HMC to seek $7.5M loan to stay afloat
By Dwayne Bremer
Sep 24, 2013, 18:40
Officials at Hancock Medical Center said Monday that they plan to seek a $7.5 million loan so that the hospital can complete current construction projects and have "bridge financing" to keep it afloat.
Members of the Hancock Medical Center Board of Trustees and the Ochsner management team met with the Hancock County Board of Supervisors on Monday to update supervisors on the status of the hospital's financial situation.
HMC CEO Polly Davenport told supervisors that her group is doing a thorough evaluation of the hospital's needs and finances.
Davenport said that statistics show the hospital had an operating deficit of $4.7 million for the 2013 fiscal year.
Part of the shortfall, she said, was construction costs associated with the hospital's expansion.
Work on the project is ahead of schedule and reimbursements from FEMA are running behind, she said.
Davenport said that Ochsner believes it can increase the revenues at the hospital by about $2 million a year.
"There are a lot of opportunities, but the real challenge is managing the cash flow to break even," she said. "That is going to take a few years. We need money now to sustain for the next 12 months. The goal should be to try to reduce the deficit each year."
Davenport said the hospital is "debt-free."
Hospital Board Members suggested seeking a loan or securing a line of credit up to $7.5 million.
The hospital would not use the property as collateral, but rather the note based upon its cash receivables, officials said.
Once reimbursements from FEMA come in, they would be applied to the principal, officials said.
Supervisors gave their blessing for the loan request and said they hoped Ochsner would continue to assist the county, even after its 90-day contract expires.
Davenport said Ochsner is "committed" to HMC.
"The decision to extend the contract is up to the hospital board," she said. "We would like to continue to be here and we are committed to seeing you succeed."
Davenport said Ochsner is also conducting a feasibility study to determine the short and long-term needs of the hospital.