The formation of a public building commission to refinance Newman Regional Health’s debt could save the hospital more than $3 million in interest payments.
Bob Driewer, chief executive officer of Newman Regional Health, spoke to Lyon County commissioners Wednesday morning during their study session about the possibility of forming a building commission. Driewer said the hospital has experienced financially challenging times in the past 12 months. The hospital took a more than $1.6 million loss for 2008.
Holly French, Newman’s chief financial officer, said in 2000 the hospital closed the year out with a surplus of more than $3 million. In 2008 they weren’t that lucky and several factors contributed to that including a 10 percent reduction of patient days from 2007 to 2008 and a 28 percent reduction in inpatient rehabilitation. 2008 also saw the lowest number of births since 1999.
Kevin Cowan of Gilmore & Bell in Wichita explained how a public building commission would work.
A public building commission may be created by ordinance or resolution by governing bodies and would have three to nine members. The public building commission has the ability to issue debt and does not have the authority to levy taxes. The public building commission, not the governing body, would hold the title to the hospital. The public building commission would then lease the hospital to the county and the county would sub-lease the property to the Newman.
Newman would remain in control of operations with its own board of trustees, and bond payments would be made to the bond trustee.
A public building commission can be used for several other purposes as well, Cowan said — it’s another funding tool and could be used for public works projects or other projects that need to be financed in the county.
“These don’t count against debt limits,” Cowan added.
In a document provided by the hospital, the savings seen would be large with a public building commission. Annual payments for a $14,045,000 issuance of bonds would be $1,730,000 under the public building commission. It would be the same with no public building commission with a $15,060,600 issuance.
The hospital would only be required to have a $500,000 bond reserve with a public building commission as compared to a $1.5 million bond reserve. Average interest rate would be 4.06 percent compared to 4.73. Interest expense would run roughly $3,041,815 compared to $4,405, 020. These add up to a total estimated savings of $3,334,736 compared to $1,971,531 without the formation of a public building commission.
In other matters, Lyon County commissioners discussed a drainage study between Roads M5 and N. The area is known to hold water in ditches. Jim Brull said after a study of the area, it is determined that the water is able to get where it needs to go and he didn’t see much of a problem with the exception of a few culverts.
“It’s such a flat area that it is not going to move fast,” Brull said.
In other items commissioners:
• Discussed economic stimulus projects and directions.
• Discussed signing a contract with Stutler Technologies Corp. to install audit and video system in two transport vehicles.
• Discussed commissioner’s attendance at the Northeast Highway Officials meeting in Seneca.
• Discussed the low bid of J & A Traffic Products of Blue Springs, Mo., for UNISTRUT Intersection Signs Materials for $3,124.
• Discussed low bid of J & A Traffic Products for steel sign posts for $4,138.
• Discussed low bid that meets the specifications for complete signs and sign faces from National Sign Co. Inc., for $14,129.75.
• Discussed road supervisor’s and sign supervisor’s weekly reports.
1469 (anonymous) says...
WOW i have an idea. How about telling people what is worng with them instead of what is not??? you know proper testing would be good. Oh and what about taking 4 hours in the ER when you are the only one in the ER ?? hmm maybe people would go to our hospitial if we had the proper Care dont you think ??? And you wonder why so many of the people in lyon county go to other hospitials better care less time hmm wonder why the hospitial is losing money
March 12, 2009 at 7:41 p.m. ( permalink | suggest removal )