10/28/2009 6:00:00 PM EDITORIAL/Measure hospital by need
After county hospital trustees retained InnoVative Capital, a firm which provides banking and financial services for the health care industry, to perform a debt capacity analysis and financing options assessment, the ball really started to roll on a new facility.
Hospital Administrator Scott Barrilleaux told county supervisors late last year that officials were carefully reviewing their options and "balancing that against the idea of how much we can afford."
A report prepared for the Board of Supervisors earlier last year showed Neshoba County's population could support a 79-bed hospital, since about 70 percent of the population is going out of the county for health care, but the county can't afford a larger facility, according to the debt capacity analysis. (Neshoba General opened in the 1960s as an 82-bed facility.)
The debt analysis study, released in August, shows that the hospital has a debt capacity of about $34.8 million.
A construction management firm is now being sought to build a 44-bed, $50 million hospital, an indication that things are moving along even more swiftly.
To finance the deal, the hospital will use $15 million of its own cash along with proceeds from a HUD-backed loan they are seeking that will require putting county property up as collateral but no tax increase.
Plans call for a Dec. 1, 2011, opening, presuming the HUD loan is approved.
The HUD loan could carry an interest rate of about 7.25 percent - or about double government borrowing rates, which are at historic lows.
The city of Phoenix this month, for example, sold $350 million in general-obligation bonds - authorized in 2006 - and refinanced an additional $117 million in bond debt, both at 3.37 percent, The Arizona Republic reported. Phoenix previously had been repaying that debt at a rate of about 4.5 percent.
Officials said the refinancing saves Phoenix taxpayers about $11.5 million over 25 years.
Someone should do the math in Neshoba County.
If Neshoba County is going to have a government-run hospital, how wise is it to build a new facility and finance it on what amounts to credit card interest rates?
The HUD financing could carry an interest rate twice that of what the Board of Supervisors could arrange.
Taxpayers may be better off in the long-run with a larger facility and a tax increase rather than paying twice the interest.
The trustees and the supervisors have flatly rejected even considering options such as privatization that could bring a larger hospital and more services.
Under a lease arrangement, for example, a health care provider would build a hospital at no cost to taxpayers and probably pay the county at least $200,000 annually. (Imagine how many parks and deputies and roads $200,000 annually would buy - and Neshoba County would still have a first-class hospital.)
When it comes to the county hospital, progress isn't measured by affordability, but rather meeting our health care needs.
