Close Window
Print Window
Return to Main News Page

In the News

Hospital Election Feb 2, 2010 - See Complete Hospital Study Press Release...

Proponents, Opponents Explain Stances on New Hospital Proposal
Constitution-Tribune, Monday, January 25, 2010

Chillicothe voters in eight days will go to the polls to decide whether they want the city to spend part of the city’s existing capital improvements sales tax dollars to help construct a new hospital. The Constitution-Tribune interviewed proponents and an opponent of the ballot issue and asked them to identify key elements of their arguments for the ballot issue’s passage or defeat.

Those speaking on behalf of the measure were Mike Palmer, chairman of the hospital board; Darryl Rinehart, councilman-at-large and member of the hospital board; and Lloyd Cleaveland, co-chairman of the Our Hospital Matters Committee.

Speaking against the proposal was Patricia A. Anderson, treasurer of Citizens Against Unnecessary Local Government Spending.

The election question, as it appears on the ballot, is as follows: “Shall the City of Chillicothe, Missouri, permit use of the City’s existing one-half cent capital improvements sales tax for the purpose of paying some of the costs of constructing a new city-owned hospital, in addition to other currently permitted purposes? Approval of this proposition will neither increase, nor extend the duration of the City’s existing capital improvement sales tax.”

New Building Won’t Fix Current Health Care Problems, Critics Say
Monday, Jan 25, 2010

Opponents say the ballot question should be voted down because the ballot proposal is “fiscally irresponsible,” does not address operational concerns, and is proposed to be built in a poor location.
Pat Anderson, who serves as treasurer of Citizens Against Unnecessary Local Government Spending, said the lack of information placed on the ballot is a big issue. “That has to be a concern to any responsible taxpayer,” she said. “No taxpayer should vote for that ballot.”

Anderson said a bigger picture is the current health care delivery system in the Chillicothe community. “These are problems that are operational in nature and have nothing to do with the building,” she said. “There are concerns with physician staffing, patient billing, insurance coverages.” She said she had just met with group of senior citizens who expressed concerns over the way health care is delivered. “There is a whole group of concerns they want to see changed in this community,” she said. “They want to see a change of how health care is delivered here.” “There is no assurance that a new building will fix any of those underlying operational problems.” Anderson speculates that the underlying operational system will become worse. “The building will be designed and inject into the hospital $25 million dollars of additional fixed overhead costs,” she said. “They will be forced to run a model that is very lean and mean and because of that, a lot of these operational problems will become worse and not better.” Anderson said that the people are “very frustrated” that they have not had the opportunity to voice their discontent with the quality of health care as it is currently delivered. “Since tax dollars are involved, they want assurance that they will get a product that is better than what they currently have.”

The hospital is proposed to be built on city-owned land southeast of U.S. Highways 36 and 65, the site of the city’s old waste water treatment plant. The proposed site has been identified as a 267-acre tract of land of which between 200 and 250 acres are located in a 100-year floodplain area. “The people I have talked to don’t want it in a flood plain,” Anderson said. “They have concerns of flooding. Where it is (proposed) is where waste and sludge have been put. They just do not feel it is a suitable site.”

Anderson was asked what capital improvement projects should be funded with the existing capital improvements sales tax if not a hospital. “The seniors live on fixed incomes,” she said. “Some people feel that we should repeal the tax.” Anderson said that the hospital is a lot more than just a building.
“There’s a lot more that goes into health care delivery,” she said. “It’s the doctors, it’s the staff, there are lots of issues that have absolutely nothing to do with the building.” She said that when talking about competitiveness among hospitals in certain geographical areas, people will go to where quality health care is delivered. “They will not come where there is a pretty building,” she said. “They may come once, but if they have a poor experience, they will never return.”

“The bigger question isn’t we want a building to compete with other communities,” she said. “We want to make sure that our health care delivery services are of the utmost quality. Ultimately, that is how you compete in health care.” She said that a new building would have little impact on the hospital’s ability to attract new doctors. “Most doctors that come to rural communities come out here because they like the rural lifestyle, they want that,” Anderson said. “They don’t want to practice in a large city.” Anderson said that she believed that a new building would mean little to primary care doctors because Hedrick is a critical access care facility which “de-emphasizes in-patient care.” “I think we have shown that we can recruit physicians with our current hospital,” she said. “It certainly has not been a detriment and I’m a little confused to why anybody would think a building would make that much of a difference. Obviously, we have been successful and we currently meet what would be the projected needs of the community.”

Anderson said she was puzzled by the strings attached the $1 million donations from each of two local foundations that stated the funds would only be available if the ballot issue succeeds. “I have never seen our local foundations or charities back down and take a position so hard on anything in this community,” she said. “They have always been so generous. I don’t think they would play hardball.”

In closing, Anderson stated that the ballot issue should be voted down. “Everybody I have talked to thinks the ballot is ridiculous, fiscally irresponsible, nothing more than a blank check and needs to be voted down,” she said. She also speculated that a new hospital will not change the amount of patient transfer to larger hospitals and that there would not be an increase in in-patient care. “The change to critical access was such a profound change for this community,” Anderson said. “It changed how health care is delivered. What I’ve seen occurring in the trending numbers are more and more transfers and very little in-patient care being delivered. A new hospital building will not change that.”

Ballot Issue on Hospital is ‘Golden Opportunity,’ Advocates Report
Monday, Jan 25, 2010

Proponents say the ballot issue should be fully supported as this is “a golden opportunity” for Chillicothe to have a brand new hospital for very little investment. “Look at the YMCA, look at the school system, where is our weak spot? Our weak spot is in our hospital,” said Lloyd Cleaveland, co-chairman of the Our Hospital Matters Committee. “We have an opportunity to get a brand new hospital facility in here for almost nothing.. almost solely paid for by Saint Luke’s.” Cleaveland said that voters’ decisions next Tuesday should not be based on personal conflicts one may have with individuals or those in city government. “Vote for it because the community needs it,” he said.

Councilman-at-Large Darryl Rinehart said that having an aging facility makes it difficult to attract physicians. “Because of what we have, it is difficult when you’re out there competing against all these other facilities,” he said. “I can understand why a doctor would want to choose somewhere else.”

Cleaveland said the current facility is arranged poorly and is equipped poorly, adding that a change needs to be made if the city wants to maintain a good medical base. Passage of the ballot issue is “a no brainer” Cleaveland said. “We are going to have a brand new hospital facility fully equipped with state-of-the-art equipment right here at home that is available anytime it is needed. The cost of that is almost nothing.”

The city of Chillicothe owns the current hospital building and leases it to Saint Luke’s at a rate of $500,000 a year. If the ballot issue is approved, the lease payments from St. Luke’s will increase from the current lease payments to an amount equal to pay 100 percent of the loan payments — principal and interest, Cleaveland said. In addition, St. Luke’s will fully take over all repairs and maintenance at the new hospital and insurance, which the city currently pays.

The hospital project is proposed not to exceed $30 million plus interest. Local funding is proposed to amount to around $6 million. Half of this amount would come from a portion of the existing capital improvement sales tax dollars, $1 million that the city has on hand which was generated by the existing lease payments made by St. Luke’s and restricted only for hospital improvements, and $1 million each from two local foundations. Based on current projections, the city’s $3 million portion would come from around half of the funds generated by the existing capital improvements sales tax over the next 10 years. The largest portion of constructions costs, estimated to be around $25 million, would be paid for solely by St. Luke’s through certificates of participation extending over 25 years.

Palmer said that St. Luke’s has verbally agreed to a 12-year lease of the hospital, plus five-five-year renewals. If the measure passes, Palmer said, St. Luke’s is prepared to sign the 12-year lease. He said St. Luke’s track record speaks for itself. “They have said that they have never left a community in which they were operating,” Palmer said.

As part of the contract arrangements, the city would receive one-half of 1 percent of the net revenues from St. Luke’s. He also noted that St. Luke’s is putting an up-front escrow deposit of $2.5 million. “We are getting a new hospital facility that we own solely with no tax increase,” Palmer said.
The proponents addressed the worst case scenario if St. Luke’s backs out after its 12-year lease which would leave a balance of $17 million.

Cleaveland said that the city would either get a new lessee to operate the hospital and pay the city rent or that the city would operate the hospital itself, noting that the city had once operated the hospital. “It would appear to be nothing but gain, gain, gain,” Cleaveland said. “How can you say no?”

A primary reason a new hospital is needed is to help retain professional medical staff and find adequate care for the patients of our community, Rinehart said. Hedrick Medical Center currently operates as a critical access care facility. “The only limitation is that the number of beds in the facility is limited to 25,” Palmer said, noting that the average bed occupancy is eight. “Twenty-five beds ought to be adequate to handle the needs,” he said.

The proposed new hospital would be located on city-owned property in the southeast corner of U.S. Highways 65 and 36. The total amount of land is 267 acres and of this amount, between 200 and 250 acres are located in a 100-year flood-plain area, according to a study released by the hospital consultants. The footprint of the proposed new hospital is not in the floodplain, however, ground surrounding would be. Palmer said that dirt likely would be hauled in from other areas of the city-owned land to build up the surrounding area and possibly the footprint of the hospital as well. 
A medical office building, which would be privately constructed, is also proposed for the location, Palmer said. The city would retain ownership of the land and have authority to dictate how the facility would look, but would enter into a long-term lease agreement with the developer. Palmer said that Trenton had a similar project and had six bidders.

Currently, the medical office building is city-owned and part of the existing hospital complex. Palmer said a privately-developed medical office building is financially more appealing than having it as part of the proposed new hospital, largely because a medical office building can be built to a lower code than an actual hospital. He said that many of the current doctors are employed by St. Luke’s and that it was likely that St. Luke’s would lease space in the new office building so that its doctors would have an office near the hospital.

There are currently around 280 employees at the hospital who generate an annual payroll of $12.6 million. Palmer said that the hospital anticipates growth once a new facility is built. “We will provide a facility for people to get their medical services here,” he said, noting that he anticipated a reduction in the number of patients that are transferred to larger facilities.  Palmer acknowledged that the area’s population is not necessarily growing but it is aging. “The population is reaching a point where they have more health care needs,” he said. He said that because of new procedures that will be offered at the facility, a new hospital will not only retain the patients that normally use the facility but new ones as well.

Rinehart said the proposed site is beneficial in many respects. “Currently, the hospital is located in a residential area where emergency vehicles have to maneuver through in order to move our patients in and out of our facility,” Rinehart said. “It was an excellent facility when it was designed... but now, the way they have to move through there is a safety concern to residents of that area. There are emergency vehicles moving in and out all the time, and a helicopter going in and out. It is a disturbance for that area.”

Palmer said that the hospital board has been looking into the possibility of building a new facility for a couple of years. He said the existing facility has aging issues and a list of big ticket items that need to be addressed. “Some we are doing and some we are waiting on,” he said.

Rinehart questions where money for improvements and renovations will come from if the ballot issue fails. “There is not enough money through capital improvements sales tax to remodel the present hospital,” he said. “If this does not pass, where do we come up with the money to remodel the facility? Run another sales tax?” Rinehart stated that using a portion of the existing capital improvements sales tax to help construct a new hospital did not need a public vote. “The council thought this was the biggest issue ever before our council in decades,” he said. “Now is the time,” he said as bond interest is down and construction prices are down.

Palmer stated that the sales tax isn’t just paid by the residents of Chillicothe, but also by the residents of Livingston County and those who travel through the community. “We have people going through town that live in other parts of the area that are helping provide us a wonderful new health care facility,” Palmer said.

The capital improvement sales tax generates around $700,000 annually and, in the past, has been used for building Danner Park, remodeling the aquatic center, assuring that the prison remain in Chillicothe, and paying off the golf course, the proponents said. “The capital improvements sales tax was voted for capital improvements in our community,” Rinehart said “What better capital improvement in our city can that money be used for that will benefit the citizens of our entire area?”

The proponents also stated that the city will still have money to work with even after the hospital payments are made. According to projections by the city, the city would still have a minimum of $421,000 in its capital improvements sales tax funds each year even after the city takes out funds for the hospital, prison, and bowling center.

Friday, January 22, 2010

Question: Will a representative from the St. Luke's corporate office go on record in the newspaper and make the statement that the current hospital no longer meets the operational needs of the community and that it is their recommendation that a new facility be built in the next two years?

Answer: Don Sipes stated in an open council meeting that St. Luke’s wanted to be on the record as enthusiastically supporting the project to build the new hospital within the next 2 years.

Question: How much is this project really going to cost the taxpayers? The financial projections state that a capital campaign will be initiated to raise at least $3 million in local donations. We understand that $2 million has already been raised from local foundations. If the balance of $3 million is not met, would the shortfall have to come from the capital improvement sales tax?

Answer: The cost of the project to the taxpayers is simple. It is the $3 Million plus interest to be financed with the existing capital improvement sales tax and $1 Million to come from existing dedicated hospital funds of the City. The budget to come from the community capital campaign is for $2 Million (not $3 Million). That money is committed by local foundations IF the election passes and the new hospital is built.

Thursday, January 21, 2010

“Shall the City of Chillicothe, Missouri, permit use of the City’s existing one-half cent capital improvements sales tax for the purpose of paying some of the costs of constructing a new city-owned hospital, in addition to other currently permitted purposes? Approval of this proposition will neither increase, nor extend the duration of the City’s existing capital improvement sales tax.” What will happen to the existing hospital if a new hospital facility is built?

Answer: The current building is one of the most recognizable structures in Chillicothe. It has a connection to many residents and should be kept as a community asset. The City has received several suggestions such as using it to expand the healthcare programs at North Central College, senior housing, adult day care, or a child care and wellness center. The new facility should open in 2012. The interim time will be spent finding a suitable use. We view this building as a community asset and encourage any suggestions for its future use. It is important that the use be compatible to the area and something the neighborhood will welcome. We suggest the neighborhood members be closely involved in any decision.

Question: Will Chillicothe Municipal Utilities incur any costs associated with the relocation of the hospital to its proposed site? Will these expenses impact the cost of CMU services to the people of Chillicothe and its associated businesses?

Answer: No. There is money in the current budget for relocation of all utilities.

Tuesday, January 19, 2010

A selling point proponents of a new hospital keep making is that this facility can be built and it won't cost a dime in new taxes. The capital improvement sales tax was extended by voters in 2005 for the express purpose of relocating the prison. During the July and November WIPFLI presentations, it was discussed that the city's $3 million contribution to this project would utilize this sales tax revenue source for the next 10 years. If this vote passes, does this mean that there will be no other community capital improvements for the next 10 years?

Answer: No. The City’s current projection is that there will be in excess of $3.2 Million for other community projects over the next 10 years after paying for both the hospital and prison.

Question: The WIPFLI consultants indicated in their July 2009 presentation to the City Council that a replacement facility will be built so that it could be run efficiently and that there would be a reduction in the number of nursing stations. Since the new facility would be smaller, will there be any local job losses?

Answer: No. The budget is for the employment to grow not shrink.

Monday, January 18, 2010

If a new hospital is built, will everyone be moved to that site, including the offices and physicians that are currently at the hospital campus?

Answer: No. All inpatient, outpatient and clinic patient care services will be located in the new hospital facility, most offices and other services. Some hospital departments that do not offer on-site patient care will be located either in the new medical office building or elsewhere in the community as they are presently. The new medical office building will be available for physicians who want to relocate. Some physicians may choose to office at other locations of their choice as they presently do. There will be no hospital operations at the current hospital building.

Question: If a new hospital is built, will St. Luke's continue making lease payments to the city? If so, what will that amount be and how will those funds be used?

Answer: Yes. The lease payments from St. Luke’s will increase from the current lease payments to an amount equal to pay 100 percent of the loan payments – principal and interest. In addition, St. Luke’s will take over 100 percent of the responsibility for all the repairs and maintenance at the new hospital and insurance, which the City currently pays.

The Ballot Issue: “Shall the City of Chillicothe, Missouri, permit use of the City’s existing one-half cent capital improvements sales tax for the purpose of paying some of the costs of constructing a new city-owned hospital, in addition to other currently permitted purposes? Approval of this proposition will neither increase, nor extend the duration of the City’s existing capital improvement sales tax.”

Tuesday, January 12, 2010:

QUESTION: The historical financial information presented by WIPFLI (consultants hired by the City of Chillicothe to study the need for a replacement hospital) indicates that St. Luke’s made an accumulated net profit from HMC operations for the period 2005 to 2008 of $12,011,000. What has St. Luke’s invested in the existing facility during this time and why should one dollars of our community's sales tax revenue go toward building a new facility?

ANSWER: The City did not hire WIPFLI to study the need for a replacement hospital. WIPFLI was hired to study the best choice between a renovation of the present facility or the possibility of a new facility. It became quite apparent that a replacement was the best and logical choice for many reasons. St. Luke's has invested that profit back into our community. It has been used to purchase state-of-the art equipment such as a 64-slice CT unit ($700,000); SPEC-CT camera (only the second in the State of Missouri at a cost of $500,000); and complete replacement of the hospital's information technology system at a cost of more than $1 million, and it is anticipated that the St. Luke's Health System will provide approximately $2.5 million in new capital should a new hospital be built. Importantly, St. Luke's has invested 100% of it's reserve funds generated by the hospital in our local banks. Additionally, the hospital has provided $3.9 million in charity care since 2005 and provides thousands of dollars to support various community projects and activities every year.
In addition to investment in technology, new on-site and telemedicine specialty clinics have been added, including: cardiology, pulmonology, neurology, wound care, psychiatry, ear/nose/throat (ENT), podiatry, physical medicine (rehab), and two new orthopedic clinics. The Saint Luke's Health System and the hospital have been successful in adding two OB/GYN physicians, an internal Medicine specialist, two Family Practice physicians and two general surgeons to the community, most of whom are employed by the hospital. The hospital employs more than 280 people with an annual payroll of $12.6 million and an additional $2.8 million spent on benefits. As the System and the hospital continue efforts to increase local high quality services, reducing the need to travel outside the community for care, additional employment opportunities are expected into the future. Finally, the hospital has provided over $1.2 million in the past 3 years for use by the City to fund important community medical needs. 

QUESTION: Do we actually need a new facility? The July WIPFLI study cited concerns regarding significant utility, maintenance, and upkeep expenses associate with the current hospital. However, in November of 2009 WIPFLI announced that the current hospital may not be shut down and that the hospital could operate two separate campuses. This means that instead of reducing costs, a significant amount of overhead expense could increase. How cost efficient is that?

ANSWER: YES, a new facility is needed. The current facility first built in 1936, added on to in 1954, and last added on to in 1970. It does not meet today's health care needs. At the time few people knew that one day we would have CT Scans, nuclear medicine, ultrasound, digital mammography or any of the other commonly used diagnostic tools of today. The focus at the time of design was on in-patients. Due to improved procedures and technology, 70% of today's care is out patient. Health care calls for a healing environment with single rooms that offer privacy, safety, and space for family visits. Along with many departments, lab, radiology, surgery and wellness are presently under spaced. New technology is limited by ceiling height, space and adjacencies. If Hedrick Medical Center wants to remain a quality hospital providing contemporary and effective care for the community, significant upgrades in the facility are required. While it is true that in November the City and St. Luke’s considered as one option to continue using some office space and support services in the current facility if it was cost efficient, that option has now been ruled out. The hospital currently operates facilities at multiple locations throughout Chillicothe (Hedrick Family Care, Park Center). Current plans call for all inpatient, outpatient and clinic patient care services to be located in the new hospital facility. There will NOT be two separate hospital facilities operated.

Wednesday, January 13, 2010:

QUESTION: Is the current facility really in need of replacement? When asked, the hospital administrator has indicated that the current facility is at mid-life in terms of replacement need and that the attached medical office building is in immediate need of replacement. Then what is the hurry to retire an asset that has at least 10-15 years of additional service life?

ANSWER: The current building, although in good condition for its age, needs many repairs. It is anticipated that significant investment will need to be made in the next several years to replace aging infrastructure and mechanical systems, such as the electrical system which is at capacity, the medical gas system needs replaced, the heating and air conditioning system needs replaced, there are significant ADA issues, and other things. A further consideration is that the relatively higher cost of retrofitting infrastructure required to support modern technology and new services makes new construction more cost efficient. Remodeling the current facility would not meet today’s healthcare needs or allow for future expansion. Also a remodeling would be costly and disruptive to ongoing hospital services, and would result in no improvement to the location and access issues.

QUESTION: One reason cited in the WIPFLI July 2009 report for a new hospital is physician recruitment/retention. Yet, the same study shows that our community need is currently being met with respect to primary care. The only area of primary care that shows a need is pediatrics. It doesn’t appear that our current facility has been a detriment to physician recruitment, so how much impact will a new building really have as far as recruitment is concerned?

ANSWER: In short, although Chillicothe is a very attractive place to live, if Hedrick’s facilities do not keep pace with the myriad of other similar sized facilities in the region that are replacing or doing major upgrades, the hospital will be at a disadvantage in recruitment and retention. Indeed, much of our recent success in recruiting has been due to anticipation that a new facility is being considered. The ability to provide for the medical and surgical needs of the community and to continue growth in services is dependent on recruiting and retaining well-trained physicians and other health professionals who have an active interest in maintaining as much care in the community as possible, consistent with high quality standards of care. This is a constant process, because physician recruiting depends on personal situations and lifestyle considerations. There is a critical and growing shortage of primary care physicians and other health professionals, and there is great competition to recruit them. Success in both recruitment and retention of high quality professionals is dependent on the hospital remaining competitive with other hospitals in providing an attractive and efficient environment of care.

Thursday, January 14, 2010:

QUESTION: The council’s decision to proceed with the ballot issue to build a new facility was based largely upon the cost estimate of $44,000,000 to fully renovate the existing hospital facility. How accurate was that estimate?

ANSWER: The report in 2008 was done by ACI-Boland a well known and respected healthcare architectural firm and there is no reason to believe the estimate is not accurate. It is clear that the City would have to spend millions to renovate the existing hospital and that money would be better used to build new.

QUESTION: Do we really need a new facility to stay competitive with surrounding communities? The WIPFLI July study shows that the outmigration of patients from Chillicothe is Kansas City — not Trenton or Cameron. A Critical Access Hospital by definition is a facility that provides basic primary services and does not offer the depth of medical specialties available at large urban community or university affiliated hospitals. Will a new building really keep patients from going to Kansas City, especially for complicated medical needs?

ANSWER: Yes. Doctors looking to locate their practices and businesses looking to relocate or expand their businesses insist on progressive health care facilities. A new building will permit more services to be performed here, especially more clinics that bring specialists from Kansas City. Will it mean all services will be offered here? No, but with telemedicine and other medical advances many services that were offered only in Kansas City can be offered here.

Friday, January 15, 2010:

QUESTION: Is the city planning to find other ways in which to fund the building of a new hospital should this measure not pass?

ANSWER: No. The City will lose the $2,000,000 in commitments from local foundations that are contingent on voter approval and building a new hospital and cannot afford a new hospital without that funding.

QUESTION: If the ballot measure is approved, please explain in detail (including funding sources and dollar amounts) of how construction of the facility will be funded.

ANSWER: The funding sources and dollar amounts will be as follows:

a. $1,000,000 presently on hand and earmarked only for hospital use;
b. $3,000,000 to be paid by the existing capital improvements tax; THERE WILL BE NO TAX INCREASE. This will consume approximately one-half of the present capital improvements tax raised over the next eight to ten years.
c. $2,000,000 from present commitments from local foundations (conditioned on voter approval and construction of a new hospital).
d. The balance of about $25,000,000 will be paid solely by St. Luke’s Hospital from the lease payments.

C-T Editor’s Note: This is part of a series of Q&As being published between now and the election. Questions have been formulated by members of the public. Responses are submitted by the Our Hospital Matters Committee co-chairmen, Dr. David Neal and Lloyd Cleaveland.

Return to Top

Close Window
Return to Home Page