By DON RATZLAFF
Hillsboro Free Press
HILLSBORO — After closing on its project loan last week, the owners of Hillsboro Community Hospital say construction on a new $11.4 million facility should begin around the first of March.
“We’re hoping to complete the project in nine months to be open by sometime in January of next year,” said Larry Arthur, CEO of HMC/CAH Consolidated Inc.
Over the next two months, the architect will be meeting with project manager Joe Cisper of JE Dunn Construction to review final plans, Arthur said. Once the plans are finalized, Cisper will solicit for bids from potential subcontractors.
“We’re hoping to have early-start contractors for the site work probably in place by the end of February to start construction the first of March,” he said.
The facility plan is for 27,000 square feet—including 7,000 square feet for a physicians’ clinic and administrative space.
“We’re actually lucky we didn’t build earlier because we really did not really have a clinic slated as part of the hospital,” Arthur said.
“Now, the physicians will actually be housed right there, so if a patient needs to see their doctor and have something done as an outpatient, they can walk down the hall without having to go out into the elements to do it.”
Guaranteed loan
The company’s construction loan of $9.7 million is through the Bank of Hays and guaranteed by USDA.
“I’ve got to hand it to the Bank of Hays for hanging in there with us and believing in us all the way,” Arthur said. “USDA was very helpful also, making this project happen.
“(USDA) gave us a guarantee one time and we weren’t able to execute it, so they were somewhat hesitant about doing it again,” Arthur added, referring to economic challenges that led HMC/CAH to file for Chapter 11 bankruptcy protection in 2011.
“I think it was because of the city’s true support of wanting to see this happen that (USDA) really stepped forward and said let’s do it.”
Local support
The city of Hillsboro’s decision to support the project with a $1.3 million bond issue was pivotal, Arthur said.
“It helped from the standpoint that it really motivated USDA, because one of the things they like to see is the community supporting the project,” he said.
HMC/CAH is committed to reimburse the city for its investment.
“The city’s not really paying for anything, we’re paying for it,” Arthur said. “The city’s doing the up-front, and then we’re paying them back over the life of the bonds.”
Arthur said Hillsboro’s partnership has become a model for other HMC/CAH hospitals. The company has additional building projects scheduled for 2016 in Horton, Stigler, Okla., and Ripley, Tenn.
Arthur said a project in Oswego is possible as well.
“That would give us five under construction and will leave us only three to do,” he said.
Business model
Arthur said building replacement facilities is key to the company’s business plan.
“Patients don’t view this (older facility) from a quality standpoint as good as what they can get by driving someplace else to a new facility,” he said.
“When we get a new facility, they’ll come in and be able to judge quality with their eyes. With their experience, they’ll see that this is as good as driving in their car to get care. That helps people at home.
“Younger patients that have the ability to go get services elsewhere will think about staying at home because it will save the 45 minutes to an hour drive to go someplace else,” he said.
Providing outpatient services is another key strategy. Arthur said about 80 percent of the local hospital’s business is outpatient.
“Most people think the hospital just has inpatients, but the outpatients we serve, that’s really the vast majority of the patients who get care anymore,” he added.
“Not only is it thousands (of outpatients), but those people will have repeat visits—they’ll have other things done for them a couple of times throughout the year.
“That’s why we’re building only a few number of beds as part of the hospital,” he added. “People don’t need to be hospitalized like they used to.”
As a for-profit company, each HMC/CAH hospital not only will need to generate sufficient revenue to pay for a new facility, but will be liable for property taxes.
In Hillsboro, the bill for city, school district, county and state property taxes will total $442,203, according to Marion Regier, HCH CEO.
Best hope
Arthur said his company is convinced that its business model is the best hope for many rural hospitals.
“It’s much easier to do it with a new facility than it is an old one,” Arthur said.
“You’re starting to see some of the older facilities in smaller towns going by the wayside,” he added. “I think we’ve seen probably 10 hospital closures around the country in the past six months, and they’ve been rural hospitals.
“This (model) helps us to ensure that health care is here for the future.”
Jim Shaffer, president of the Hillsboro hospital and chair of the HMC/CAH corporation, credits Arthur for envisioning a system of rural hospitals.
“He thought there was a way you could have a system of hospitals where the cost of operations can be reduced by the numbers—having a better accounting system and a better back office system,” he said.
“This had not been done in rural hospitals anywhere in the country that we know of.”
Republished with permission
