Tim Walker
AMR Report
At a special Pocahontas County Commission meeting December 27, a lively discussion was held between the commissioners, hospital staff and a representative from First Citizen’s Bank about the viability of Pocahontas Memorial Hospital (PMH), backed by the county commission, borrowing up to $7.5 million to renovate and expand the hospital. This proposed expansion, according to PMH CEO Mary Beth Barr, would be used to create space for new outpatient services, such as a small operating room for minor procedures such as cataract surgery or colonoscopies. Other proposed expanded services could include Behavioral Health, Cardio-Pulmonary, Physical and Occupational Therapy, Radiology/Nuclear Medicine, and Mammography.
Barr said that 80 percent of PMH’s revenue is generated by outpatient services.
At the last regular commission meeting, Certified Public Accountant (CPA) Greg Gibbs of the Arnett Carbis Toothman CPA firm briefed the commission on a study his firm had done. The study found that the additional revenue PMH would generate through the additional services should be enough to meet the loan payments, especially if PMH could engage in an aggressive capital expansion fundraising program to assist with the costs.
This special meeting was held because the commissioners had determined that they would need additional information before they could endorse any loan application of this size.
Barr told the commission that, so far, only preliminary architectural drawings and suggestions have been done, and those were paid for by a private donation.
Commissioner Walt Hel-mick mentioned that when this proposal was first brought to the commission earlier in the fall, they were only talking about a $4-to-$4.5 million project.
He asked Barr why the amount has now increased to $7.5 million. Barr said the original estimate was only an educated guess, but more accurate estimates show a larger loan is needed to accommodate the expanded services they want to offer.
Barr said that the expansion would be done in three phases:
Phase one would be constructing a new building to house the Rural Health Clinic, which has outgrown its current space.
Phase two would be for a new building to be constructed for the Emergency Department.
Phase three would expand the Lab and Radiology Departments.
Helmick asked Barr if the current building could simply be altered to accommodate these additional services.
Barr replied that the additional construction will enable them to meet federal requirements that in-patient and out-patient services be kept separate from each other, and that a simple expansion of the current main hospital building won’t meet that requirement. Barr also said that these expansion plans will not affect the current in-patient services which would remain in the main building.
Regarding his concerns that the CPA Gibbs’ feasibility study which shows the hospital can afford to pay for the loan, Helmick pointed out that, although there are about 8,400 people residing in Pocahontas County, the hospital only serves about 4,000 of them.
Helmick said this is because people who live in the northern and southern parts of the county use the hospitals in Elkins or Lewisburg because they are closer. He also said that in all likelihood, the county’s population will continue to decrease in the future.
Despite that, Helmick said he still sees merit in the hospital’s proposed expansion, although, at least for the near future, he feels the hospital can survive even if this loan and expansion don’t take place. He said it should still be affordable for county to just financially support the hospital even if it begins to lose money in the future because it did not renovate and expand its services.
Commission President David McLaughlin and Commissioner Jessie Groseclose brought up that the current trend among small rural hospitals is for them to affiliate with larger medical organizations and hospitals such as West Virginia University. They asked Barr and Hospital Board President Janet Ghigo if that might be a more viable and less risky option than borrowing more than $7 million. Ghigo said that those organizations do bring additional services to a small hospital, but they also charge the hospital a lot of money to do so, and even then, they still expect local communities to provide much of the financial support for their own rural hospitals. She said the primary interest of those large medical organizations is in expanding their own access to patients who need more advanced medical services which can only be provided at the organization’s own larger hospitals.
Regarding the possibility of PMH borrowing money from a private bank, Tim McClung from First Citizens Bank made it clear that for a private bank such as his to make a $7.5 million loan, either the hospital or the county commission would have to put down 30 percent of the loan amount up front, which would be about $2.5 million dollars.
Barr told the commission that all PMH is looking for at this time is the commission’s authorization to submit a loan application to the USDA. She said, after that, the USDA would do its own research and calculations to determine how large of a loan the hospital can afford to assure it can repay the loan.
McLaughlin asked exactly when PMH would be required to start the estimated $50-to-$80,000 monthly payments.
Helmick replied that in these types of loans, the payments do not begin until the construction has been completed and the increased revenue to the hospital from the additional medical services they will be offering as a result of expansion are being generated.
Helmick suggested that the Commission make direct contact with the US Department of Agriculture to see if they feel this loan is a viable and affordable option for PMH. All three commissioners decided that was a good idea.
