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Decision on hospital in Renville Co., Minn., could come soon

This rendering show's what the hospital may ultimately look like. Submitted

OLIVIA — A decision on whether to go forward with a plan to build a new Renville County hospital facility could come in the next week or two.

The Renville County Hospital Board will take up the issue Jan. 22, Hospital Administrator Glenn Haugo told the Renville County Board of Commissioners on Tuesday.

The County Board has to make the final decision on whether to go forward.

The county commissioners expressed differing views, and did not commit to a date to make a decision.

The RC Hospital and Clinics is looking at financing a $22 million to $23 million project to develop a 62,000-square-foot facility at a site yet to be determined.

The hospital board is looking at financing the project with revenue bonds.

Taxpayer-backed general obligation bonds would require a referendum. Obtaining financing through the United States Rural Development agency or a federal Housing and Urban Development program would require a lengthy process and would not allow construction this summer as hoped, according to Kurt Apfelbacher, vice president with Dougherty and Company, Minneapolis.  

He told the commissioners that hospital revenues would retire the debt. County taxpayers would not be responsible for it.

The hospital debt would not affect the county’s bond rating or ability to issue taxpayer-backed general obligation bonds, he added.

The county would be responsible for any shortfalls in operational costs, Apfelbacher said during discussions.

Questions during Tuesday’s meeting focused largely on whether the hospital can recruit and retain the health care providers needed to assure sufficient revenues, and the unknowns associated with federal health care reform.

Haugo said provider recruitment is an ongoing priority for the hospital, and will not be compromised by a building project. Physicians attended the last hospital board meeting to express concerns about staffing levels, he said.

The administrator noted that the hospital has lost two providers, but actually has two more providers on staff than it did five years ago.

“If we do the building project and have a new facility, I have a hunch it is not going to hurt recruiting prospects, I think it is going to help,’’ said Haugo.

There is no way to predict the financial impact of federal health care reform at this point, since the details of the new law are yet to be crafted, noted Haugo. The hospital has a strong financial record to show potential bond holders, Apfelbacher told the commissioners.

He said the financial package being proposed would include a debt service reserve equal to one year’s principal and interest payments.

Haugo also pointed out that audit reports show the hospital “probably has one of the best debt service coverage and bottom lines among critical care hospitals in the state.”

Commissioners LaMont Jacobson and John Stahl also serve on the county hospital board, and they voiced their support for the project. Jacobson said that the hospital facility is at the stage where it needs to be replaced. Stahl also pointed to the need to maintain health care services if the county is to retain its aging population.

Haugo urged the commissioners to consider the economic importance of the RC Hospital and Clinics system. In addition to the hospital in Olivia, the system has clinics in Olivia, Hector and Renville. It has more than 140 employees from throughout the county and an annual payroll of more than $7 million.

“ … If some business like that was coming into the county, you’d be bending over backwards to get them into play,’’ he said.

Tom Cherveny

Tom Cherveny is a regional and outdoor reporter with the West Central Tribune in Willmar, MN.

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