Building Project

Grand Opening Set for August 5

Smith County Memorial Hospital will host a public grand opening ceremony Sunday, Aug. 5 from 2 p.m. to 5 p.m. at the new facility located at 921 E. Hwy 36.

“We welcome the public to this event,” said Allen Van Driel, CEO of the hospital. “The residents of Smith Center and county as a whole have been fantastic partners in this journey and we’re excited to invite the public to share in the ceremony.”

The come-and-go event will begin with a short presentation from Van Driel and special guests including the hospital board of trustees and representatives from USDA.

Van Driel believes the grand opening will give people an opportunity to celebrate the hard work and success of the large team that has contributed to the new hospital building.

“I’ve been very impressed with the leadership from the board of trustees, the team from Hutton Construction and HFG architects,” Van Driel said. “The group has really worked together seamlessly. In my career, I’ve been part of three hospital building projects and none have gone as smoothly as this one.”

The event will include guided tours of the facility and refreshments provided by Steve Smith, the new chef and registered dietitian hired by the hospital.

While the grand opening ceremony will take place earlier, the hospital will not be open for business until Aug. 8. For all medical needs prior to Aug. 8, please visit the current hospital at 614 S. Main St.

 

Building Project Q&A

We’ll do our best to answer your questions.  Hospitals and the Health Care industry are very complicated, so if you find yourself confused we completely understand.  Please do not hesitate to contact us for further clarification at 785-282-6845 ext 203.

 

Q: How can we build a new hospital without raising property tax?

A: Debt service payments to USDA will be made from increased reimbursement to the hospital from the Medicare program, our current sales taxes, and fundraising.

SCMH, like most other small rural hospitals, is designated by the Medicare program as a Critical Access Hospital.  CAHs are paid for services to Medicare beneficiaries (more than 60% of our patient revenue) based on the cost of providing care.  The accounting process for this is very complicated, and the reimbursement is recalculated each year based on actual expenses.

Among the expenses that Medicare has us include in our calculations are depreciation and interest expense.  This means that if we add new facilities or purchase capital assets, our reimbursement from Medicare goes up.  If we borrow money to finance the project, the interest expense is also included in our reimbursement.

Careful modeling of our projected expenses, using past reimbursement calculations, demonstrates to us that reimbursement for services to Medicare patients will increase enough to cover the cost of debt service in the early years of repayment.  As assets become depreciated and our reimbursement for that portion of cost decreases, any shortfall can be offset using existing sales tax revenue as the current bonds (let in 2008) for the HVAC improvements in the existing building are paid off.

As with any county owned property there is risk associated.  We do not foresee any drastic changes coming our way with our reimbursement model, but there is no way to say with 100% accuracy that something couldn’t change.  We believe the risk of not doing this project far outweighs the risk of building.  We feel confident, after careful review, that we should not need additional tax revenue to make the debt service payments for at least 10 to 20 years.

Q: How are we financing the hospital?

A: We are utilizing the USDA Rural Development Program for a long term low interest loan to cover the cost of the project. The Smith County Public Building Commission will issue revenue bonds for the project, which would then be purchased by USDA. Our debt service payments would be made to USDA.

Q: Why can we do this and other communities can’t?

A: The financing side of this project could be the same for most Critical Access Hospitals and thus would allow them to present much of the same plan to their communities.  That being said, we have something most communities our size don’t have, an amazing Medical Staff!

The greatest risk associated with a rural hospital is the stability of its Medical Staff.  We are blessed to have an outstanding Medical Staff- better than any other small facility for quite a distance around us.  The quality of our Medical Staff goes back several generations, which has created a climate where physicians, and other staff looking for a practice location, actually seek us out.  Building and maintaining up-to-date facilities makes it easier for these providers and staff to provide quality care, and it helps us maintain the stability of our staff.

Q: Where is the new hospital being built?

A: We have purchased land between the Smith Center Jr/Sr High School and Jones Machinery.  There is approximately 40 acres to build on.  This will allow for the new hospital facility as well as future growth.

Q: When will the new facility be built?

A: The construction timeline allows for up to 18 months for actual construction, although that may change based on weather, availability of materials, availability of workers, and many other factors. So our present time line is to have construction completed during the third quarter of 2018.

Q: What will be done with the existing building?

A: Plans for this are not complete at this time.  Those plans are dependent on resolution of the questions about the Long Term Care and Wellness Center.  The problems with the infrastructure in the existing building (deteriorating plumbing, electrical service, and noncompliance with accessibility rules) make it unlikely that the building could be re-purposed.  We have explored the possibility of demolition of the building after salvaging usable fixtures.  This would further increase our reimbursement from Medicare, and would allow reuse of the site for other development.  We are continuing to work on plans for this.

Q: What is included in the new facility?

A: The new facility includes space for Inpatient Care, Labor and Delivery, Emergency Department, Surgery, Laboratory, Radiology, Physical and Occupational Therapy, Cardiopulmonary Rehab, a Therapy Pool, Physician clinic, and Outpatient Specialty Clinics.  It will include many technology updates to allow us to deliver care well into the future.  The plan also includes adequate parking and a helipad.  Because the building site consists of approximately 40 acres of ground, there is also abundant space for expansion and addition of other facilities as plans for those develop.