County, city split on financing for SCBH project

City for backing assisted living/memory care facility financing now; but county against it
Though the Benson City Council voted to proceed with general obligation bonding backing for the Swift County-Benson Hospital’s (SCBH) proposed $12.5 million assisted living/memory care project, the County Board of Commissioners declined to give its backing.
Benson’s council, the county board and the SCBH governing board met in a joint session Monday night at the hospital to try to reach consensus on project financing. Members of both the council and county board are sharply divided in how SCBH financing for the facility should be handled.
For more than a year, SCBH’s governing board has been working to turn around the financial plight of the hospital, which has been losing nearly $1 million a year for the past two years. It is facing similar losses in 2016. While much of that loss is depreciation, the hospital is also burning through $500,000 a year in cash to make debt payments to Swift County on loans and bonds.
SCBH has put forward a three-pronged proposal to turn around its finances:
First, it is taking over control of the medical clinic operations in Benson. Over the past several months Affiliated Community Medical Centers (ACMC) and the hospital have worked out an agreement through which SCBH takes over the clinic. The new arrangement becomes effective Sept. 1.
ACMC will continue to provide medical staff, but the hospital gains multiple advantages through the agreement including the ability to seek and hire its own physicians and nurse practioners. It also will help the hospital see that more of the referrals for diagnostic services and use of specialists come to SCBH.
At the same time, SCBH and orthopedic surgeon Dr. Mike Holte have reached agreement on his again doing surgeries there. Other surgical services are also being arranged.
Second, is the construction of a $12.5 million two-story assisted living/memory care facility on the hospital campus with 16 memory care beds and 34 enhanced assisted living beds. These beds on the second floor would be interchangeable. If the demand for memory care beds increased, the hospital could convert some of the enhanced assisted living beds to memory care. It would also have 22 independent living apartments on the main floor.
SCBH was recently given Scofield Place by its board of directors. It has 34 units that have been used for both independent and assisted living. It is debt free and fully occupied.
Finally, the governing board is proposing a $5.75 million hospital restructuring project, changing the current layout of the hospital to better serve in-patient and outpatient clients, and provide for more efficient use of staff. It would move the inpatient beds closer to the surgical center. This part of the project has been put on hold for now.
To help finance the construction of the assisted living/memory care facility, the SCBH governing board asked the county and city to consider one of two options. The first, and preferable, option for SCBH is for the city and county to sell general obligation bonds for the construction. City and county backed GO bonds would get SCBH the lowest interest rates, leading to a savings of $800,000 or more over the 20-year term of the bond payments.
While the county and city would sell the bonds, they would be paid for by SCBH from the revenues it earns in operating the assisted living/memory care facility. The taxpayers of Swift County would only be asked to pay off the bonds if the hospital were to fail.
If the city and county decline to agree to offering GO bond backing for the project, SCBH would pursue financing through private Minneapolis firm National Healthcare Capital (NHC.) This option would require the sale of bank qualified, tax-exempt revenue notes that would rely on county and city backing. However, with NHC, the backing requirement would go away after five to six years. If SCBH revenues were healthy after that period, the city and county backing would no longer be required...
 
Pictured: Members of the Swift County Board of Commissioners, Benson City Council and SCBH Governing Board met Monday night  to discuss financing for the hospital’s proposed $12.5 million assisted living/memory care facility.
 
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