still participating in the PERS program.

James Coleman, chairman of the Natchez Regional Board of Trustees, said the board must make wise business decisions to ensure a continuation of quality healthcare.

&uot;Given the financial environment all healthcare institutions must now operate within, its likely that there will be few public hospitals participating in PERS,&uot; Coleman said. Natchez Regional is not unlike any other healthcare provider struggling in a world of decreased reimbursement at the federal and state level for Medicare and Medicaid and a the same time incurring increased operational costs.

The hospital has begun reviewing options for a new employee retirement program but decisions will not be finalized until after the outcome of the legislative process is known.

Coleman said in a prepared statement that many employees would see an automatic windfall as a result of this change.

&uot;Not only could they draw their contributions out of PERS or roll them over into a private investment plan, they would see a 7.25 percent increase in their pay because they would no longer have to make the contribution.&uot;

Employees with greater than four years of service will be vested and have a choice to leave their equivalent 7.25 percent contribution in the PERS system to grow until retirement.

The employees who already have passed the milestone 25 years of service and have elected to continue working and not retire. These employees would then have the option to draw retirement from their PERS account while continuing working for the hospital, since the hospital would no longer be a part of the PERS system.

Coleman said the board hopes to put a new pension plan in place comparable to others in the industry and in other hospitals across the state.