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Hospital takes on debt to build
By The News-Record staff
For the past seven years, Campbell County Memorial Hospital has only talked about debt as a hypothetical.That’s about to change.
As the hospital embarks on a $68 million expansion project, more than half of that total price tag should come from debt. The hospital’s hired bond underwriter, the Minneapolis-based investment firm Piper Jaffray, recently estimated that the hospital should accumulate between $43 million and $45 million in debt.
Hospital chief financial officer Andy Fitzgerald says it could take anywhere between 10 and 30 years to pay off that total, depending on how the chips fall with the local economy and the health care industry.
The estimate of how much the hospital would borrow to finance a new medical wing, parking garage and helipad has gone up and down a few times over the past year. When hospital trustees were considering an $83 million project in 2008, Fitzgerald tagged the number at more than $40 million. Then, after slashing back the project’s cost to $65 million in spring, the debt estimate dropped to the $35 million dollar range.
Now it’s back to more than $40 million.
Why the jump? Fitzgerald says that it was all about securing a favorable interest rate for the bonds the hospital will issue to finance the project. Piper Jaffray advised that by taking on more debt, and depleting less of its cash reserves, the hospital would secure a better credit rating from rating agencies.
To give an idea of how long debt issues can linger on the books, the last time the hospital had debt was in 2002. That issue had been around since the 1970s.
The hospital hopes to price and close on its current bond issue before Christmas.
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