A Tale of Two Houses

Have you ever known anyone who got into too much debt?  Has it ever happened to you?  What an awful feeling, eh?

I have a confession to make.  You all know I moved here from Montana.  Most of you know I haven’t bought a house here in Madras yet because I still have a house in Montana that hasn’t sold yet.  What many of you don’t know (until now) is that I still have TWO houses for sale in Montana!  Yes, that’s right…..two houses, like big balls and chains around my neck.

How did this happen?!  It all seemed like such a good idea at the time.  We had our little cabin in the woods outside of Troy.  It was originally a one-bedroom place, but when our triplets were born, we felt a need to add on two more bedrooms and bathrooms.  It was in an ideal location (for us) away from all traffic and other houses with a natural hunting range right off the front deck and a spring creek in back.  I never worried about the kids getting hurt in traffic—no one drove down our dirt road unless they were coming to see us!  (I did worry at times about them being eaten by bears or mountain lions, but that’s another story.)

But I worked 20 miles away in Libby, and when they got old enough, the kids attended school in Libby.  Then, Grandma lived in Libby and needed more care.  And later, Tom was in and out of the hospital so much with his cancer treatments that we got to the point where we were almost always in Libby.  So, we started looking for a place to live in Libby and found a great deal on a house that still offered some rural flavor, but was much closer to Grandma and school and the hospital.

Our credit union was used to people changing houses back then, and so they worked out a “bridge loan” on the Troy house and a new loan on the new Libby house.  The assumption we all made was, with the market so hot and prices so high and rising quickly, it wouldn’t take long before the Troy house sold, we paid off that loan, and all would be well.

This was back in mid-2008.  Do you remember what happened then?  It wasn’t more than about a month after we sealed the deal that the whole market fell and not one house sold in the county for over a year.  It has not gotten much better since then.

So, here we are today in 2012, still owning both houses, making two house payments and now making a rent payment in Madras, too.  We rent the Montana houses out to great people, and their rent helps us make ends meet.  But I want to tell you that this whole house deal just about killed us financially.  We should not have taken on that much debt based on the assumption that everything in the economy would stay exactly the same as it had been in the past and everything would work out perfect in the future. 

I may be wrong, but I’ll bet a lot of you have either been in similar situations before, or you know people who have.  How many thousands of people just in Central Oregon have lost their homes during this recent recession because they were in over their heads in debt?

Why am I spilling my guts to you about this now?  Because it hits so close to home when I think about our recent decision to re-vamp the building project.  We have the option to continue plowing forward on the old design and the HUD financing if we want to keep fighting the good fight.  But all the signals are saying that the economy, at least for healthcare, is not going to improve any time soon.

Let me give you a few examples.  Medicaid here in Oregon is going to cut $239 million from their budget this year, and they expect to cut even more the following year.  Medicare is trying to do the same thing, only the numbers are in the billions.  Every insurance provider wants to pay us less and less for the hard work we do.  People are delaying surgeries because they don’t have the money for co-pays.  We see the belt tightening everywhere.

Combine that situation with the fact that our contractor gave us a guaranteed maximum price (GMP) that was way over budget, and HUD was delaying us again, and you have the perfect storm that can lead right into a debt crisis for MVH!

So, our new plan is to tighten our belts, stay lean, and be able to respond to the changes that come our way.  Staying as much out of debt as possible is key to that plan!  So is offering every surgery and every service here at Mountain View that we can do in a quality manner.  We are on the right track.  And we are going to stay the course and be healthy for years to come.

Thanks for your support about our decision on the building project.  We will keep moving forward, and keep you posted!

Jeanie

Recent News Coverage

Since our big announcement to pursue an alternate building project we have had several interviews with local media.

Be sure to watch KTVZ News Channel 21′s 5:00 pm and 6:00 pm broadcast tonight to see their interview with me today.  Also, if you listen in to KBND News Talk in Bend, I shared some information about our news with them too.

As always, if you have tough questions (or just want to chat), please call me at my office here at MVH.  My office line is 541-460-4200.

Thanks for your support!

Jeanie

 

Keep Fighting the Good Fight!

We have some important news regarding our most recent building project…

Last evening at our Board of Directors meeting it was decided that MVH will pursue alternative building plans for facility expansion.

After receiving the most recent round of bids for the hospital project, we have realized that the financial cost was too high a risk to take for our community’s hospital.   The rebid for the hospital renovation project returned figures much higher than we had projected.

After considering these new bid prices, the condition of the local and national economy, as well as recent threats to Oregon Medicaid reimbursement, the Board concluded that the current project costs were not affordable. Our HUD funding application was based on a total construction cost of about $22 million. The general contractor was unable to meet that goal in the necessary timeframe.

In light of all of this, we will immediately begin to rescale the project to address the most urgent needs first. The most pressing areas include the operating room, the imaging department and additional clinical space for physicians.  This starts with redesign work, then revised architectural drawings. Because of the amount of work to be done, we do not have a projection as to a ground-breaking date.

MVH will search for other options beyond HUD funding to find affordable alternatives that can be available in a faster timeframe.  We must address the most pressing concerns to ensure our facility remains an affordable health care resource for Jefferson County.

Our immediate goal is to keep our hospital and our community healthy and strong for many years to come.  The Board at MVH is committed to making this project a reality just as quickly as possible.

I understand how difficult it is to make a change like this at this late stage of the game, especially when so many people have put in so much work and planning.  However, we must not be blind to the current financial situation of our nation, our industry, our community and our own hospital.

Thank you for the support and help you have each given to our building project to date.  Thank you for believing we can still address our biggest needs while keeping MVH strong for years to come.  And thank you all for keeping our focus on the most important purpose of all: to give compassion and excellent care to improve the health of those we serve, our patients.

We will build a building!  And we will do it RIGHT!

If you have questions, please call my office at 541-460-4200 or contact our Communications Department at 541-460-4039.

Thanks again,

Jeanie

A Great Visit!

Last week, four people from the U.S. Department of Housing & Urban Development (HUD) came to look at Mountain View Hospital.  They are involved in making the final decision on whether to loan us $34.25 million for our new building.  I don’t know about you, but $34.25 million is a LOT of money where I come from!  And they won’t lend it to just any old hospital.  No, they needed to see whether we really need a new building, and if the community really supports the project.

Some of you helped me show them how tight our current space really is, and some of you even helped explain how deeply you feel we need better facilities to care for our patients.  Almost all our local docs were able to tell the HUD folks their opinions about the plan, and our Finance Committee, Foundation and Hospital Board members all participated, too.

Even some people from elsewhere in the community shared their perspectives with HUD.  Rick Molitor, 509J School Superintendent, Melanie Widmer, Madras City Mayor, Rick Allen, Developer, and Jim Manion, Warm Springs Power & Water Manager all had lunch with HUD and told them how important the new building is to our local economy.  It was encouraging to hear them advocate on our behalf.  They really “get it!”

Well, all the meetings and tours and preparation paid off.  The HUD folks were impressed with everything they heard and saw.  Some of the comments I heard them say included…

• “This is really a beautiful area!  I wish I could live in a place with this kind of weather.”
• “Everyone we met here has been so friendly and positive.  People in town seem to love living in Madras and there is a lot of positive ‘vibe’ from people here.”
• “Your hospital is very well-maintained and cared for.  It looks newer than it really is, and that’s a sign of a well-run place with good people.”
• “We can see why you need a new hospital!  Your OR is especially below par.  It would be difficult to recruit any new surgeon here with that OR space.”
• “You really need a new CT, and we can see there just isn’t any room for it now.”
• “The longevity of your docs shows they truly care about the community and they are committed to the hospital.  They are united in wanting this new building.”
• “We’ve read about your CHIP program, and it very impressive!”
• “Your Board members have served for a long time, and they are very connected to the community.  We can tell they have thought through all the options and have carefully considered this project.”
• “The community leaders we talked to are very positive about the Madras economic future.  There is a lot of good momentum and growth potential here.”
• “The only challenge we see for Madras is just the unknown future for healthcare in general with all the reform measures being discussed.  Otherwise, your project looks great!”

So what happens next?  I’m told the HUD folks who came here will write a report about what they saw and heard, combine it with the data we have already supplied, and submit their recommendation to The HUD Powers-that-Be to make a final decision.  They anticipate that decision would be made in the next two months.  Several other HUD reviewers will visit us in the meantime to look at specific technical aspects of the project, with our next visitor scheduled to come December 16.

In the meantime, we are working on new “bid packages” in the next couple of weeks.  These have the most up-to-date drawings and requirements for sub-contractors to provide bids on the work.  The subs will have another chance to give HDR (our architect/builder) quotes on parts of the project.  We all hope that these updated bids will come in a bit lower than the quotes we received last year.  In the meantime, we will be getting all the permits required from the State, County and City.  There are many moving parts to this project, and they are all going to come together in January.

All the new bids are due by January 15.  By January 24, we should have all the information the Board needs to make a final decision to close the loan with HUD.  It’s possible we could close on it by the end of January and start construction in February-March!

I know you probably have more questions.  Please let me know what else you would like to know about the project.  You can stop me in the hall, call me (ext. 4200) or email me at JGentry@mvhd.org.  I want to keep all of you informed and involved.  After all, it’s your hospital, and we are all in this together.

Thanks again for making the HUD visit a spectacular success!

Jeanie Gentry, CEO

HUD to visit Mountain View Hospital this week!

Later this week (Wednesday and Thursday) we will have a visit from HUD representatives from Washington, D.C.  They will be interested in finding out about our perspectives on the new building.  Many of you may have a chance to give them your point of view. If so, I thought it might be useful to refresh your memory with some basic information about the project.  These FAQs might also help you be able to respond to questions you encounter in the public.

Thanks for your support!  I look forward to all of you helping knock the socks off HUD!

Frequently Asked Questions – Key Points

Why do we need this new building? Our current building looks great!

We have taken good care of this building and added onto the original 1967 section several times.    However, any more additions would require massive renovation to the “guts” of the buildings—the electrical, plumbing, mechanical, HVAC, etc.

It’s also really tough to change all that while we are treating patients.

We don’t have enough space for everyone right now.  We only have one operating room.

We can’t do all the surgeries we need to do now with only one OR.

 

Tight spaces make for uncomfortable trips to the Imaging department for both patients and our caregiver

Our Imaging spaces are like closets and we can’t replace some of the equipment that needs to be replaced because it won’t fit in those rooms.

Our Emergency Department needs more space.

 

 

 

 

And our lab is in a trailer…

How efficient can the Lab be when they are so far away from our patients & staff?

What will this new building mean for our patients?

The new building will make our patient flow more efficient, allowing us to better serve our patients.  When the community sees that not only do we look better, but we perform better, they will want to get all their medical care here in Madras.  After all, we don’t want folks to travel away from home for something that is closer, quieter and kinder here at Mountain View.

What will this project mean to our local economy?

MVHD is one of the largest employers in Jefferson County, employing 255 people with a payroll last year of over $16 million.  Our ability to grow means more living wage jobs will be added to our community.  The construction project itself will take 14 to 16 months and has potential to employ significant local labor.  Typically, every dollar a rural hospital earns has a multiplying effect of up to seven times those dollars in the local economy as people live and spend their money here at home.  That’s a great payback on an investment!  And an important part of the economic engine.

How much is the new building going to cost?

The construction will cost $22.4 million.  But the loan is higher because of other costs that will be included.  The construction cost has a required contingency amount added to it.  Here’s the breakdown of the entire amount that will be funded by a HUD-guaranteed mortgage:

 

 Can we really afford the payments for the new building?

• YES!  We had an expert accounting firm analyze our finances based on very conservative estimates of our volumes in the future.  They tell us that, unless there is some unforeseen major shift in our market, we can definitely afford the payments for the next 25 years.

Will this project raise our taxes?

• NO!  MVHD can’t raise your tax rate without voter approval…which is not going to happen.  We are going to have to afford the payments without additional taxes.  We also pledge to keep our prices in line with the other providers in our region.

Any other questions?

Call me!  I love to answer your toughest questions.            

541-460-4200

Thanks for your help!

Jeanie