By Joel Hall
Officials from Southern Regional Medical Center (SRMC) warned the Board of Commissioners (BOC) on Tuesday that the hospital risks shutting down if it is unable to refinance about $40 million in debt before the end of the year.
Hospital officials asked the BOC during its work session to use the county's bond rating to help refinance a $40 million line of credit, which SunTrust Banks, Inc. will come to collect at the end of this month if nothing is done. The request is less than half of the $95 million bond the hospital asked the BOC to support earlier this year.
The county, so far, has not agreed to financially back the bond. The BOC will have its last business meeting of the year next Tuesday, where it will have to decide on the matter.
With the hospital suffering nearly $83 million in losses this year, and the county dealing with its own financial problems, commissioners expressed angst at the idea of taking on additional debt.
Ron Dodson, chairman of the board of SRMC, as well as Ed Bonn, SRMC president and CEO, made a plea to the commissioners on Tuesday night to consider the impact the hospital shutting down would have on the county's economy and health.
"I don't beg very often, but I am begging you to consider this for the benefit of the county," said Dodson. "The end of December is very critical. If we don't get this approval by the end of December ... we could be shut down financially."
Last year, Dodson said, the hospital experienced "an outflow of over $83 million in bad debt and charity care."
Eldrin Bell, BOC chairman, as well as other commissioners, expressed concerns about the request.
"At a time like this, how are you going to stop the bleeding so the county isn't picking up your finances five years down the road?," Bell asked hospital officials. He said backing the bond wouldn't stop the hospital's cash flow problems.
"It's not the county's responsibility to make sure the hospital is profitable," said Wole Ralph, District 3 commissioner. "SunTrust has said that they are not willing to extend you a line of credit. I'm worried that this is asking us to back something SunTrust doesn't want."
Michael Edmondson, District 4 commissioner, noted that SRMC has about $48 million in reserves. He suggested that the hospital pay the $40 million in full and save itself the burden of paying off debt.
"You all have about twice as much as us in the bank," said Edmondson. "You have $48 million in the bank and about $40 million coming due in a few weeks. Why not just have $8 million in the bank and save yourself about two-and-a-half million in debt services?"
Bonn suggested that having only $8 million in reserves would be "a scary scenario" for the hospital, one that would put the hospital -- and the services it provides to the community -- at risk.
"While we could settle the debt that way, it would leave us with no money to deal with any potential bumps that may come along," said Bonn. "In this market, you need to hold onto your cash.
"We are willing to finance our own debt, but we are trying to go to the bank with the county's bond rating," Bonn continued. "The bank wants us to refinance this. We want to give that letter of credit a more stable instrument."
Bell said with the issues the county is facing, he is guarding the county's finances cautiously.
In recent weeks, the county has been reeling from its own set of financial issues, which threaten the county's bond rating.
Problems have recently arisen between the county's finance department and the board of commissioners as the failure to correctly submit a 2007 fiscal year audit put the county on suspension from receiving state grant funds. Due to miscommunication between the finance department and the BOC, the county went through $20 million of its reserves, unbeknownst to the board.
"I've looked into this and there are some questions that I have," said Bell. "I am not confident at this time to put our backing behind anybody."