Pocahontas County Commissioners Discuss PMH Renovation and Expansion Plan
(The below transcript contains additional information not able to be included in the above radio recording due to time restraints)
During a special Pocahontas Commission meeting on Friday, December 27th, a lively discussion was held between the commissioners, hospital staff and a representative of First Citizen’s Bank about the viability of Pocahontas Memorial Hospital (PMH), backed by the County Commission, borrowing up to seven and a half million dollars to renovate and expand the hospital. This proposed expansion, according to Mary Beth Barr, the CEO of PMH would be used to create space for new outpatient services, such as a small operating room for minor procedures like cataract surgery or colonoscopies. Other proposed new or expanded services could include Behavioral Health, Cardio-Pulmonary, Physical and Occupational Therapy, Radiology/Nuclear Medicine, and Mammography. Barr said that eighty 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 had briefed the commissioners on a study his firm had done which found that the additional revenues PMH would generate through the additional services the hospital would be able to provide should be enough to meet the loan payments, especially if PMH could engage in an aggressive capital expansion fund raising program to help out.
This special meeting was held because the commissioners had determined that they would need a lot of additional information before they could endorse any loan application of this size.
Barr told the commissioners that so far only preliminary architectural drawings and suggestions have been done, and those were paid for by a private donation.
Commissioner Walt Helmick mentioned that when this proposal was first brought to the commission earlier this fall, they were only talking about a four to four and a half million-dollar project. He asked Barr why the amount now needed has increased to seven to seven and a half million dollars. 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. This would free up the current clinic location to be used for other services.
Phase two would be for a new building to be constructed to house the OR and an expanded Emergency Department,
Phase three would be expanding 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 accomplish that requirement. Barr also said that these expansion plans will not affect the current in-patient services which would remain in the current main building.
Regarding his concerns that the CPA Greg Gibbs feasibility study which shows the hospital can afford to pay for the loan out of increased revenues generated by the increased medical services the expansion would generate, Helmick pointed out that although there are about 8,400 people residing in Pocahontas County, the hospital only services about 4,000 of them. He explained that 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 to them. 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 that 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 the 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 instead borrowing over seven million dollars. Ghigo answered that although those organizations do bring additional services to a small hospital, 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 provide the smaller hospital’s patients with the more advanced medical services which can only be provided at the organization’s own larger hospitals.
Regarding the possibility of PMH borrowing the 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 seven and a half-million-dollar loan, either the hospital, or the county commission would have to put down thirty percent of the loan amount up front, which would be about two and a half million dollars.
Mary Beth Barr told the commissioners that all PMH is looking for at this time is commission 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. She pointed out that the project could be downsized if the USDA decided the hospital could only afford a smaller loan. Barr also assured the commissioners that the commission and the hospital are not committed to the loan until they actually get all that information and sign the offered loan agreement paperwork.
When Commissioner McLaughlin asked exactly when PMH would be required to start the estimated fifty to eighty thousand dollar monthly loan payments, commissioner Helmick replied in these types of loans, the payments do not begin until the construction has been completed and the increased revenues to the hospital from the additional medical services they will be offering as a result of expansion are being generated.
Commissioner Helmick also said that other possible resources to generate money to help reduce the loan amount include: capital expense fundraising; taxes received from the Atlantic Coast Pipeline; a possible county tax levy; and grants from Health and Human Services. He did acknowledge the unlikelihood of getting any special tax levy approved by the voters and that pipeline tax revenues, which could start out as high as three hundred thousand dollars a year, will reduce in amount every year and disappear in about ten years because of pipeline depreciation.
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.