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Hospital construction likely beyond 2010

by Canda HarbaughWestern News
| December 2, 2009 11:00 PM

Unless Santa drops off a generous $7 million gift, construction on the proposed new hospital in Libby won’t begin next year.

Taking into consideration the amount of debt the hospital could handle, the present cost of construction, the total money raised, and the amount the federal government is anticipated to pitch in – there is a $7 million shortfall, according to Bill Patten, chief executive officer for St. John’s Lutheran Hospital.

“Absent the money,” Patten said, “it would be unrealistic to break ground in the 2010 construction year.”

A rendering of the new hospital, which will be adjacent to its current location, was presented to the public one year ago.

Hospital board members voted in August 2008 to take on the project, citing that it was the most viable way to address space and infrastructure issues.

Building the new hospital is an urgent issue, Patten said, not only for space and infrastructure, but also for funding. As a federally designated critical access hospital, the government is slated to reimburse the hospital about half of its construction expenses over time.

Patten fears that if the hospital isn’t built soon, Congress may change policy to cut costs and fund public health care.

“It’s so important that we get this project started,” Patten said, “because if they change the rules, we can be grandfathered in.”

The new hospital was estimated to cost $36 million last year, but the price tag approached $40 million with different changes, such as the plan’s square footage and the interest rate. The price recently fluctuated again, this time to just over $35 million, when construction costs fell and the hospital opted to delay some equipment purchases.

The hospital can’t responsibly take on the debt load it could have earlier last year because profits have fallen, according to Patten.

“The bottom line has been affected by the economic downturn,” Patten said. “It’s gone down because of increased charity care and outstanding hospital bills.”

Last year’s profit was roughly $1 million, Patten said. It would have to be closer to $1.5 million for the hospital to responsibly take on enough debt to start building the new hospital without an appropriation.

Federal funds that were recently funneled into Libby for asbestos-related health care could cut down charity care and unpaid hospital bills, but Patten doesn’t foresee it making a substantial impact on the hospital’s profitability.

Hospital officials continue to explore different avenues to raise money. Another federal appropriation request was put in, and the St. John’s Lutheran Hospital Foundation has collected over $600,000 in pledges to go toward its $1.5 million goal.

Cost-cutting measures have also been taken, such as staggering the purchase of new equipment instead of replacing it all in the new building. New X-ray equipment, for example, could be purchased right now, Patten said, and other equipment may have three or four years of useful life left.