Not a cake-walk
CHELAN - Although the Lake Chelan Community Hospital and Clinic (LCCHC) has garnered a considerable support in favor of a new hospital levy, there are some in the Chelan Valley that are not convinced a new hospital is the best option.
On Wednesday, March 8, a ‘Vote-No’ committee met at Campbell’s Resort to outline some of the reasons they are against the levy.
One being, the $14 million estimate it would take to do maintenance on the hospital.
“We don’t agree with the number of $14 million for improvements in the hospital,” Chelan PUD Commissioner Ann Congdon said. “There are a couple people a part of our group that are structural engineers and builders and have been their whole life, and they have really scrubbed the numbers. They feel it could be done for much less and they are putting the figures together as we speak. They have done virtually no maintenance in 15 years, and I think it was intended to move to a new hospital. We have a couple of experts who believe it could be done for much less.”
When asked about the cost, LCCHC CEO Kevin Abel said “It’s not ongoing maintenance, there are 71 capital improvements that need to be done, this is major stuff. All of the HVAC systems, major electricals and all of the fire alarms need to be replaced.”
Another discrepancy between the two groups is associated with the affordability of the project.
“In terms of the new hospital, we don’t see how we can afford it. Revenues are down, and subsidies from the government are almost certainly going to go down with the repealing of the Affordable Care Act (ACA),” Congdon said. “The business plan for small rural hospitals relies on Federal subsidies and they don’t factor in that these will go down, that puts us at great risk. We don’t see how they will be able to pay their debt service with revenues declining and the overall use of the hospital declining abd they know they would have to come back to community for support if they couldn’t make their payments.”
Abel seemed less worried in his response as he assured that “we are well within the financial targets for being a Critical Access Hospital. We have $13,000 after a draft closing that is on a $27 million net income budget, so although we are a little below budget, we are on the long term trend for being profitable.”
Abel went on to say that the $22.5 million burden the hospital is taking care of will not fall on the community unless there is a vote, but the that the USDA would work with them in that case. Because of reimbursements though, Abel believes a scenario where that situation would come up is “highly unlikely”.
Another issue The Vote-No committee is concerned with involves the debt capacity ratio, which currently sits at 1.8.
“It is is the biggest concern.” Congdon pointed out. “The debt ratio being a measure of cash flow that is available, well right now, the hospital has a debt of $7.5 million and their ratio is 1.8. If they go out and borrow $22.5 million - with the possibility of an additional $2 million - then factor that into it and they will be woefully short. That is probably our biggest fear so they need to factor that into their numbers if revenue and marketshare continue to drop.”
Again, Abel diverged from the opinion of Congdon and the Vote-No committee by saying that 1.8 is a decent number to have and, “that gets us into the conversation regarding critical access hospitals, and that reimbursement would come on both the voted and non-voted debt because the government reimburses on depreciation, so our projections actually show us that the ration would go up from the original 1.8.”
Ultimately, the Vote-No committee believes that it would be much more financially feasible to stay at their current location, expand and reconfigure what is there to provide for private rooms and an increased emergency room. However, that might be a formidable task given the location of the hospital.
“There argument for expansion is what we have looked at and from earlier infrastructure and Healthcare Collaborative consulting. What they said, is that acquiring the land and homes, bringing in access and developing 30-40,000 more square feet is actually more expensive than what the new facility would cost. Also with the site being on a hill, it is much more expensive and difficult to develop than a site on flat land.”
The vote for a new hospital levy is April 25, and will need a 60 percent supermajority to pass.