Middle Park Medical Center OK’d for federal loan
Middle Park Medical Center has secured a $24 million loan from the U.S. Department of Agriculture and averted the possibility of receivership.
The Kremmling Memorial Hospital District Board of Directors officially accepted of the loan at its Sept. 24 meeting.
The department will use the loan to pay off the $22.4 million left on the certificates of participation issued to finance MPMC’s Granby facility.
“This is a huge step forward for MPMC, our staff and ultimately, the quality of care for all of our patients,” said MPMC CEO David Ross in a press release. “This removes the distraction of receivership and lets us focus on making Middle Park Medical Center the premier critical access hospital in Colorado.”
The loan, issued through the department’s Community Facilities Direct Loan Program, has an interest rate of 3.6 percent, much lower than the 7.1 percent that MPMC pays on its current certificates.
The organization will save about $481,000 per year with the new loan, said Charles Ervin with Dougherty Mortgage LLC. MPMC hired Ervin to help process the loan.
MPMC will pay about $1.2 million per year on the new loan, which is amortized over 35 years.
The approval marks the end of a tumultuous financial period for MPMC, in which the organization defaulted multiple times on debt incurred to build its $20 million facility in Granby.
MPMC failed to make a November 2013 payment on the debt, causing the trustee to dip into its reserve funds and triggering an event of default. MPMC triggered an additional event of default when it failed to replenish the reserve funds.
U.S. National Bank Association, trustee for the bondholders, filed a motion in March seeking receivership of MPMC’s assets.
In that motion, the trustee made additional claims of default.
After news of the loan approval broke, the motion was withdrawn.
During negotiations earlier this year, board members expressed frustration with what they said was the bondholder’s unwillingness to cooperate.
During the Sept. 24 meeting, Ervin pointed to the paucity of covenants attached to the new loan as evidence of the department being a less overbearing lender.
MPMC CEO David Ross agreed.
“I think USDA is a more friendly, personable and collaborative partner than our existing bondholders,” Ross said.
Jeremy Anderson with USDA said the department was willing to negotiate with MPMC regarding any restrictions on the loan. The USDA would also like MPMC to consider it as a lender for future projects, Anderson said.
“I can tell you that we are really interested in making sure everything goes well for the guys for the next couple of years because we’ve seen the feasibility analysis, we’ve seen the appraisals, we know you have future needs,” Anderson said. “We don’t want you to be in a position where future needs are hard to address. We’ll probably be able to be there before other lenders are willing to get in there.”
If MPMC chooses to incur additional significant debt in the future, USDA would like to be involved in those discussions but wouldn’t be restrictive, Anderson said.
Possible future projects could include improving or replacing MPMC’s Kremmling facility, Ross said.
MPMC hopes to officially close on the loan on Dec. 1.
In the coming months, Ross said MPMC will focus on expanding its specialty clinic services including orthopedic surgery and ophthalmology.
The organization will also work on community outreach.
“We just want to get out in the community more and be a healthcare system that the Grand County community is proud of, and that includes improving our billing,” Ross said.
MPMC pursuing Centura medical records system
MPMC is currently working with Centura to find an agreeable price and timeframe for joining Centura’s Epic electronic medical records system, Ross said.
Centura is transitioning to the system next year, and Ross said MPMC hopes to be part of the first wave of facilities to implement the system.
“We appreciate our relationship with Centura, and we want to be more clinically integrated with them,” Ross said.
MPMC staff has expressed frustration with the organization’s current EMR system, which they say is dysfunctional.
MPMC is a considering other options including a cloud-based system, but Centura’s system is the ideal choice, Ross said.
Ross said he hopes to get a final recommendation to the board at its Oct. 29 meeting and have a new system in place by the end of 2016.
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