SHCHD Talks CT Scanner, Increasing Revenue

At the Southern Humboldt Community Healthcare District Board of Directors regular meeting on May 26, district administrator Matt Rees gave an update about the CT scanner acquisition and the board voted to hire consultants to look into the feasibility of building and financing a new hospital at the College of the Redwoods site in Garberville. 

Rees reported that the finance committee recommended the board authorize the purchase of a GE low-dose 64-slice CT scanner device. 

“Since this project contains so many different pieces we’ll have to have an architect, an engineer, a building, and the CT itself,” Rees said. “We’re basically asking for you to approve $850,000 to do the full project. If the project goes above that amount, we’ll bring it back to the board for further approvals.” 

The board approved a budget of $850,000 for the CT project and directed Rees to apply for financing from Alliance Funding for the project.

Financials and Budget

The April finance report was presented by district chief financial officer Paul Eves. He reported that there had been an error in coding a drug that had reduced revenue in March by $279,000 but was picked up in April so the two months balanced out.  

“It was actually a relatively good month,” Eves said of the April financials. “We ended up with a net of $232,000.” 

He added that cash was holding up well in April due to an IGT (Intergovernmental Transfer) payment and a payment from Partnership Health Program.

Eves presented the first draft of the 2016-2017 budget.

“Probably the most important thing I would say about the budget is if we’re going to buy a CT scanner we need to increase our revenue, and we will,” Eve said. He reported that he and Rees thought that with the CT scanner the district could possibly quadruple patient nights by not sending people somewhere else for diagnoses.

“We put it in as double,” Rees said of the patient increase calculation in the draft budget, and noted there were impacts that swing beds have on the numbers in the assumptions.

“But I will emphasize that this is just draft number one,” Eves pointed out about the budget he presented. “So we will continue to tweak it and continue to consider some of the factors that we expect to affect it.”

In an update on CBO (Central Billing Office) Rees reported that the coding work by the district’s new coding company, Eide Bailey, had brought the uncoded bills that were behind from the previous coding company down from $2.2 million to about $288,000. 

“We’re happy about that,” Rees said. “And we’ve had really good collections the last couple of months.”

New Facility

Rees asked for and received board approval for $17,325 to hire Moore Uebell Architecture to prepare a planning study that would include hospital required elements, supplemental elements, and basic plot plan test of the College of the Redwoods site in Garberville as a potential site for the new hospital complex the district wants to build. Rees said this would help the district determine the costs of building at the CR site more reliably.

Rees also recommended and received board approval for hiring Wipfli CPAs and Consultants to research and assist the district with applying for a United States Department of Agriculture (USDA) direct loan for rural development for a new hospital.

In a seven-page document outlining the “scope of services” to be provided, the Spokane, Wash., firm indicated that its fee for assisting the district with the USDA loan application, as well as with providing related “financial advisory services,” is between $25,000 and $35,000.

Preparing a feasibility study that meets USDA’s requirements, meantime, will cost an additional $65,000 to $75,000, the firm said. The study is to be comprised of a “market/demand analysis” that will include an evaluation of the local economy; as well as a “financial forecast” focused on the district’s operation plans along with its financial expectations.

“We’ve got to build a new facility by 2030. We need to work with Wipfli to find [a] source of money. So we want to get that started,” Rees explained in an interview after the meeting.

He added that the outfit would “look at the profitability of each of the services we offer to help us determine what services to put in the new building.”

In a report on the Southern Humboldt Community Healthcare Foundation committee capital campaign project Rees recommended the district consider hiring a foundation director. 

Parcel Tax Proposal

The board discussed a parcel tax proposal that they said would replace the current parcel tax, which they said would sunset in the next few years. Rees and the board reported it was too soon to tell how much of a parcel tax increase, if any, or its duration, would be required to fund a new hospital building until more information is available from the consultants they approved hiring that day. The board also expressed uncertainty about when they would put the parcel tax on the ballot. Whether a new parcel tax would begin with the sunset of the current one, which is $125 per year, or replace the current one, or run concurrent from the time it is passed until the current one ends was not decided. 

“The question is the timing of the increase,” Truitt said. “I don’t feel like we have enough information to make that call yet, because we know that we are going to need cash for some things and depending on, we’re planning on doing a capital campaign, we’re looking at bringing in new services but we haven’t gotten any predictions yet except our own internal draft number one budgetary figures so we have limited information about how much money we’re going to be able to generate outside of the parcel tax increase to pay those early costs.”

The board approved a voucher policy but changed the wording to reflect that the voucher would be for the amount of the parcel tax, and simplified some wording about the timing of obtaining the voucher. The voucher policy would provide residents of the district who had paid the SHCHD parcel tax with a voucher for district services in the amount of the parcel tax, whatever it ends up being.