New Pinckneyville Hospital Hinges on HUD Guarantee
</element><element id="paragraph-1" type="body"><![CDATA[ Plans for the proposed new Pinckneyville Community Hospital (PCH) continue, however, there is much about the certificate of need application process that is still up in the air.
The certificate of need is due June 25. However, completion hinges on whether or not PCH is asked to complete an application for the HUD program that will guarantee the board's loan.
Changes in the application and pending legislation to revamp the Health Facilities Planning Board that will review the application could also have a significant impact seeing the new hospital come to fruition.
The board voted unanimously to amend its contract with Ed Parkhurst of Prism Consulting to complete the certificate of need for a new hospital and to work on the HUD program that guarantees loans for critical access hospitals.
The new contract is for a maximum of $95,830. Of that, the certificate of need preparation amounts to $48,290 plus up to an additional 15 percent in professional fees. The amended contract was adopted with the caveat that the board can tell Parkhurst to stop work at any point and only pay for the work that was done to that point.
Board members debated the value of a new contract extensively before agreeing that delaying the vote until the May meeting would put the certificate of need process about three weeks behind.
"It was just bad timing," Hospital Administrator Tom Hudgins said.
The work stopped because the financial markets nearly collapsed. Around the same time, the application for certificates of need underwent some drastic changes. The Health Facilities Planning Board is still working to fine tune some parts of the application.
"I hate to pay for his (Parkhurst's) education," board member Dr. Bill Roe said. "But, we don't have a choice."
Parkhurst is working to have the application finished by the June meeting. The certificate of need application must be filed no later than June 25 with the Health Facilities Planning Board in order to get a hearing at the last meeting of the year in November.
Parkhurst's original contract was for $58,300 (base price of $55,000 plus 10 percent in fees). There was approximately $15,000 left on the original contract when work on the certificate of need ceased. PCH will keep the remaining $15,000 from the original contract.
Hudgins said that he expects to hear from HUD within the next week or two to set up a date for PCH representatives to visit Washington D.C. If the meeting goes well, the hospital will be asked to complete the application process.
Hudgins said he is hoping to have a definitive answer from HUD in May.
The board adopted the FY 2010 budget. Those figures will be used to complete the HUD application and the certificate of need.
The new budget projects net income of $639,623.
The FY 2010 budget includes a 3.5 percent increase in salaries. Raises are given based on merit, which has an individual cap of 3.5 percent. Not all employees get the full 3.5 percent raise.
"The average is a little over three percent," Hudgins said.
That is based on projected operating expenses of $18,690,217 and operating revenue of $18,877,151. The FY 2009 budget projects operating losses of $1,308,153 and net loss of $758,467. There are two months remaining in the current fiscal year.
The hospital posted an operating income of $68,105 and a net income of $105,438 for February.
The board stressed that the budget allows for raises, but does not guarantee them.
Several board members asked Hudgins whether or not he believes there is a good chance the HUD application will be successful.
"Based on the numbers run in the past," Hudgins said. "Yes." If PCH is not asked to complete the HUD application, there is no need to go forward with the certificate of need.
Even if all goes well with the HUD application and the certificate of need, there is no guarantee that things will progress in a timely manner. The state legislature has recently passed legislation that changes the Health Facilities Planning Board from five members to nine members and sets up a new, more thorough vetting process before appointments are made. It also stipulates a salary of $65,000 per year for the state's Health Facilities Planning Board members and a salary of $95,000 for the chair person of the board.
"The legislation has been passed and there is every indication that the Governor will sign it," Hudgins said.
The new rules will not take effect until March 1, 2010. The legislation calls for the current board to create a transition plan. PCH and many other facilities throughout the state are waiting for the report from the most recent Health Facilities Planning Board meeting. Discussion at previous meetings has led to speculation over whether two of the five members will resign instead of working on a transition plan. Multiple resignations could result in the state board being unable to meet for lack of a quorum.
The new hospital is still on target for construction to start in March 2010. As of March 31, the estimated cost of the new hospital had dropped from over $35 million to just over $33.7 million, which is within 25,000 of the July 2008 cost estimate.
Hudgins said he hopes to drop that figure a little more once a more thorough analysis of the HVAC system is completed.
Medicare reimbursement is expected to cover 68 to 70 percent of the annual bond payments of $3.5 million on the new hospital.
PCH will submit a filing fee of $2,500 to the Health Facilities Planning Board on June 25. Successful applications are also subject to a construction fee that cannot exceed $100,000. Based on the cost estimate, PCH will have to pay the full $100,000 if the certificate of need is approved.
Hudgins said that Perry County also requires a special use permit be approved by the zoning board before a new hospital can be built. The application has been filed and the $150 fee paid. The Perry County zoning board will review the application in April.
The proposed site of the hospital is currently zoned as agricultural.