DCHS sets hearing on $25M in borrowing
IRON MOUNTAIN — Dickinson County Healthcare System will have a public hearing Thursday on its plan to seek a $24.65 million federal loan to refinance existing debt and make numerous capital acquisitions.
The hearing on the pre-application for a Community Facilities Direct Loan from U.S. Department of Agriculture Rural Development will be at 5 p.m. in Conference Room E of Dickinson County Memorial Hospital.
According to the hearing notice, $9.875 million is needed to refinance a term loan with Fifth Third Bank.
The remainder includes:
— $3.35 million to upgrade information technology systems.
— $3.24 million to replace a linear accelerator for radiation oncology.
— $1.62 million to replace a magnetic resonance imaging unit.
— $691,000 to replace a single-photon emission computed tomography unit.
— $641,000 to replace a computerized axial tomography unit.
— $4 million for upgrading other essential equipment.
— $787,000 for facilities improvement projects.
— $402,000 for financing fees.
The 25-year loan, with a projected interest rate of 3.5%, would have an annual debt service of about $1.49 million. The hearing will be in conjunction with a regular DCHS Board of Trustees meeting.
On Monday, County Commissioner Joe Stevens, a liaison to the DCHS board, said the hospital “lost a little money” in June, which would be the first month since November it hasn’t been in the black. Such losses aren’t unexpected, he added, and officials will have more information on the proposed federal borrowing and the hospital’s finances at Thursday’s meeting.
Chairman Henry Wender said the county board is due for an update on the hospital’s status.
The borrowing has been in the works since October, when DCHS hired Washington D.C.-based Venable LLP to help organize a restructuring that would not require bankruptcy. The effort, led by Venable attorney and former northern Michigan U.S. congressman Bart Stupak, is proceeding as scheduled, with a draft package submitted to the USDA Gladstone office July 19. After acting on suggestions from state staff, the application will proceed to the federal level.
DCHS operates as a Michigan municipal health facility corporation under Public Act 230. It receives no direct county appropriations or taxpayer support and has been self-sustaining since moving to its U.S. 2 facility in 1996. Under a 1994 deed, the county agreed to lease the U.S. 2 site to DCHS for a century at the nominal rent of $1 per year but retains title to the property and buildings.
Through May of this year, DCHS reported a positive bottom line of $1.25 million, after posting losses totaling about $21 million over the previous three years.