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 hospitals finances and its future.
Thompson compared the hospitals construction in 2013 as starting a new business.
Thats because facilitating the changeover also meant ending the hospitals lease with Hospital Corporation of America (HCA).
Allen County had to start with zero in the checking account, hospital Trustee Jim Gilpin explained.
Thats 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 citys support also was key to the countys 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 thats what I call us, fail within the first five years due to a lack of capital, Thompson said. Weve had that capital, and weve been able to pay it back to help retire the bonds.
Because the citys 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.
Were 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 hospitals 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. Lukes. 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.
Its unfortunate it appears as turmoil, Gilpin said. Were making sure were getting a good deal.
Korte said hospital trustees will meet again with HCA and St. Lukes 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. Lukes likely would have St. Lukes assuming responsibility for the $26 million in bond payments that funded the hospitals construction. The caveat is that by returning to a lease arrangement, St. Lukes would keep any profits, not the county.
