Nurse smiles at elderly patient in wheelchair.

Providing health care services to the people of Bay County


The Bay Medical Center Special District (District) is a non-taxable, governmental health care entity created by the Florida legislature as a special district and located in Panama City, Florida. The hospital associated with the District was originally established in 1946 as a community hospital and has been the subject of various special acts of the Florida legislature from 1946 through the present. Currently, the District operates under Chapter 2005-343 , Laws of Florida, which superseded and amended all prior special acts relating to the District and the community hospital.

On April 1, 2012, the District entered into a long term lease agreement with Sacred Heart Health System, Inc. and LHP Hospital Group, Inc. to lease the hospital for 40 years with two 10-year extensions. Proceeds from the prepaid lease and cash assets of the District went into the Bay Health Foundation, the name chosen by the nine-member Special District Board to reflect its new purpose and avoid confusion with the hospital. The most significant source of revenue for the District comes from the careful investment of this corpus of funds.

The District Board’s major objectives are to ensure the security of the Bay Medical Pension Plan through prudent investments and conservative actuarial assumptions; to satisfy and manage all post-transaction liabilities; to monitor the covenants related to the lease of the hospital and health care facilities and to ensure the fidelity of all agreements; and to collaborate with other health care organizations to strengthen health care services in the community.

The greatest responsibility the Board manages is the Bay Medical Pension Plan. Over the last several years, the Board strengthened the financial security of the Pension Plan by adopting more conservative actuarial assumptions that are reflective of managing the liabilities of a closed pension plan (all new participation in the Plan ceased on March 31, 2012). As of the January 1, 2024 Actuarial Valuation, the Pension had 1,403 participants and an actuarial market value of assets of $101.9 million resulting in a Plan funding level of 89.9% compared to 82.2% the previous year. For calendar year 2023, the actuarial market value investment return gain of 14.83% was more than the investment return assumption of 6.75%. Actuarial market value return was the major source of actuarial gain during 2023. Three, five and ten-year average annual investment return has been 3.77%, 7.97% and 6.3% respectively and on an actuarial market value basis. Another material source of funding for the Pension comes from the Board in the form of annual required contributions.  For fiscal year 2024, those contributions totaled $2,860,377. For fiscal year 2023, those contributions totaled zero. Since 2012, the total contribution from the Board was $35.1 million which was $11.8 million more than the required contribution for that same time period. Visit our pension page via the main header navigation for more detailed information about the Bay Medical Center Pension Plan.

Other responsibilities that the Board manages include medical malpractice liability prior to the lease of the hospital in 2012, open Medicare, Medicaid and Champus cost reports, as well as Medicare RAC audits and related appeals.

Through its grant making program, the District funds health care organizations in Bay County through various contracts and grants; which support may include, but is not limited to, St. Andrew’s Clinic, Avicenna Clinic, chronic disease management programs, other emergency room diversion clinics, and other local health improvement initiatives. Since inception of the grant program in 2012, the District has awarded $5.8 million in grants to fourteen local organizations. The goal of these grants is to continuously improve health care for the citizens of Bay County and foster collaborations between agencies.

The District’s fiscal year is October 1 – September 30.

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