According to Southern Regional Medical Center (SRMC) officials, SunTrust Bank has given the hospital extended time to refinance a $40.2 million bond. The extra time gives the hospital, the Clayton County Board of Commissioners (BOC), and SunTrust more time to come to an agreeable compromise about the hospital's financial future.
Ron Dodson, chairman of SRMC's board of directors, said the hospital is "cautiously optimistic that we will come to an agreement with the commission in time to avert a call on our debt by SunTrust.
"SunTrust has agreed to give Southern Regional a limited amount of additional time to resolve this situation," said Dodson. "Our hope is that the commission will vote to approve the hospital's plan when it meets on Jan. 6."
On Dec. 16, the BOC voted 3-2 against refinancing the hospital's bond issue using the county's bond rating. Ed Wall, the county's investment banker, said the board members who voted against the resolution -- Eldrin Bell, BOC chairman; Commissioner Michael Edmondson; and Commissioner Virginia Gray -- had problems with several parts of the proposal.
"It was a 10-year guarantee," said Wall. "The amount that the board would have to pay if the hospital couldn't pay was limited to $7.6 million a year, but if the bond payment was more than $7.6 million, the county was responsible for the excess.
"If the hospital couldn't pay, [the BOC's] responsibility could go on for 10 or 11 years," he continued. "Also, the interest was a variable interest rate with a cap of 12 percent."
Wall said Bell desires to "lock in" an interest rate and have a "measured discussion" about what the hospital needs and what the county can afford.
Bell said it is "a bit premature" to say for certain the board will agree to hear the matter again by Jan. 6. He said the board can't "stand behind their debt without a number of conditions," one of them being to have a bigger say in the hospital's financial decisions.
"We have no oversight of the hospital," said Bell. "If we stand behind them, I want to see some oversight.
"None of that means that I don't want to see the hospital survive," he continued. "It is definitely a service to our citizens, but we have some strong financial decisions to make, not political decisions. The public has tightened its belt because of the economy ... so the hospital will have to."
Commissioner Wole Ralph, who voted on Dec. 16 in favor of backing the bond, feels confident the board will back the hospital. "Part of the agreement is for [the hospital] to demonstrate that they can pay the bond," said Ralph. "The hospital already assured us that they would set aside two years of [debt] payment. SRMC has demonstrated the ability to pay back the bonds, so the taxpayers don't have to put in a single cent to pay for the bond.
"It is in our interest ... to have a functioning hospital," he added. "Restructuring this bond will bring down the cost of the debt service significantly. It seems like a good move on all sides."
Southern Regional Medical Center:
· Is the fourth-largest employer in Clayton County.
· Has 331 licensed beds.
· Has 2,224 employees.
· Employs 574 accredited physicians.
· Admitted 18,122 patients in fiscal 2008.
· Had 74,212 emergency room visits in fiscal 2008.
· Birthed 3,938 children in fiscal 2008.
Source: Southern Regional Medical Center