HCMC assets sold; purchaser will build new facility

Written by Hillsboro Free Press Wednesday, 18 June 2008 11:28

FOLLOWING IS A PRESS RELEASE ISSUED BY HILLSBORO COMMUNITY MEDICAL CENTER FOLLOWING THE DECISION BY THE HILLSBORO CITY COUNCIL, AT A SPECIAL MEETING ON WEDNESDAY, JUNE 18, TO SELL THE HOSPITAL’S ASSETS TO HMC/CAH CONSOLIDATED INC. THE FREE PRESS WILL FOLLOW UP WITH ORIGINAL AND EXPANDED COVERAGE IN ITS JUNE 25 ISSUE.

The City of Hillsboro and the Hillsboro Community Medical Center announced this week that they have entered into an agreement with HMC/CAH Consolidated Inc. of Kansas City.

The deal includes the acquisition of all the hospital’s assets and liabilities and the development of a new hospital.

This means the current bonds and other debt would be cleared, and HMC/CAH, as part of the agreement, will build a new state-of-the art hospital in Hillsboro.

“There are still a few i’s to dot and t’s to cross,” said Michael Ryan, HCMC administrator and CEO. “But what we do know is this is an incredible opportunity to facilitate growth in the availability and quality of healthcare services for Hillsboro and the surrounding communities.”

Wendell Dirks, the chairman of the HCMC board, noted “that an exciting opportunity exists for the community. Hillsboro Community Medical Center brings an excellent reputation with a long history of community service and HMC/CAH can bring much needed private capital to ensure hospital services stay in the community through a state of the art facility. We look forward to solidifying the future of healthcare in Hillsboro at an affordable level.

The two organizations have been working through a period of “due diligence.” HCMC board and administration have met with the principals and staff of HMC/CAH and have visited a couple of HMC/CAH hospitals in Missouri and Oklahoma.

At this point HMC/CAH, HCMC and the City of Hillsboro have approved agreements providing for the sale of the hospital to HMC/CAH and for the acquisition of property for the construction of a new hospital.

“I am sure everyone has questions, and we will schedule community meetings to answer as many as we can within the next few weeks,” Ryan said.

Here are some common questions and answers in the meantime:

1. Why would HMC/CAH Consolidated Inc. want to purchase the existing hospital?

The principals of HMC/CAH have a 30-year history of working with rural hospitals, both consulting and managing. They understand rural health care and what it takes to survive long-term. The technology involved in the delivery of hospital services has changed over the years and our physical facilities need to be responsive to those changes. They know that when outdated facilities are replaced with new, state-of-the-art facilities, utilization and revenue increase. In addition, a new facility helps in recruiting physicians and new staff members. The problem with most small rural hospitals is that they can’t access the capital required to update or replace their facility.

2. What happens to Salem Nursing Home?

Salem Nursing Home will continue to operate and serve the community of Hillsboro and the surrounding area. The staff would remain the same with residents continuing to receive outstanding quality service. As the hospital operations are relocated to the newly constructed hospital, nursing home leaders will benefit from the opportunities presented by having a larger campus to utilize.

3. Would the company replace existing staff members with people who already work for them in other locations?

No. absolutely not. HMC/CAH knows that the current hospital staff provides a very high quality of patient care, so they have no reason to fix what is not broken.

Finding and hiring qualified hospital personnel is difficult at best; one of the major benefits of purchasing the hospital is that a highly qualified staff already exists. If the company started from scratch they would have the very challenging and costly task of finding and hiring the right people.

4. Will building this new hospital make my taxes go up?

No, actually, quite the opposite. Building this hospital will be done completely with private financing. No taxes will be assessed to build or operate this new facility. In fact, the new hospital will be placed on the Marion county tax rolls, thus helping to ease the tax burden for all county residents.

5. Where will the new hospital be located?

The new hospital will be built on property at the southwest corner of U.S. Highway 56 and Industrial Road. We wanted to locate on property that would be accessible to all residents of Marion County. The visibility of the highway location may result in other health-care related businesses deciding to join us on our new campus.

6. Will the community give up local control of the hospital?

The company realizes that success is not possible without community support. HMC/CAH is motivated to make sure the community continues to feel like the hospital is part of the community. Therefore, the current hospital administration will continue to run the hospital on a day-to-day basis; nothing will change in that regard. The company also asks that the current hospital board members continue as members of an advisory board to provide input related to new added services or changes in the existing service mix, and to provide community input on any number of issues where community approval and acceptance is required.

7. What other benefits will the hospital receive, in addition to the new facility?

Being a part of a larger organization gives the hospital access to greater purchasing power and lower prices for supplies. In addition, the hospital is able to bargain with insurance companies as part of a larger group to set rates and attract new carriers so patients with all types of health insurance can use the inpatient and outpatient services provided by the hospital without paying for any higher out of network co-pays or deductibles.

The company also has resources that normally the hospital Would have to purchase, such as educational and consulting services. Employees of member hospitals share information and expertise with each other on both a formal and informal basis. These resources can be related to the quality of patient care or operational issues such as billing and reimbursement.

8. Are their other benefits to the community not necessarily related to patient care?

Yes, definitely. There are some significant benefits related to the economic health of the community. The first two factors many companies consider when deciding to relocate or expand to another community are the quality of the schools and the quality of the health care available for their employees and their families in case of sickness or injury. These are the same concerns for any individual moving to Hillsboro. The parents of a prospective Tabor College student want to know if quality medical care is available nearby. A new hospital will add new jobs and expand the economic base of the community, benefiting everyone including those seeking employment, as well as retailers, banks and other businesses in the community.

9. What can you tell us about the company HMC/CAH?

The parent corporation of HMC/CAH is Hospital Management Consulting, which has provided a variety of hospital services to more than 800 hospitals across the United States since 1982. The principals of Hospital Management Consulting formed HMC/CAH for the express purpose of purchasing rural hospitals and then replacing the old dated hospitals with new, state-of-the-art facilities. The delivery of health care has changed dramatically over the past 50 years and the physical lay-out of hospitals can impact that delivery to a great degree.

In closing, Ryan thanked Mayor Dalke and the HCMC Board of Directors for their untiring efforts in making this effort a reality.

“These agreements represent the culmination of thousands of hours of work. The community is the real winner in this opportunity for economic development and improved health care.”