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VAN DYKE -- A variety of matters were
brought before the Board of Directors of the Comanche County
Consolidated Hospital District, the governing body of the Comanche
County Medical Center and Doctors Medical Clinic, at its regular
monthly meeting on Tuesday, September 25.
A request by the proposed Roadrunner Wind
Farm for a property tax abatement, continuing negotiations regarding
the sale of the old DeLeon Hospital and Clinic buildings to the DeLeon
Independent School District, various alternatives for expenditure of
the anticipated $50,000 in proceeds from the property sale, ambulance
replacement needs, computer systems problems, personnel and hiring
matters, a favorable financial report and a major revision to the
hospital’s pricing were some of the more important matters discussed.
Board president Gale Easley conducted the
meeting and members Joe Locke, Charles Mazurek, Janna Morris and Billy
Ray Evans attended. Karen Petty was absent.
CCMC's Chief Executive Officer Kevin
Storey, Chief Nursing Officer Shannon Steigleder, Medical Chief of
Staff Dr. Howard Dickey, Materials Manager Rick Sanchez, EMS Manager
Danny Owen and Administrative Assistant Kathy Johnston were also
present and participated at various times.
Adoption of Property Tax Rate for 2008
The first matter of business was the
adoption of the proposed property tax rate of 25 cents per $100
taxable valuation, the same rate as in 2007.
As soon as the matter was announced
Charles Mazurek offered a motion to adopt the proposed rate and Joe
Locke seconded. Mazurek noted that adoption of the state's required
resolution was included in his motion. The motion was unanimously
approved without any further discussion.
Of the total 25 cents, 16.1 cents is
devoted to the interest and sinking bond fund, and 8.9 cents to
hospital maintenance and operations.
Windfarm Property Tax Abatement
Request
Wes Jackson, of Cummings Westlake, a
Houston property tax consulting firm, was invited to make a
presentation to the Board concerning the proposed Roadrunner Windfarm
being planned by Renewable Energy Systems of America, based in Austin.
Jackson noted that RES is a subsidiary of
a large 150-year-old construction company based in England that has
built many windfarms in Europe and has now begun operations in the
U.S. He added that the company has the financial resources on its own
to insure that the proposed windfarm can be successfully completed. He
described the project as having a good probability of going forward.
Because of rapidly escalating costs for
wind turbines, Jackson said windfarm projects require some financial
assistance to be constructed and operated successfully.
There are two primary means of assistance
currently available. The first are federal tax credits based on
electrical production to windfarm investors. Jackson noted that this
meant that windfarms will only be owned by corporations or individuals
with large taxable incomes.
The second means of assistance for
windfarm owners are temporary abatements of local property taxes
granted by various taxing entities such as the Hospital District.
Jackson noted that Comanche County has already agreed to provide
property tax abatements and that similar requests are being presented
to the various school districts and other taxing entities involved.
Jackson said that the proposed windfarm
would be located in the Comanche, Priddy, Mullin, Blanket and Zephyr
school districts. He briefly described how the project would benefit
both the affected school districts and their taxpayers.
Jackson stated that they do not come in
to the area expecting that they are "owed" any tax abatements, but are
"asking" for them because they are critical to the success of the
project. Long term financing and high-income investors will be needed
for the project to be built, and the Roadrunner project will be
competing with other windfarm projects among the same investor
sources.
Jackson stated that he was not aware of
any windfarm projects having been built in Texas that did not include
some form of property tax abatements as investor incentives.
Jackson stated, "If we want this project,
which is known as Roadrunner Wind, to be competitive, then it's
critical that we get the tax incentives in place." He later added,
"The project has to compete in the financial world, and if it doesn't,
then I believe that the project is going to look very different than
the way they planned it right now. Currently, it's a 350 megawatt
windfarm. That would mean somewhere on the order of 150 or so wind
turbines in Comanche, Mills, and a few in Brown County."
Jackson stated his belief that without
local property tax abatements, that the project would probably still
go ahead, but that the developers would likely be more selective in
their choice of locations and scale back the total size of the
project.
Gale Easley asked Jackson what would be
the benefits to the Hospital District if the abatements were granted.
Jackson began his answer by noting that
the 250 foot tall, "state of the art" wind turbines, would have a
taxable property value of around $3.5 million each, and with around
120 being constructed in Comanche County, even with the requested
abatement, there would be an approximately one third increase in the
Hospital District's tax base.
He added, "You would be able to do a few
things (hospital services) that you haven't been able to do now, and
you could still give a substantial (rate) reduction to your
taxpayers."
RES is seeking the same abatement
schedule from the Hospital District as from the County, which is 60%
abatement (and 40% taxable) for five years and 40% abatement (60%
taxable) for another five years, with the project becoming fully
taxable in the 11th year.
Jackson described the requested abatement
schedule as the "going rate" for windfarms in west Texas.
Charles Mazurek inquired about how wind turbines depreciate.
Jackson responded that they do
depreciate, similar to any mechanical equipment, and then noted that a
4% annual depreciation based on the net value of the previous year,
would be expected, although he added that the taxable value is set by
the local appraisal district and their industrial property
consultants.
Mazurek concluded that even with
depreciation, the net taxable value of the project would be higher in
year six than in year one, and higher still after the ten years of
abatement had concluded.
Billy Ray Evans inquired about the
necessity of tax abatements for the projects to be built and
successful.
Jackson reviewed the situation and noted
that RES also had windfarm projects in the works in at least three
nearby Texas counties north of here, and he expressed his hope that
the Roadrunner project could be built before the others. He added that
this area does not have "great wind", but does enjoy the advantage of
a high energy transmission line already in place.
There were questions regarding local jobs
created. Jackson noted that the windfarm does not create a lot of
local jobs, although he guessed that around 8-10 jobs might be
created. Several Board members indicated that even that small number
of good paying jobs would be welcomed.
Jackson reiterated that with the windfarm
in place, it would have additional tax revenues for support of its
operations while being able to give tax rate relief to all property
owners in the Hospital District, as well as the County. The affected
school districts and their taxpayers (only the Comanche ISD in this
county) would also benefit from greater funding and lower property tax
rates.
Jackson stated construction was planned
to occur in calendar 2009 and be on the tax rolls in 2010 with the
first tax revenues being received in a little over three years.
There was further discussion of the
status of the recently created countywide reinvestment zone and the
procedures required for each of the involved school districts.
Jackson outlined what the procedures
would be for the Hospital District to approve the tax abatement. He
added that no action was required at the current meeting, but that his
visit had been for informational purposes only.
The comments expressed by the Board
seemed to be generally positive toward the project and its prospects
for receiving tax abatement. It was noted that a public hearing will
likely be required prior to final approval. Plans were made for the
matter to be on the agenda for the October Board meeting.
Medical Staff Report
Following the unanimous approval of the
minutes of the minutes of the previous Board meeting on August 30, Dr.
Howard Dickey gave the Medical Staff report. Dr. Dickey said he was
not at the meeting, and that it was one of the shortest on record.
He reported that the Medical Staff
approved the reappointment of Dr. Guyle Donham to the hospital's
Active Medical Staff and the appointment of Dr. Bradley Purkhiser to
the Courtesy Medical Staff on the Emergency Room rotation with the
medical privileges requested.
Gale Easley noted that normally medical
staff appointments are considered in executive session.
Dr. Dickey said that there was not really anything to add on either
appointment application, that everything looked good.
Easley then asked if there were any
motions to be offered regarding the Medical Staff appointments and
Charles Mazurek moved that both be approved. Janna Morris seconded and
the vote of approval was unanimous.
Resolution Requesting Rural
Development Grant for Ambulance
Gale Easley read a resolution requesting
a grant from the USDA's Rural Development agency for a grant
requesting partial funding for a new ambulance that the Hospital
District has on order.
Joe Locke made a motion for approval of the resolution, Charles
Mazurek seconded and the Board voted unanimously in favor.
No action was taken on the agenda item
concerning taking action on the tax abatement for the wind farms.
Sale of Old DeLeon Hospital Property
Kevin Storey noted that he had emailed
copies of the latest draft of the sale agreement to the Board members
on the prior day. He added that closing costs on the sale were
projected to be $703 on the $50,000 sale, and that language granting
the DeLeon Independent School District the right of first refusal on
the adjoining Kimmell Wellness Center had been added at the request of
the DISD.
Storey noted that the book value of the
old hospital and clinic was zero, and that all of the sales proceeds
less the closing costs would be gain.
Charles Mazurek inquired about the 10
year non-competition restriction in the sale agreement, asking if it
was long enough. He thought it should be either a perpetual
restriction or else one as long as the bond issue was outstanding, or
around 25 years.
Mazurek also inquired about the lease
agreement on the two out buildings for the hospital's storage and EMS
needs. He wanted a longer lease agreement for ten years at $10 per
year with an option to renew for an additional ten years. Other Board
members expressed agreement.
Mazurek made a motion to amend the sale
agreement for a 10 year lease of the storage buildings at $10 per year
with an option for a renewal for another 10 years, and that the
non-compete agreement extend through the life of the new hospital's
bonded indebtedness.
Joe Locke seconded and the vote of
approval was unanimous.
Storage Building Construction Proposal
Kevin Storey stated that he hoped to
build a storage building of approximately 50 feet by 50 feet in size,
of metal construction on a concrete foundation, air conditioned, and
partitioned inside with separately locked storage sections for various
hospital departments. It would also include a space for a maintenance
shop.
The building would be constructed
southeast of the hospital near the communications tower. Storey
estimated it would cost around $50,000, approximately the same as the
sales proceeds from the old DeLeon Hospital and DeLeon Clinic
buildings.
Gale Easley asked Storey if the storage
building was "desperately needed right now."
Storey responded that the new CCMC
Hospital was woefully short of storage space. Also, there is very
little storage space or walk-in refrigerated storage available in the
dietary department, severely limiting its abilities to operate and
offer any choice of meals for patients. The only storage space
currently available is at the two predecessor hospital facilities and
this requires frequent driving to and from DeLeon and Comanche and the
new hospital.
Janna Morris and Shannon Steigleder
echoed Storey's comments about the lack of storage facilites at the
new hospital.
Storey noted that there were other
pressing matters needing significant expenditures, including a leaking
roof in the portion of the old Comanche hospital retained by the
Hospital District. He estimated the cost for that would be $30-35,000.
He added that the proposed new storage
facility was not something that absolutely had to be done, but that it
is needed and would contribute to the hospital's efficient operations
and provide additional food storage facilities, by relocating the
current maintenance shop to the new building, so that there could be
more food resources available in time of crisis.
Joe Locke and Janna Morris inquired if
another new ambulance was needed and, if so, how that would fit into
spending plans.
Danny Owen was asked about the need for a
second new ambulance. He noted that the oldest ambulance, about to be
replaced with a new unit, had 200,000 miles on it, and that the second
oldest, which was not running good and "about to lay down and die" had
180,000 miles.
Storey noted that in his previous
hospital experience that he had found it to be good practice to trade
in ambulances when they had reached 100,000 miles, adding that you
received a much better trade-in value on the lower mileage units. He
said that ambulances were driven a lot harder than regular vehicles
and thus tended to wear out more quickly.
There was discussion regarding possible
use of Healthcare Foundation funds in the possible purchase of a new
ambulance.
Billy Ray Evans, who is a member of the
Foundation Board, said that the funds raised there would be devoted
exclusively to the hospital's use for projects involving patient care,
and added that the purchase of a new ambulance might very well be an
appropriate Foundation expenditure.
Danny Owen commented that the next new
ambulance purchase would be around 30% less expensive than the current
replacement since the ambulance box on it could be transferred to the
new truck cab and chassis.
Gale Easley asked for a return to
consideration of the storage building construction proposal agenda
item.
Charles Mazurek stated his opinion that a
decision on the storage building construction proposal should be
delayed until after the proceeds of the sale of the old DeLeon
Hospital building were in hand. He added, "I think it's coming, but
it's not here yet."
Kevin Storey asked if the Board wished
for him to seek construction bids in the meantime, or if the matter
was to be tabled entirely until a later meeting.
Gale Easley responded that matter was
tabled.
Chief Executive Report
Kevin Storey reported that two physicians
had signed and returned the contract forms that the Board approved at
its previous meeting, and that another two contract forms had just
been delivered that same day to physicans who had been out of town and
were being reviewed. He added that thus far there had been no
physician requests for changes to the contracts and that he believed
that process was in good shape.
Storey reported that the background
checks and drug tests on the Chief Financial Officer candidate had
turned up no problems. Thomas Letz has accepted the CFO job offer and
is planning to start work at the hospital on the second Monday in
October and should be present at the following Board meeting.
Storey reported finding additional
problems with the hospital's computer system and described recent
examples. Although the system vendor has undertaken to fix the
problems, Storey stated that he has continued to investigate
alternatives, and added that he has located a vendor that is $300,000
less than an earlier alternative system being reviewed. He noted that
it was also a fully electronic medical record type system, which will
soon be a requirement for all hospitals.
Storey noted another recent example where
the currently used information system is costing the hospital money by
not presenting alternative vendor sources and thus causing
higher-priced than necessary supplies to be purchased.
Storey also cited the results of some
research that he and the auditors had performed to identify which
hospital equipment was pledged as security for which different loans.
They had found that several expensive
items of diagnostic equipment are partially pledged on two different
loans, therefore requiring the repayment of both loans before any of
the equipment can be traded or replaced to stay current with new
technology.
Gale Easley expressed amazement that such
a financing arrangement had ever occurred, and Storey agreed, noting
that both loans were from the same funding source and had occurred
within one month of each other.
He stated that unlike in previous years
when tax revenue anticipation loans had been taken out to finance
hospital operations, now most of the tax proceeds (approximately
$850,000 out of $1,200,000 total) are dedicated to the bond interest
and sinking fund and will no longer be available for hospital
maintenance and operations.
Storey said that he is hoping and
planning that the hospital will not need to rely as heavily upon the
property tax proceeds for operations this year and can use most or all
of the balance of the tax proceeds not devoted to the bonds for new
equipment purchases to utilize better technology.
Storey reported that he has two good
candidates for the vacant human resources director position and
briefly reviewed the credentials of each without citing any names.
Both seemed to have good professional qualifications.
Storey discussed his activities and plans
to generate favorable publicity for the hospital and to advertise its
services, both in print and on the radio. He noted that as the
hospital's financial results continue to improved, that there are
additional funds available both for advertising and for education.
Clinical Report
Shannon Steigeleder reported that there
were 21 patients in the hospital that day and that there had been 136
inpatient admissions during the month.
Steigleder noted that nurses had been
provided vibrating two-way radios for communication with the nursing
station in an effort to decrease the general noise level in the
hospital from the overhead paging system.
Training on the electronic Medication
Administration Records System has also begun. She also reported on
work in the Performance Improvement Committee.
Steigleder reported 460 emergency room
visits during the month with 114 hospital admissions resulting
therefrom. Another 21 patients were transferred to a higher level of
care. The average transfer time was one hour and 41 minutes. She noted
that time as a considerable improvement, adding that their goal is to
be below two hours.
There were 72 surgical and special
procedures in August, up from July's total of 68. Home Health is
treating 39 patients, Primary Home Care has 36 patients, Life Line has
291 patients and Hospice has 16 patients.
The average patient length of stay on the
medical/surgical floor was 4.0 days, and the average length of stay
for swingbed patients is 6.0 days.
Steigleder reviewed various educational
and public awareness initiatives in which she is involved, including
neonatal emergency care, Halloween safety and breast cancer awareness.
Flu shots are being provided to hospital
employees and volunteers in mid-to-late October. Kevin Storey added
that flu shots will soon be made available to the public and announced
in the newspapers.
Steigleder added that there have already
been three flu cases reported in Brownwood and that the CDC is
advising for early flu shot clinics this year with flu booster shots
likely to be needed late in the season.
Financial Report
Kevin Storey was again called upon to
give the financial report, and noted how much he looked forward to
having the new CFO, Thomas Letz, at work to deliver financial reports
in the future.
Storey reported an increase in patient
revenues in August of more than $500,000 over July's weak figures, and
more than $150,000 over the prior August.
The stronger revenues helped the hospital
earn a profit of $32,000 for the month, and a two month year-to-date
profit of $7,000, versus a two month loss of $357,000 in the previous
year.
Cash balances decreased by $175,000
because of payment of accounts payable, and accounts payable decreased
by $226,000.
Storey noted that in recent years
Medicare slows down payments and that has produced a temporary drop in
cash balances as well, but should recover quickly. Storey said the
hospital still had managed a slight increase in the balance of its
special cash reserve, but might soon have to make temporary use of it
to cover the Medicare slowdown.
Storey said activity volumes in most
operational areas were up in August. He added that the positive
effects of improved supplies purchasing are just now beginning to be
felt. Most of the larger credits are still outstanding, however, and
are still coming in.
Storey reported that anytime salaries and
benefits run 50% or less of patient revenues that it is good, and that
both in July and August the percentages have been 48 and 49 percent.
In the prior August the similar figure was over 60%. "We're in pretty
good shape there," he added.
Storey then noted that four employees
have been added since he started with the hospital. The additions have
been in employee benefits, materials management, EMS and the
laboratory. Even with the employee additions, however, total expenses
per patient days has decreased, primarily because of greater patient
days.
Storey noted that he expects September
total revenues to be down from August, however, because two of the
hospital's larger volume physicians were out of service for a
significant blocks of time. He projected a $300,000 revenue decline
with the bottom line to be close to breakeven or a small loss.
"Overall, however, we're in pretty good
shape," he concluded.
Chargemaster Update
Storey said that he had the preliminary
projected annual revenue impact for the update of the Chargemaster
(the hospital and clinic's price list for medical services). He
hesitated, however, to get very specific, noting that the total
projected revenue increase was "eight digits" ($10,000,000 or more)
and that the figures had not been verified.
He said, however, that Blue Cross has a
hospital affordability rating system that ranges from "least
affordable" to "affordable" to "more affordable," and that CCMC is
rated as "more affordable."
Storey stated, "If Blue Cross comes in
and rates you as 'more affordable', your prices are way too low, and
you are leaving a lot of money on the table." He continued, "You've
got a lot of prices that are below the Medicare allowable, which means
you are leaving a lot of money on the table."
Storey stated that he planned to raise
the hospital's prices up to the Medicare allowable, at a minimum, and
then slowly raise them thereafter to where they should be. He later
stated a three-to-five year timeframe as appropriate for getting
CCMC's charges in line with the area hospital industry.
Storey added that the impact on the
hospital's bottom line should be both favorable and substantial, and
later explained how he estimated it could produce a $1,000,000
improvement to the hospital's bottom line. "I think that's closer to
what the public was told would happen when you'd be out here," he
added.
Storey later stated that he was being
very conservative in his estimates and if there were going to be some
surprises, he wanted them to be good ones. He also cited examples of
how low CCMC's prices are when compared to the Brownwood and
Stephenville hospitals.
The Board meeting was adjourned with most
members seeming to be satisfied with the results of the meeting.
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