Only a vote by Allen County commissioners remains before they decide to pursue a new Allen County Hospital.
While all signs point that way, commissioners have yet to make the endeavor official.
Tuesday morning commissioners met with Charles Wells, their financial adviser, and members of the Hospital Facilities Commission to nail down what needs done.
Wells, who said last week in a meeting at LaHarpe that doing anything other than building a new hospital would be a waste of money, outlined issues awaiting resolution: a sales tax, including whether sales tax money collected by Iola would be available; site for a new hospital; and how management would shake out.
Iola is in the first of a 10-year run of a one-cent sales tax, half of which is set aside for street improvements and the other half for capital improvements.
Commissioners said they had had some indication that Iola officials might be interested in dedicating a part of the capital improvement money to a hospital.
Wells said if $300,000 or so of the $600,000 collected for that portion were made available for a new hospital, the county would need to ask for only a quarter of a cent additional sales tax. A quarter cent countywide would raise about $450,000 and complete a $750,000 sales tax component that Wells thinks is necessary for debt service on a $30 million construction and working capital issue.
Other funding would come from the federal government, through Medicare, and profits generated by the hospital.
Target for the sales tax referendum is Nov. 2, which means ballot information must be available to County Clerk Sherrie Riebel by Sept. 6 to meet pre-election requirements.
Construction bonds would be issued by a public building commission, the same as was done for the new Allen County Law Enforcement Center. That would fetch the best interest rate from being insured by the taxing authority of the county.
While funding is the linchpin, Wells said settling on a site would be as essential for voters in making their decision.
Both Hospital Facilities Group representatives and Wells have said the selected site should be in a visible location, meaning consideration isn’t likely to stray too far from the two federal highways in the county, U.S. 169 and U.S. 54.
Wells warned, “Your efforts will be all for naught if it’s not a good spot.”
Hand-in-glove with a site is at least a preliminary building design.
Another factor important to public acceptance is “who is going to run the hospital,” said David Toland, an HFC member. “People need to understand what management is going to be. We need to have an answer to sell the issue to the public.”
A key, agreed Wells, is negotiating an agreement with Hospital Corporation of America (HCA) before the election to end its lease.
HCA is in its fifth year of operating the hospital as a for-profit facility. The lease may be broken with six months’ notice by either party.
“We have to get out of the lease to go forward with finances,” said Commissioner Rob Francis. So that “no matter what happens Allen County will have local control.”
Local control would mean a board, appointed by county commissioners, which would hire either a chief executive officer and finance officer or strike a management agreement — HCA would be a possibility — to run the hospital for an annual fee.
Joyce Heismeyer, hospital CEO and HCA employee, said she was confident HCA would be willing to negotiate a management agreement for a new hospital.
Others mentioned were Via Christi, Quorum and St. Luke’s.
So there’s no misunderstanding, County Counselor Alan Weber said it should be made perfectly clear that “the hospital will be operated by the county and will either hire a CEO or contract services of a management company through the local board, with money staying with the hospital.”
While an appointed board would make decisions incumbent to it, county commissioners ultimately would be responsible for the hospital.
NOTHING of consequence can occur until the sales tax issue is settled, Wells said, including negotiations with Iola on its financial participation.
“You can bid underwriting and banking services ahead of the election,” since compensation will be contingent on the tax issue passing, he said, “and that will add to your body of knowledge,” by determining the PBC bond rate.
Wells also noted it was important for local banks to have a financial role in the project.
“If they are, you’re in good shape,” he said. “But, if they aren’t, you’re not,” noting that lack of interest by local banks wouldn’t play well with those elsewhere.
Representatives of all Allen County banks met with commissioners June 29 and expressed interest in financial arrangements for a new hospital.
A campaign to promote a sales tax needs a lead person to be successful, Wells said.
Commissioners will make the decision, said Commissioner Dick Works, but “we can only give information about what we want to do and can’t use tax money to promote it, though individually we can support it.”
Public promotion will come from the Hospital Facilities Commission and how that will be organized will be decided in the next few days, said Mary Ann Arnott, HFC’s chairman.
“You need a champion for the new hospital,” Wells said, a role that usually falls to the hospital CEO.
Heismeyer said she thought there were certain things she could do to encourage voters, and would be “more than willing to do what I can as an HCA employee.”
The HCA association might make it difficult for her to be too active, Wells observed.
PHILANTHROPY also is a huge component that has laid pretty much dormant to date.
Wells recalled in Neodesha supporters raised $2.2 million ahead of construction.
“Every dollar you raise is $1 you don’t have to borrow,” he said. But, “you need cash on the barrel head, you can’t close financing on pledges.”
He said either a professional manager could be hired for fundraising or it could be done by locals. In Neodesha Diane Pittman, the hospital’s CEO, led fund raising. Heismeyer said she would be willing to help.
Fundraising has to fit in with other elements, Wells added, saying if it were done too far ahead of an election potential donors might be reluctant to participate for fear of the referendum failing. “But, attracting donors early will have them take ownership in the election and help pass the issue,” making philanthropy a balancing act, he said.
NEAR THE end of the 90-minute meeting, an executive session was called, including HFC members and commissioners with Wells, to discuss site acquisition. None specifically was mentioned in the open portion of the meeting, although comments were that two, three or more were to be discussed.
At the conclusion of the meeting, McIntosh and Toland agreed to look more closely at sites and McIntosh said he would approach Iola officials about directing part of its sales tax money to construction of a hospital.
It was noted that Iola will have a vested interest in the project: It more than likely will be proposed in or near Iola and its presence would be a significant advantage in the city’s economic development efforts.
