Hospital debt to be refinanced

Debbie Teofilo
Special to the Sun

The Kern Valley Healthcare District (KVHD) Board of Directors took action at its meeting on November 6 to begin the process of refinancing its existing debt which will offer substantial savings to the District.

KVHD currently makes payments on approximately $7 million in accumulated debt which is made up of revenue bonds from 2003 and a loan from the Office of Statewide Health Planning and Development. The interest rate paid on this debt is from 5 to 5.25 percent, yet the current market rates on revenue bonds are about 3 percent.

To take advantage of these lower rates, KVHD plans to consolidate and refinance its debt by issuing new revenue bonds by June 2020. After paying refinancing costs, its net savings could be in the range of $500,000 to $600,000 depending on whether a six- or eight-year repayment period is chosen.

The KVHD Board voted to engage the services of a financial consultant to analyze the available bond options, and a legal specialist to issue and deliver the revenue bonds. A vote to authorize the issuance of the new bonds is expected to take place at the Board meeting on December 4.

In other matters, CFO Chet Beedle reported that the month of September generated a net profit of $75,643 for the District which lowered its first-quarter net loss to $13,812. Acute inpatient bed use increased significantly; it was the first time in two years that the Acute Services department performed better than was budgeted. The Health Clinic is doing very well and further revenue increases are expected soon when the mobile clinic becomes operational.

The Skilled Nursing Facility (SNF) continues to experience staffing challenges that are temporarily being overcome by using expensive nurse registries from out of the area. KVHD hopes to have its application to start its own Certified Nursing Assistant training program approved by the end of the year so it can train and retain more reliable local staff. The executive staff has been attending SNF staff meetings to get staff feedback on improvements needed within the facility.

CEO Tim McGlew reported that the state legislature is considering the SB758 bill which would significantly reduce the cost of seismic retrofitting for hospitals. Hospitals would be required to remodel only the three areas of greatest service need in the event of a disaster: emergency rooms, operating rooms, and post-operative recovery areas. KVHD has already prepared seismic remodel designs for these areas of Kern Valley Hospital, and is awaiting word on whether its grant application for $19.3 million in seismic remodel funds will be awarded by FEMA.

Kern Valley Hospital Foundation President Judy Hyatt reported to the Board on its many funding achievements that have helped provide equipment, services, and health education for KVHD and the community. She highlighted the successful Heart Walk and River Rhythms annual fundraisers, and its recent role in the provision of diabetic cooking classes, a new 15-passenger bus, and furniture for the SNF. An endowment fund for the purpose of sustainable funding will start soon. The Foundation is looking for creative ways to help with doctor recruitment, staff training, and mobile clinic needs.

The next KVHD Board of Directors meeting will be held on Wednesday, December 4 at 6:00 p.m. in the Hospital Administrative Conference Room.