New hospital poised for ?go?

? Hillsboro City Council to consider $1.5 million development agreement at Aug. 4 meeting

The sign announcing the future arrival of the new Hillsboro Community Hospital has endured a lengthy vigil at the corner of U.S. Highway 56 and Industrial Road, the location of the proposed $11.4 million facility. If all goes according to plan, construction could begin as early as October with the opening projected for October 2016. Don Ratzlaff / Free Press

The CEO of the company that owns Hillsboro Com?munity Hospital said Friday it is one step away from securing a USDA construction loan to build a long-awaited new medical facility?but it will take action by the city council to bring the project to the starting line.

?We fulfilled the commitments that USDA had put in their conditional-commitment letter,? said Larry Arthur of HMC/CAH Con?solidated Inc., based in?Kansas City, Mo. ?We?re just now trying to get this last piece together so we can close the loan in escrow.?

The city council was expected to act on a proposed development agreement with the company at its Aug. 4 meeting. The agreement would have the city provide infrastructure and site development work that would bring an estimated value of $1.5 million to the $11.4 million project.

?The idea is that in doing all of these improvements, they will then pay us back for the cost of a bond issue that we?ll have to deal with in order to fund the improvements,? said City Admini?strator Larry Paine.

?We?re basically putting ourselves in the position of funding the improvements, but not doing the improvements,? he added. ?That way we can avoid liability for construction defects.?

Arthur said, ?If things would move along a timeline that we think could work, we could be starting construction in October.?

Paine said the October start is possible, but ?we have a lot of things we?ve got to do to put together to make a lot of this happen.?

If the development agreement is approved, the bond would be handled through the city?s Public Building Commis?sion, a public entity separate from the council but with a board of directors comprised of council members.

?We?ve got to do some things to change the PBC ordinance,? Paine said. ?As soon as we get the charter ordinance fixed, then we can start the process to make the bond issue work.?

Paine said the changes will take some time simply because of the legal process.

?It?s all around watching the calendar?you?ve got to have so many days of this, and so many days of that, in order to make it all work,? he said. ?We?ve been waiting for the hospital to get to a point where we could work. Now they?ve got to wait for us.?

As for the development agreement itself, Paine said Friday, ?I am hopeful we?ll have a unanimous vote.?

Long journey

The path to a new facility began in mid-June 2008, when HMC/CAH acquired the assets of what was then known as Hillsboro Com?munity Medical Center from the city. Arthur stated at the time that his company intended to build a $10 million, 15-bed critical-access hospital at U.S. High?way 56 and Industrial Road east of town within three to five years.

The plan seemed close to fruition when the company hosted a ground?breaking ceremony at the designated site Dec. 14, 2010.

But plans to build were put on indefinite hold when HMC/CAH encountered unexpected financial setbacks that ultimately led to Chapter 11 bankruptcy.

?A lot of what happened to the company was driven by external forces rather than internal forces,? Arthur said last week. ?We had two lenders that had defaulted their obligations to fund capital into our company. That naturally triggered us having to go through and restructure the company?s operations through Chapter 11.?

Arthur said the company went through the formal process to regain control of its operation in 2011 and 2012, then exited the bankruptcy process in January 2013.

?It was never our plan not to build the hospital (in Hillsboro),? Arthur said. ?It?s just that these external forces had a great impact on the company, and as a result of that we?ve gone through considerable restructure related to the company?s operation.?

Case study

Arthur said the partnership agreement with the city of Hillsboro is one of the products of the restructuring process.

?We are also in process of trying to move two other hospitals along in construction, but we needed to have a good case study, if you will, and that was Hillsboro,? he said. ?We felt if it worked in Hillsboro, it will work in other communities.?

But selecting Hillsboro as the ?case study? wasn?t an easy sell, he added.

?We had to really convince USDA in this process that Hillsboro was the right opportunity to start with that (approach to) funding,? Arthur said.

One of the company?s other hospital projects is in Kansas and one in Tennes?see.

?We?ll have hopefully three hospitals within the next year under construction to kind of fulfill our business plan,? Arthur said.

Positive partnership

Arthur said the city?s potential participation in this building project would be important for both parties.

?It?s a significant partnership in that it was part of why USDA had interest in committing to the project,? he said. ?They like private-public partnerships. The city?s involvement was key in moving the project forward.?

Arthur added: ?Hillsboro is well-served by the progressive nature of the mayor and the city manager to try and keep that community growing. Not all rural hospitals in all rural communities are having the same success Hillsboro is. I think it?s a tribute to the leadership you have there.

?They?ve been nothing but supportive of trying to get this hospital built, and we appreciate their efforts without a doubt.?

Paine said helping the project move forward will benefit Hillsboro?s current and future growth.

?The policy aspect of it is that we feel the hospital is a vital part of the core of this town,? he said. ?We need to make sure that we?re helping that entity stay in Hillsboro, then put them into a position of being an economic engine.?

Marion Regier, HCH administrator, said the local operation was been largely profitable under the ownership of HMC/CAH.

?We had a tough year a year or two ago, but we?re doing OK this year,? she said. ?We?re growing and that?s exciting to see.

?We have a great medical staff to support the health care needs of Hillsboro,? Regier added. ?With this investment we?re looking to make in Hillsboro and the future of health care in Hillsboro, it?s a great thing moving forward. I look forward to a bright future.?

Combined with developments at St. Luke Hospital in Marion, Regier said, ?What we have in place now for Marion County is pretty strong.

?Hopefully, those who have been going out of town for health care will realize that we have very competent providers here.?

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