DCHS sets Sept. 30 goal for $26M loan
IRON MOUNTAIN — Dickinson County Healthcare System hopes to secure a federal loan of about $26 million by Sept. 30 to stabilize its long-term debt and make equipment upgrades.
“I believe it sets the foundation for the future,” said Jerry Worden, interim chief financial officer, at a hospital board meeting Thursday. “I believe that it’s the right thing for us to do.”
The borrowing has been in the works since October, when DCHS hired Venable LLP to help organize a financial restructuring that would not require bankruptcy. The effort, led by Venable attorney and former northern Michigan U.S. congressman Bart Stupak, needs final approval from the U.S. Department of Agriculture’s Rural Development Agency.
A draft report should be submitted to the USDA’s Michigan office by July 19, Worden said. After acting on suggestions from state staff, the application will proceed to the federal level.
The hospital continues to post improved financial results. A report Thursday showed operating income of $293,877 in May, bringing the year-to-date total to $1.62 million.
All five months of 2019 have had a positive bottom line, said Jeff Campbell, the board’s finance chairman. “Absolutely great news,” he said of the May report. “Still not out of the woods … but a positive, good trend.”
Jeanne Goche, who came to DCHS in December as interim CEO, said the hospital is moving away from crisis and into “a little bit more of a strategic planning phase.”
Goche, an Iowa health care executive, will now be retained for one year as CEO while restructuring officer Dennis Smith leads the search for a permanent CEO, said Margaret Minerick, board chairwoman.
According to Worden, who served as CFO at Marquette General Health System from 2008 to 2013, the recent months of profitability have put DCHS in a good position to pursue a long-term loan. About half of the borrowing will allow the hospital to refinance its higher-interest debt, the bulk of which is owed to Fifth Third Bank. The rest will enable equipment upgrades, including new magnetic resonance imaging services and a medical linear accelerator for radiation oncology. Computed tomography scanning equipment also will be replaced in both the cardiac and general services departments.
A consultant will be hired to help gain certificates of need for the equipment, as required by state health regulations.
Stupak has said the proposed USDA loan, spread out over 30 years, actually will lower the hospital’s monthly financial obligations.
Worden said Thursday the loan request may range from $25 million to $27 million.
In other action, the board:
— Received a report showing the hospital cared for 215 inpatients in May, along with 13,820 patients in the outpatient hospital setting, including 999 in the emergency department. Physician offices saw 9,532 patients.
— Reported that DCHS had $8.36 million in total operating revenue in May and $8.06 million in expenses. After the calculation of non-operating revenue and expenses, May closed with a positive bottom line of $218,826, bringing the year-to-date total to a positive $1.24 million.
— Noted that uncompensated care for the month totaled $417,007.