Dateline: March 13, 2008

Hospital district to be debt free in 2011
By Roger Estlack, Clarendon Enterprise

With only a few weeks remaining before the Medical Center Nursing Home becomes privately owned, members of the Donley County Hospital Board stepped forward this week to answer criticisms and possible misunderstandings about the sale of the facility.

A potential sale fell through a year ago. The board took bids on the property again in September, accepted a bid in October, and signed the contract of sale in December. But in the last several days have some citizens begun to question deal and pour over the details of the the 26-page sale agreement.

In response, Board Chairman Alan Fletcher and board member Mark C. White spoke to the Enterprise Monday afternoon and addressed many of the common concerns raised by citizens.

To summarize the sale, Community Care Management Services of Denton, under the name of Clarendon Realty, LTD., submitted the lone bid of $1.25 million, which the hospital district accepted. They agreed to buy the Medical Center Nursing Home, the Community Services Building (referred to in the contract as the “Professional Building” and commonly referred to as the dentist’s office), and the undeveloped property east of the professional building and nursing home.

The district retains ownership of the Associated Ambulance Authority building and a strip of about five acres of undeveloped land south of the ambulance building

The district agreed to undertake and complete an eight-bed expansion of the nursing home; and at closing, the district agreed to refund $190,000 to the buyer for operating capital.

Why does the contract list the value of the nursing home as only $760,000?

Fletcher said the hospital district listed MCNH with a Houston-based nursing home broker – Marcus & Millichapas – to get help finding a buyer and to get an appraisal of the facility.

“That ($760,000) is the appraised value they gave us, and we have to pay a commission on that,” Fletcher said.

If the district had sold the facility by itself for $1.25 million, it would have had to pay Marcus & Millichapas a commission on the entire amount, he said.

Why is the district refunding $190,000 of the purchase price?

Because it takes 30 to 60 days for Medicare and Medicaid to start paying a new provider, which is what MCNH will be under new ownership, Fletcher said. “That’s about 45 days of operating expense, and it saves them from having to get another loan for operating capital. Is it beneficial to get more money if they can’t keep it open?”

How much is the addition costing and how is that being financed?

White said the addition will end up costing about $403,000 but none of it is financed. It is all being paid for with cash the district has on hand.

Is the district just giving away the professional building and the extra land?

“We’re just throwing that in,” Fletcher said, because the board felt like the professional building lost value after the state health office announced its intention not to renew its lease. “(The new owners) are going to put their offices in there and bring in physical rehabilitation services, and they wouldn’t take the facility without the extra land to expand.”

What assurance do we have that the buyer will maintain the level of care MCNH is known for?

“These people’s other facilities are rated A+, no complaints have been filed by family members of residents there, and all of their facilities are up to standards,” Fletcher said. “They invited us to look at any facility they owned without notice.”

Fletcher said they couldn’t find anything that indicated the new owners wouldn’t keep the level of care up.

“Maybe we could have shopped it around for a year and got more money,” he said, “But we wanted to get someone in here for the sake of the community. I think we’re lucky to have this buyer.”

Ultimately, Fletcher said, the sale is about keeping the facility open and keeping 50 jobs in the local economy.

How much is the district’s bonded indebtedness and when will it be paid off?

White said the district owes $1.3 million, but that it will be paid off in three years.

“In October 2011, the hospital district will be debt free,” White said.

The bonds were originally set to run through 2022, but White said the bonds are “callable,” which means they can be paid off early at specified times. The first date they can be “called” or paid off is in 2011. After the sale closes, the district will put about $1 million from the sale into a trust fund and will borrow about $375,000 to put in the trust with the sale proceeds. The financing will be structured to where the interest earned on the trust will match the interest on the bonds, and in September 2011, the bonds will be called and the debt paid off. White said the note for the $375,000 necessary to make this happen will also be paid off at by that time.

“We feel like the taxpayers elected us to take care of their tax dollars, and we’re going to be debt free.” White said. “We’ll keep enough money on hand to run the ambulance service and maybe replace an ambulance if we need to.”

What is the future of the hospital district?

The Donley County Hospital District will remain intact to run the ambulance service and pay for indigent care expenses and will still have all the authority granted to it by the state.

“We’ll still have to have about $160,000 in tax revenue to run the Associated Ambulance Authority – increasing wages there and probably replacing a high-mileage ambulance,” Fletcher said. “Plus, we’ll have to pay for indigents, but that’s limited to a percentage of our budget.”

Fletcher said a significant reduction in taxes is probably three years out – the same time the bonds are paid off, but he said the personal property tax would likely be done away with in the next tax year. He would not be in favor of doing away with the district – and thereby the tax – altogether.

“I don’t see any reason to abolish it,” he said. “We have the premier ambulance service in the area, and we want to keep it that way. And maybe we can entice more health care providers here. What we have is already an unbelievable asset.

Will the public have a chance to speak on these issues?

Fletcher said a time for public comments would be on the agenda for next week’s regularly scheduled hospital board meeting, which will be held at 6 p.m. on Tuesday, March 18, in the ambulance barn.

Citizens who have comments or concerns are urged to attend the meeting.