IRON MOUNTAIN — Dickinson County Healthcare System is exploring other options to refinance its debt and purchase new equipment as its application for a $25.65 million federal loan remains in limbo.

The hospital board Thursday authorized seeking counsel for issuing revenue bonds at a cost not to exceed $225,000.

Jerry Worden, interim chief financial officer, said a Rural Development loan issued through the U.S. Department of Agriculture is the preferred borrowing because the interest rate would be lower. Federal officials have made no decision on the loan, awaiting an audit report and more evidence of financial stability.

The chief concern for DCHS is the $10 million it owes to Fifth Third Bank, with a balloon payment due this spring. “We continue to work with USDA and our creditors,” Worden said, adding a recommendation may be presented to the hospital board as soon as next month.

Although no burden would be placed on taxpayers, issuing revenue bonds would require approval from the Dickinson County Board. The scope of the potential borrowing is undetermined, but may be similar to the USDA loan. Worden said.

Revenue bonds would likely carry a significantly higher interest rate than the proposed federal borrowing, which has a projected rate of 3.5% and an annual debt service over 25 years of about $1.49 million.

In addition to $9.875 million needed to take the Fifth Third Bank loan off the books, the proposed USDA loan includes about $15 million for equipment and facility upgrades. When the application was submitted in August, it was noted DCHS also has loans totaling about $4 million with two local lenders — Range Bank and First National Bank & Trust.

The hospital board held no discussion on its borrowing options Thursday, but gave credit to employees for a $4.6 million financial rebound from a year ago. Preliminary figures show $1.9 million in net income in 2019, compared to a loss of $2.7 million in 2018.

“This is a phenomenal turnaround,” Worden said. “This has not come without a lot of hard work.”

DCHS was prepared in September 2018 to explore Chapter 11 bankruptcy before Washington D.C.-based Venable LLC was hired to oversee a restructuring. Federal borrowing was the centerpiece of Venable’s strategy, but DCHS has steadied enough that other paths might be viable.

“I’m more optimistic now than I’ve ever been,” said Trustee Kim Van Osdol, who came to the hospital board in December 2018. In other action, the board:

— Re-elected Margaret Minerick as chairman, David Brisson as vice chairman and Sally Blom as secretary. All votes were unanimous. Beside Van Osdol, other members are Dan Wender, Jeff Campbell, Dave Holmes, Dr. John To and Dr. Beth Schroeder.

— In response to a question from County Commissioner Joe Stevens, heard Worden say DCHS is “looking at multiple facets of the entire billing system” as it prepares to acquire new software and equipment as part of a planned technology overhaul.

— Learned from CEO Chuck Nelson that recruiting has begun to hire a permanent chief financial officer. Nelson said he expects to provide quarterly updates to the county board, noting 2020 looks to be an even more significant year than 2019 in moving DCHS forward.

Jim Anderson can be reached at 906-774-3500 ext. 226 or janderson@ironmountaindailynews.com.