Hospital project moves forward
By Steve Herring
Published in News on September 15, 2016 9:57 AM
Two reimbursement resolutions totaling $45 million were approved Wednesday for two projects at Wayne Memorial Hospital.
The bulk, $38 million, is for the planned renovation and expansion of the hospital's surgical suite. The other $7 million is to replace four air-handling units that are more than 40 years old.
The resolutions were approved by both the hospital board and the board of Wayne Health Corp., the parent company of the hospital. The membership of both boards is the same.
A reimbursement resolution gives a nonprofit organization, such as the hospital, the option to reimburse itself for capital project expenditures made before the issuance of tax-exempt debt to pay for a project.
The resolutions do not commit any money, said Becky Craig, chief financial officer for the hospital. It just means the hospital can borrow up to that amount, she said.
The hospital does not yet have a final price on the surgery unit project, and that is why it needs the flexibility, she said.
It is similar to pre-qualifying for a home mortgage with a bank telling a person he can borrow up to a certain amount, Mrs. Craig said.
The $7 million is the set cost for the air-handling units, she said.
"We had a $33 million resolution passed back in 2014 for the surgical modernization project," she said. "The suggestion of the finance committee is to take that to $38 million just to make sure that we have plenty of opportunity. You don't have to borrow $38 million. But it just gives us more flexibility. We need to go before the North Carolina Medical Care Commission with an application.
"The other is the $7 million project to replace the air-handling units. They have been up there since 1970 or '71. So they are 45 years old. They have given us good service. We have an excellent maintenance department, but their (air units) time is up. We have a bid proposal to replace them over a period of two years. It was four air handlers. We have to do them piece by piece so. We can't leave it too hot in here."
That is the recommendation of the North Carolina Medical Care Commission and hospital financial adviser, she said.
Interim President Bob Enders said he is expecting to meet next week with the surgery suite project architect and contractor, T.A. Loving Construction Co. of Goldsboro, to get the next and "hopefully" final cost estimate for the surgery unit project.
"We have given the state and T.A. Loving the design development drawings, and based on those T.A. Loving is working to receive estimates from different subcontractors," said Shirley Harkey, vice president for patient services and interim chief operating officer. "T.A. Loving should have that pricing next week from the subs (sub-contractors). Then they have to vet those pricings and decide which subs they are going with. I am talking about mechanical, electrical, plumbing, drywall those kinds of subs.
"So we are moving on a target to have things in front of the North Carolina Medical Care Commission to see if we can borrow the money in November-December."
The commission administers the Health Care Facilities Finance Act that enables it to issue tax-exempt revenue bonds to finance construction and equipment projects for nonprofit and public hospitals, nursing homes, continuing care facilities for the elderly.
Enders said the board's Building and Grounds Committee would probably meet in October to go over those figures.
The state Department of Health and Human Services has issued a certificate of need for the surgery unit project that includes renovation of 50,000 square feet of existing hospital space and an addition of 40,000 square feet.
State law prohibits health care providers from "acquiring, replacing, or adding to their facilities and equipment, except in specified circumstances, without the prior approval of the Department of Health and Human Services."
The intent of the certificate of need is to restrict "unnecessary increases in health care costs and limits unnecessary health services and facilities based on geographic, demographic and economic considerations."
The project will update and replace the operating rooms that were originally built when the hospital opened in 1970.
One issue is that the operating rooms are being squeezed for space.
Also, the volume has increased in the hospital's endoscopy suite which is separated from the rest of the surgical suite. The two units need to be contiguous in order to share staffing to include anesthesia staffing.
Because of the separation, staff has to move portable radiography equipment from room to room. The proposed changes will allow the hospital to use fixed radiography equipment in those rooms.