Effingham Hospital Authority members are hoping to bridge a gap with county commissioners in an effort to win support for their expansion plans.
Hospital authority members have been working on modernization plans for four years. The hospital is asking the county for 5 acres adjacent to the hospital in order to add an Alzheimer’s unit to the Effingham Care Center and allow space for new operating rooms.
Hospital officials estimate their plans — which will add 50,000 square feet of space — will create more than 270 jobs and lead to an economic impact of $28.7 million.
And they insist there isn’t much time to lose to make those plans happen.
Hospital authority members and officials have their eyes on Build America bonds established by the federal stimulus initiative known as the American Recovery and Reinvestment Act of 2009. They also want to secure a low-interest loan from the Department of Housing and Urban Development’s program designed for small and rural hospitals.
By using Build America bonds, hospital authority members say they will save $14 million. But they need to begin the paperwork for the pre-application to HUD by the end of the year — and they’re trying to convince commission Chairman Dusty Zeigler and his fellow commissioners.
“It’s going to be a beautiful hospital,” Hospital Authority Chairman Stephen Mobley said. “Hopefully, he’ll see what we see and get the opportunity to save $14 million in Build America bonds. But we’ve got to act right now to do it.”
Hospital CEO Norma Jean Morgan also has made her plea for the commissioners to accede to the authority’s plans, which include a resolution guaranteeing 2 mills in property tax receipts. Hospital officials want to take advantage of not only the money from the federal government but also a favorable construction climate.
“We plan to build a modern new facility and create a center of health care excellence here in Effingham County,” she said. “While this is a low tide in our economy, it is the best time to build a hospital. Through stimulus money, we can save 35 percent on the interest. If we can be successful with our county commissioners to support the plan and we can get the financing before the end of 2010, it will save us a tremendous amount on interest. We’ll be able to build a facility during a time when it’s best to price construction.”
The current hospital is 40 years old and hospital representatives said their plans will allow for an essentially new hospital by July 2012.
“Because of the age of the hospital, there are a lot of issues today with rules and regulations that have to be addressed,” authority member Rick Rafter said.
A pre-application meeting with HUD is scheduled for Dec. 11, and the application process is a long one, Rafter said.
“HUD is a hands-on group,” he said. “They want to make sure that anyone who gets a loan can pay it back.”
The hospital is estimating it can handle a $30 million loan over a 25-year term. The hospital authority wants the commissioners to sign a letter of intent showing they back the plans to show HUD it’s serious.
“We feel this is good for Effingham County,” Rafter said. “Effingham County needs a good hospital. There’s a lot of our business that is going out of the county.”
Rafter pointed out that the hospital has stepped up its physician recruitment and has added such services as an anti-stroke capability.
Zeigler wants to know what the hospital’s business plan and business model is.
“We all know they need to rejuvenate the facility,” he said. “We need to know a heckuva lot more about that process. It made me uncomfortable to not know what’s the go-to-market strategy for the hospital.”
He also expressed frustration that no alternative plans of financing to grow the hospital were offered.
Rafter said he’s had three major operations while he’s been in Effingham County and all were done in Savannah hospitals.
“The things that we can do and the doctors we can attract to Effingham County who can bring business to our operating rooms will increase our revenues,” he said. “Our goal is to make the hospital profitable enough that we generate enough money to cover indigent care. That’s not going to happen overnight. But if we can attract enough doctors and keep those operating rooms full, that’s going to increase the revenue to the hospital.”
Currently, the hospital’s millage rate goes toward indigent care, which is about $2 million a year.
Commissioners also issued concerns over what would happen if the hospital couldn’t repay its bonds or if it closed.
“We don’t want to commit to $3.5 million a year to HUD and not have a hospital out there,” Commissioner Bob Brantley said. “It would make us feel better to see that the hospital has a plan for the future.”
Effingham Hospital’s financing plan is similar to one being undertaken by Meadows Regional Medical Center in Vidalia, which began work on a completely new 70-bed, $75 million facility in August. The Effingham Hospital’s final application to HUD is expected to go forward in June.
Under the terms of the resolution the hospital is asking from the county, which is a preliminary commitment, the commissioners can back out at any time during the pre-application phase if they believe they are not getting the information they want from the hospital.
Rafter and Zeigler both expressed a desire to improve communication between the hospital and the board of commissioners.
“I feel the communication between the hospital authority and the board of commissioners should be much more than what it is right now,” Zeigler said, “especially with a project of this magnitude.”
Said Rafter: “I couldn’t stand by and see it go away because of a lack of communication.”