Council approves $8 million for HCH
The Harrison County Council approved a motion Monday night, Nov. 22, which would allow an $8 million grant from the Harrison County Community Foundation’s community fund to be given to the Harrison County Hospital for debt reduction.
The agreement awaits approval of the Foundation’s board before the deal is official. The Foundation’s board will meet Monday evening. The fund will be replenished with riverboat gaming revenues, similar to a previous agreement the county and the Foundation struck for $9 million toward the government center project.
The motion included the stipulation that the hospital use local banks for financing and that it uses $10 million, if possible, from its cash reserves to go with the county’s money.
Hospital representatives presented the same request that was approved a week earlier by the Harrison County Board of Commissioners.
The hospital, like many throughout the county, has found it difficult to find banks willing to back its debt of about $28 million in the difficult financial period, hospital officials said. Chase Bank, HCH’s current financial backer, decided only to renew the letter-of-credit agreement on a one-year basis and to significantly increase the yearly payment, forcing the hospital to look for other options to become more stable.
The plan will use $16 million ‘ $8 million from the county and $8 million to $10 million from the hospital cash reserves ‘ to bring the total debt to about $12 million. That figure will be much more manageable for local banks to work with, said Jerimi J. Ullom, an attorney with Hall Render Killian Heath and Lyman, based in Indianapolis, who represented HCH. Ullom specializes in health care-related financial issues, and has worked with other county hospitals in the state that have experienced the same problem.
‘It’s a situation we’ve seen time and again the last several years,’ Ullom said.
Jeff Davis, chief financial officer for HCH, said another reason debt continues to climb is because the number of underinsured and uninsured patients has continued to rise, along with the number of Medicaid patients. He said the amount of unpaid medical services, or indigent care, HCH has absorbed since 2001 is about $50 million.
‘We’re the last resort for people that don’t have insurance,’ Davis said.
He said HCH never turns anyone away because they can’t pay.
The request received a little resistance, mainly from Councilman Ralph Sherman, who wanted HCH to delve deeper into its $23 million cash reserves. He suggested the hospital use $14 million, added to the county’s $8 million, to get the debt down to about $6 million.
‘If you go under again, you’ll just be back,’ Sherman said about the proposed agreement.
Steve Taylor, HCH executive director, said the hospital doesn’t feel it ‘went under,’ but did say it could add $1 million or $2 million of cash reserves to debt reduction. Taylor and Davis said the problem with using more of the hospital’s cash reserves to buy down the debt is that banks need to see cash on hand before they are willing to support hospitals. Davis said having no debt but no cash on hand is worse than have significant cash on hand with debt, at least in the eyes of the lender.
The legal counsel for the hospital, John E. Colin, addressing an issue brought up at the previous board of commissioners meeting, explained to the board that the HCH board of trustees could never sell the property without the blessing of the county council and commissioners. He said county hospitals operate under the Indiana Code.
‘There’s not a process by which a county hospital could take the property and sell it without overview from the commissioners and council,’ he said.
The property deed to the hospital names the hospital board of trustees, not the county.
After the nearly 90 minutes of discussion, the motion was made by Councilwoman Leslie Robertson and seconded by Councilman Robert (Bob) Morris. It was approved with a 5-1 vote, with only Sherman against. Before that motion, Sherman made a motion to approve $8 million if the hospital agreed to pay $12 million. Councilman Jim Heitkemper seconded, but the motion failed 2-4.