Hospital asks $8 million in bonds for projects Laboratory, pediatric renovations sought

December 10, 1996|By James M. Coram | James M. Coram,SUN STAFF

Carroll County General Hospital wants the county to sell $8 million worth of municipal bonds next fall -- the third request since 1994 -- to pay for new construction projects.

The hospital would use most of the money to renovate its laboratory and pediatric units and to build a women's center and administrative building. The remainder would be used to purchase medical equipment and information technology, and to improve the physical plant.

Hospital officials, who want to begin the projects right away, asked the County Commissioners yesterday for permission to obtain a $4 million bank loan. The loan would be would be repaid when the bonds were sold.

The county sold a total of $13.4 million in bonds for the hospital in 1994 and 1995. A condition of those sales was that the hospital not incur any more debt without county approval.

County Comptroller Eugene C. Curfman and county budget Director Steven D. Powell will review the hospital's financial situation within two weeks to assess whether the hospital can finance the new debt.

In addition, Curfman and Powell have asked for a feasibility study to determine whether the hospital's anticipated revenue growth would support an $8 million bond offering next fall.

Although the county would issue the bonds, the hospital would pay the principal and interest on them, as it does on the earlier bonds.

John M. Sernulka, the hospital's president and chief executive officer, presented a glowing financial report yesterday to Curfman, Powell and County Commissioners Donald I. Dell and Richard T. Yates.

Revenue for the fiscal year that ended in June are $2.2 million, or 4 percent, more than the hospital predicted in a feasibility study before the previous bond sales.

The hospital's growth plans call for development of ambulatory care centers with primary-care physicians, specialists and diagnostic centers in Mount Airy and the Eldersburg-Sykesville, Hampstead-Manchester, and Taneytown-Union Bridge areas, Sernulka said. An urgent-care center will also be developed in Eldersburg.

Primary care practices will be expanded in Finksburg and Westminster, he said. In addition, the hospital plans to form a primary-care group practice and to recruit sub-specialists in Westminster, he said.

The growth strategy is enabling the hospital to withstand competition from seven hospitals east and south of the county, Sernulka said.

Having the county sell bonds on its behalf again could save the hospital at least $400,000, since higher bond ratings usually bring lower interest rates. The county bonds are rated Double A. The hospital bonds would be rated Triple B.

Curfman said it would probably cost the hospital a quarter of a percentage point or more to issue its own bonds, which would mean a minimum of $20,000 more a year, or $400,000 more altogether for an $8 million issue maturing in 20 years.

Powell wants to wean the hospital from dependence on county bond issues and has asked the hospital to develop a plan for selling bonds on its own, which isn't likely until the hospital achieves a bond rating nearly equal to the county's.

"It is a long-term goal," Kevin Kelbly, the hospital's vice president for finance, told county officials at yesterday's briefing.

Helping the hospital attain lower interest rates benefits the community, Powell said afterward, because it means lower costs for the hospital and lower rates for the patient.

The commissioners are expected to vote before the end of the year on whether to approve the loan and whether to request General Assembly permission to issue bonds for the hospital.

If permission is given, the commissioners will decide next fall whether to issue the bonds.

Pub Date: 12/10/96

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