Texas County Memorial Hospital may qualify for stimulus package funds available through the U.S. Department of Agriculture (USDA) to build a proposed 52,000 square foot hospital expansion project, board members heard last week.
Hospital CEO Wes Murray described “a total new development” for the hospital’s proposed expansion.
“Opportunities exist through the USDA to fund shovel-ready projects such as ours, and today we need to decide if we want to proceed with the examined financial forecast the USDA needs to move forward with us,” he told the board.
The USDA funds are part of the government’s federal stimulus package. They would provide TCMH with a 30- to 40-year loan with a fixed, simple interest rate of 4.37 percent. Only interest would be paid by the hospital during the construction process.
“I feel very confident this would be a great opportunity for us,” Murray said. “The terms of the loan would be hard to beat, and the lower interest rates combined with the savings on materials and labor due to the current market conditions would provide us with the ability to address all of our hospital’s building needs.”
The proposed expansion and related remodeling addressed many hospital departments, particularly those with heavy patient use – emergency room, medical surgical floor and radiology. Saving funds would allow the hospital to also address the expansion and remodeling needs of the surgery, obstetrics and intensive care departments at the hospital, too.
“The need for this project has never gone away,” Murray said. “The question has been, ‘When do we pick up the project again and move forward with it?’ “
Last September, board members voted unanimously to approve the $18 million, 52,000 square foot expansion and related remodeling “contingent upon appropriate financing.” Although the contractor’s bids for the project fell within the original construction cost estimates, bond interest rates rose in late September, raising questions about the feasibility of the project.
Hospital officials continued to prepare bond documents with the intention of seeking financing through tax-exempt bonds with hopes that bonds would go down to the 4 percent range originally projected for the project. A debt capacity analysis for the project completed by UMB Bank, NA, the company handling the bonds, and BKD, LLC, the hospital’s auditing firm, showed the hospital on strong financial footing for an $18 million project with an interest rate at 4.5 percent or less.
When the bonds were ready for market in mid-November last year, interest rates for the bonds were at 5.2 percent, creating an additional $2 million in interest expense for the project. The hospital’s board agreed to shelve the project until the timing was appropriate.
“We felt like the project wasn’t right for us last fall because a better opportunity was going to come along,” Murray said.
In addition to the potential USDA funding, TCMH is also pursuing funding through the Federal Emergency Management Association (FEMA) to build a storm shelter on hospital grounds that could be used for hospital needs, such as a multipurpose waiting area.
“This alternate funding source may be the answer for us because with the addition of the FEMA funding, we could theoretically do our entire building project and meet all of our growth needs.”
Murray spoke with the contracted construction manager for the expansion project, JE Dunn, which has worked with the USDA to build a new hospital in Ironton. Murray has also spoken with hospital officials in Fairfax, where the local hospital is receiving USDA funds to build a new hospital for its community.
“To keep the good physicians we have and to continue to recruit great physicians like those we have coming, we need to do this expansion project,” said Linda Pamperien, TCMH chief financial officer.
Doretta Todd-Willis, chief nursing officer at the hospital, said she has seen highs and lows in her 20 plus years of working at TCMH.
“We’ve been blessed with another opportunity to do what we can with our facility,” she said.
Pamperien reminded board members that the hospital has received USDA funds for construction in the past. TCMH received a USDA and Rural Development grant/loan to fund electronic medical records in the hospital in 2007. Earlier this year, the USDA granted a zero-interest, 10-year loan to TCMH through Se-Ma-No Electric Cooperative to build a new clinic and ambulance base in Mountain Grove.
The USDA has already contacted BKD to obtain preliminary hospital financial data.
“The USDA is encouraging us to go forward,” Pamperien said. “To be progressive, we have to take risks, and we may never have this opportunity again.”
Murray described his feelings about the project as excited and said he feels strongly that TCMH qualifies for the loan.
TCMH has been asked to move quickly to pursue the USDA loan because, according to Murray, the stimulus funds are designed to be given away rather than sit and wait for projects. The hospital is still about two months away from receiving the earmarked funds if the plan goes through.
“We have to do the financial feasibility and application, and our construction plans will be reviewed,” Murray said. “Our state USDA representative, Clark Thomas, will personally deliver our proposal to Washington, D.C.”
Even if the funds are earmarked for the TCMH expansion project, the hospital is not obligated to take the money if the board decides in the future that the timing is not right for the project.
There will be some expense to TCMH to do the examined financial forecast – a financial feasibility study required by the USDA – as well as personnel hours required to complete the application.
Board members unanimously agreed that the funding potential with the USDA should be approved.
In other news, TCMH officials hope to have a timeline for the Mountain Grove clinic and ambulance base project within the next two weeks.
“We are ready to take the ambulance over to Mountain Grove at any time,” Murray explained, adding that there’s already interest in the construction project.
“It will be a very nice clinic, inside and outside,” Murray said. “We hope to have a formal groundbreaking ceremony in a month or so.”
A radiologist, Vijay Sekhon, M.D., will be working three mornings a week in the TCMH radiology department beginning July 1. Sekhon is with the hospital’s consulting radiology group, Palmaris, and he will be based in Rolla.
Sekhon’s regular presence at the hospital will improve turnaround time for some radiologic procedures as well as allowing the opportunity to take care of in-house needs of the medical staff.
The TCMH Medical Clinic in Cabool has fully implemented electronic medical records. The complex in Houston will complete the phasing in of electronic medical records later this summer.
In conjunction with the electronic medical records system, TCMH physicians are using an electronic prescription service for patients at pharmacies with e-prescribe service capabilities.
“The physicians are really excited about having this tool available,” Murray said.
The hospital just recruited Dr. Dale Korn, an emergency medicine physician from Lebanon, to work in the hospital emergency department. Korn will begin full-time duties in October in addition to the full-time emergency room physicians already employed by TCMH.
Murray and Joleen Senter Durham, director of physician recruiting at the hospital, recently hosted lunch for some of the residents of the Cox Family Medicine Residency program in Springfield. They provided a short presentation about the hospital.
“We have already had some positive feedback from that short interaction with the residents,” Murray explained.
Pamperien presented the financials for May, showing a decrease in revenue. The hospital ended the month with a negative bottom line of $127,685 and a negative year-to-date balance of $320,969.24.
“We knew that the first six months of the year were going to be the roughest,” Pamperien said. “We have the pieces in place for things to begin to turn around quickly.”
Dr. Eugene Honeywell partially returned to work in May and will resume full-time clinic and hospital work in July. Dr. Russell Huq will join the TCMH Medical Complex in September, and Dr. John Paulson will join the same clinic next July.
Durham is already recruiting for healthcare providers for the TCMH clinic that will be built in Mountain Grove.
Present at the meeting were Murray; Pamperien; Todd-Willis; Durham; Dr. Charles Mueller, chief of staff; and board members Omanez Fockler, Janet Wiseman, Jane Kirkwood, Mark Hampton and Mark Forbes.
The next meeting of the TCMH board of trustees noon is Tuesday, July 28, in the downstairs meeting room of the hospital.