Hospital leaders tout strength, future
The state of Allen County Regional Hospital remains “very solid,” its chief executive officer Tony Thompson told Iola City Council members Monday.
Thompson was joined by other hospital officials to brief the city on the hospital’s finances and its future.
Thompson compared the hospital’s construction in 2013 as starting a new business.
That’s because facilitating the changeover also meant ending the hospital’s lease with Hospital Corporation of America (HCA).
“Allen County had to start with zero in the checking account,” hospital Trustee Jim Gilpin explained.
That’s where the city came in. In the lead-up to the new hospital, Iola city commissioners agreed to support the venture by offering half of the revenues from a half-cent city sales tax through 2019, to ensure the hospital had enough working capital to get off the ground. Those revenues average about $300,000 a year. The city’s support also was key to the county’s successful quarter-cent sales tax referendum in 2010.
Those two income streams have been used to pay off a $5 million bond to give the hospital initial working capital, Thompson noted.
“Most new companies, and that’s what I call us, fail within the first five years due to a lack of capital,” Thompson said. “We’ve had that capital, and we’ve been able to pay it back” to help retire the bonds.
Because the city’s support expires Dec. 31, a pressing issue is whether the county will ask the city to once again use a portion of its sales tax revenues to support the hospital.
“We’re not here tonight to ask for it,” Gilpin said. “Between here and then, we will have more discussions.”
THOMPSON and Gilpin were joined by Larry Peterson, the hospital’s chief financial officer, and Trustee Loren Korte to discuss other issues.
Gilpin addressed ongoing discussions about whether ACRH will continue to be managed by HCA, or whether trustees will instead enter a lease agreement with St. Luke’s. After the hospital was built, the county switched from a lease to a management contract with HCA.
That contract allows for a window of opportunity for trustees to review the pact to determine if they want to stay with HCA or follow another path.
“It’s unfortunate it appears as turmoil,” Gilpin said. “We’re making sure we’re getting a good deal.”
Korte said hospital trustees will meet again with HCA and St. Luke’s officials in February “to see exactly what they can offer us.”
He would like to see a decision made in March.
Upon questioning from Councilman Gene Myrick, Gilpin noted a lease agreement with St. Luke’s likely would have St. Luke’s assuming responsibility for the $26 million in bond payments that funded the hospital’s construction. The caveat is that by returning to a lease arrangement, St. Luke’s would keep any profits, not the county.
The goal, Korte said, “is to set up with someone we feel is best for the hospital, the best for the county, the best for the patients, and move forward.”
As an aside, another factor trustees will consider is whether St. Luke’s or HCA would be willing to build or establish a medical clinic nearer the hospital. As it stands, the hospital continues to use the medical arts building on the old ACH campus, just east of G&W Foods.
The negotiations, Gilpin said, “create an opportunity to see if that’s a possibility.”
Peterson detailed the payment schedule of the $25 million construction bonds used to build ACRH. Two separate bonds were issued, in 2011 and 2012. Those were refinanced in 2017.
THOMPSON also touched on potential legislation in Topeka to expand the state’s Medicaid system, to provide additional health insurance to low-income residents.
The issue is a vital one in Allen County, Thompson said, noting the Kansas Hospital Association estimates expanded coverage could bring an additional $1.1 million to the hospital, and another $200,000 or so for other entities in Allen County, including pharmacies and durable medical equipment suppliers.
Thompson noted a bill two years ago to expand Medicaid — known as KanCare in Kansas — passed through the Legislature, but was vetoed by former Gov. Sam Brownback. The issue was dropped in lieu of a potential veto override.
“My request of you is to reach out to our elected officials in Topeka,” Thompson said. “You should, as elected officials, be supportive of it.”
THOMPSON fielded questions on other topics, such as how ACRH is being impacted by the closing of Mercy Hospital in Fort Scott. Allen County was able to recruit staff for the hospital laboratory, operating room and other areas.
He also anticipated seeing an impact on services ACRH offers to former Mercy patients.