WAHOO – The Saunders Medical Center Board of Trustees voted for a second time to go ahead with a plan to refinance bonds, despite some confusion as to the amount that will be contributed by the county.
At their Oct. 15 meeting, the SMC board discussed the plan to refinance $10 million in bonds. The plan includes a $1 million prepayment from the board of trustees and another $1 million from the county’s health services fund.
Chief Executive Officer Tyler Toline and Chief Financial Officer Chase Manstedt proposed the plan to the Saunders County Board of Supervisors on Oct. 8. At that meeting, the county board approved the plan, with Supervisor Ed Rastovski saying, “I think it’s a well thought out plan.”
But Manstedt said since then he has heard from County Clerk Patti Lindgren that there is some confusion as to how much money is available from the county.
The $2 million total prepayment from SMC and the county would reduce the outstanding bond balance to $11.2 million, of which SMC is proposing to refinance $10 million. The other $1.2 million would be paid from the SMC budget over the next five years, Manstedt told the county board on Oct. 8. There would also be an option to pay down more in the future, he told the supervisors.
Also at the Oct. 8 county board meeting, Manstedt told the county that as operations improve at the hospital, they are in good financial standing and have surplus cash to refinance in order to take advantage of low interest rates.
The county has $3.8 million held in the health services fund. SMC is asking for $1 million from that fund for the refinancing plan. The health services fund began in 2005 in preparation for construction of Saunders Medical Center, which was completed two years later. From 2005 to 2008 the county levied taxes for the health services debt fund, netting about $800,000.
Saunders Medical Center has paid the county $100,000 each year toward the annual bond payment, Toline said.
The refinancing plan could save nearly $500,000 in interest on the bonds. Toline said refinancing could also help pay off the debt much quicker, perhaps in 10 years.
“That’s a reasonable expectation,” he said.
SMC Board Member Greg Hohl said SMC needs to show the county supervisors that refinancing is in their best interest.
“If we lower the debt and save money on interest, ultimately it lowers the risk to the county,” he said.
The SMC board made a motion to go ahead with refinancing the bonds by putting in $1 million, with the final amount to be refinanced subject to the amount the county board agrees to put in.
In other action, Manstedt updated the board on SMC’s financials. He said the operating income for September was $125,000, which was “right on target.” During the first quarter of the fiscal year, SMC has earned $557,000 in income.
“We are off to a really great start for the year,” Manstedt added.
The hospital’s first-quarter revenue was boosted by a strong showing in the emergency department, which was up 12 percent, Manstedt said. Weak spots were swing bed days, which were slow in July and surgeries and scopes, which are behind budget. Manstedt said they’d like to see the numbers increase as 2019 comes to a close.
“There’s not too much cause for concern yet,” he added.
There has been a 10 percent increase in clinic visits over last year, Manstedt reported, with 500 more than 2018.
Toline told the board that they are working on a new program where employees who have maxed out on their personal time off (PTO) and can no longer accrue more days can donate them to the hospital foundation for things like scholarships and the employee assistance fund.
“It’s a nice way to give a gift to the foundation,” he said.