Clarendon Health System's board of trustees voted Tuesday to pass a resolution that would allow five local banks to help re-finance existing debt, said Chief Operating Officer Paul Schumacher on Friday.
The approval of the resolution was just an initial step, he said, and simply gives the health system's administration the go-ahead to "move forward with the process," and would require another board meeting to vote on final approval of the re-financing package.
Richard Stokes, the system's chief executive officer, explained to board members and the public at a Feb. 6 meeting that CHS was pursuing a loan from the USDA to re-finance a $5.8 million Wells Fargo loan. The loan from the USDA would have required 51 percent of funds to be spent on new construction, while 49 percent could be used to re-finance existing debt. As new construction was a stipulation, a three-story, 30,000 square-foot medical office building with a price tag of $6 million was in the works.
Plans for the new medical office building have been shelved -- for now -- as the system works out the details of the multi-bank loan package.
"Given our current financial situation, it's probably the most prudent decision," Schumacher said. "It takes the medical office building off the table and doesn't add new debt."
Details of the loan package are in the works, he said, and on the fast track. He said Friday he thinks a specially held board meeting will likely come before the next regularly held meeting to vote on the loan package.
Stokes' contract was extended for two years, he said, following a positive one year performance evaluation from the board.
In February, the system posted a total loss of $72,000, he said, compared to about a $2.5 million loss last year for the same time period. Year-to-date the system has lost about $400,000 he said, but he anticipates the system will break even for the year, or post a small profit.
Schumacher also noted that:
- The system negotiated a reimbursement increase of 7.3 percent from Blue Cross Blue Shield, their largest payor.
- The system is evaluating a new group purchasing organization, HealthTrust Purchasing Group (HPG) based in Brentwood, Tenn., the services of which could save $700,000 to $1 million annually.
- The system is looking to meet its target of the 100-day campaign, an initiative to reduce and eliminate contract nursing labor costs, which aimed for May 1 as a goal. Schumacher said it looks like May 10 will be the target date, which could trim the budget by $200,000 to $250,000 each year.
- The system has now paid SCANA $26,000 to extend a natural gas line from the courthouse to the hospital, and permits are in place. Construction on that project should be underway in the first part of April and should result in $30,000 to $40,000 a month in savings.
- Dr. Cathy Rabon updated the board on surgical quality measures and the fourth quarter of 2013 showed those benchmarks were met 100 percent of the time, which was the first time the system has done that.
