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Posted on Dec 3, 2014

City to loan $1.5 million to struggling hospital

It looks like the Quincy City Council will loan $1.5 million to the debt-riddled Quincy Valley Medical Center.

Before a packed council chamber on Tuesday, the city council voted 6-1 to begin preparing a loan agreement between it and the hospital. Councilman Adam Roduner voted against loaning the hospital the money.

The money will be used to pay down the hospital’s $3.4 million debt to Grant County; it is not an extension of the hospital’s debt. The county has said the hospital debt must be at $3 million by June 1.

Hospital Commissioner Don Condit called the city’s decision a “major piece of progress” that the hospital hasn’t seen in a while. The hospital lost more than $600,000 last year and is expected to do the same this year. In the last month, it has seen a proposed levy fail and announced $1 million in cuts and revenue-generating measures.

“I’m extremely excited about the fact that now we’re starting to move,” Condit said.

However, hospital Commissioner Anthony Gonzalez expressed mixed feelings about the decision after the meeting. While he was excited by the council’s support, it doesn’t overshadow the fact that several hospital employees this past week learned they would have their hours or pay cut, or even lose their jobs, Gonzalez said.

“I’m excited that the council has showed support tonight for their local hospital,” Gonzalez said. “We still will evaluate each month. If we have to take deeper cuts, we will.”

It was standing room only on Tuesday as a crowd of more than 40 people filled the small council chambers. Most of those attending were hospital employees. However, there also were such community leaders as Port of Quincy Commissioners Curt Morris and Brian Kuest and Quincy School District Superintendent John Boyd.

In a presentation to the city council, hospital CEO Mehdi Merred said the hospital representatives at the meeting were “anxious and excited” to be at the council meeting.

Merred explained that a draft repayment plan shows the $1.5 million being paid back to the city over five years at an interest rate of 3.5 percent. Under this agreement, the city would earn about $214,000 in additional interest income over its current investments, Merred said.

“This isn’t a gift,” he said. “We are not asking for free money.”

The loan would begin to be paid down in 2017 with an initial repayment of $25,000. That repayment would increase to $200,000 in 2018, $550,000 in 2019 and $725,000 in 2020, according to hospital figures.

And, if the hospital were to close, the city is guaranteed to get its money back because taxpayers would have to pay off the hospital’s debt, Merred said.

“In reality, this transition presents no financial risk to the city,” he said.

Merred also reported on the number of Quincy residents who visited the hospital this past year. In that time, there were 11,343 “patient encounters” from people living within the Quincy zip code, he said. Some 3,085 patients from within the Quincy zip code were treated at the hospital. Of that number, 67 percent live in the city limits, Merred said.

In the last year, there also were 2,576 visits to the emergency room from people living within the Quincy zip code. Of those visitors, 1,983 (almost 77 percent) live in the city limits, Merred said. That’s about 165 visits a month from city residents, he added.

And a breakdown of votes cast within the city limits in the Nov. 2 election shows 56 percent of in-city voters supported the $2.2 million maintenance and operations levy the hospital was requesting, Merred said. About 44 percent of in-city voters voted against it. The levy failed because it did not garner at least 60 percent of the vote across the hospital district.

This shows the majority of city residents who voted supported the levy, Merred argued.

Councilman Tom Harris questioned if the hospital would be able to pay down its warrant line with the county by June 1.

While he expects the warrant line to be at $2.8 million come June 1, that would leave only a $200,000 gap for the year, Merred said.

“It’s going to be a tough challenge at this point,” he said.

Councilman Scott Lybbert voiced his frustration that the conversation Tuesday was about a loan and not about building a new medical facility in Quincy. For some small communities where the hospital is struggling financially, the construction of a new facility to replace an aging one has reinvigorated the hospital, Lybbert said.

“I’m disappointed we’re not having a meeting of building a (new) hospital instead,” he said.

The crowd on Tuesday had little to say. However, port Commissioner Morris stressed that not having a hospital in Quincy would “drastically” impact the port’s ability to recruit new businesses.

Quincy has always taken care of itself when problems have risen in the past, Morris said. In most recent years, the city has been in a good position because tax revenues have been increasing with the location of the data centers to town, he said.

“Here is an opportunity to take the fortunes of what we have been given and help the hospital,” Morris said.

A final proposed loan agreement may be back before the council in January, Mayor Jim Hemberry said.

 

— By Jill FitzSimmons, editor@qvpr.com

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