Hospital continues work on new facility

Consultants to be brought in to help raise funds

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Officials at The Memorial Hospital are continuing to move forward with plans to construct a new hospital.

Approval has already been made to hire an outside firm to conduct a capital campaign in Craig to raise funds for a new hospital, while hospital administrators are interviewing candidates for project manager and consultant.

A recently established non-profit foundation for TMH approved the hiring of Philanthropic Professionals, Inc. (PPI) of Billings, Mont. to conduct a fund-raising campaign in Craig.

PPI was recently paid $8,500 to conduct a feasibility study in the community to find out how much funding would be available in donations if a fund-raising campaign were to be conducted.

In a survey of 68 community members that the hospital selected, the firm projected that $2 million could be raised.

TMH is now asking the firm to return to Craig to raise that money, which Pam Thompson, community relations director at TMH, estimated would cost about $120,000.

Beginning June 17 two representatives from PPI will be in Craig between eight months and a year to raise funds, Thompson said.

"They've never come in under what they projected in their feasibility study," Thompson said of PPI's track record.

Thompson was confident with the decision to hire PPI, and said it would cost just as much if a campaign were to be conducted "in-house."

"It's very expensive to run a capital campaign," she said.

Under the preliminary budget plans for a new hospital, TMH Administrator Randy Phelps has said an $18 million hospital could be built without tax support.

The hospital can foot $15 million of the bill through loans and increased revenue due to a recent conversion to critical access status, while the other $3 million can be raised by the hospital foundation.

If PPI can raise $2 million, the other million dollars will hopefully be raised through grant writing and fund-raising events, Thompson said.

The hospital board of trustees voted last fall to convert TMH to critical access status, which makes the hospital eligible for cost-based reimbursements from the federal government for Medicare patients.

The program, which the federal government created to aid rural hospitals, will increase TMH's annual net income by $1 million, hospital officials have said.

"We want to conduct a campaign so a new hospital can be funded through this and critical access," Thompson said.

Officials are currently considering three firms to consult the hospital in securing federal Housing and Urban Development Committee financing.

"We would pay a consultant to orchestrate the loan application in a manner to get approval by HUD," Phelps said.

The way it works, Phelps said, is in order to get approved for financing HUD must in a sense "co-sign" the hospital's proposal.

"We structure a proposal based on our debt service capacity," he said. "We describe the project to federal officials and the federal government provides mortgage insurance."

A consultant would make sure everything in the hospital's plans fits HUD requirements.

The hospital is entertaining bids from three different firms to handle HUD financing.

The low bidder would cost the hospital $548,890.

This price is a total of what would have to be paid to the firm and HUD, Phelps said.

The low bidder is AMI out of Atlanta.

The knock against AMI is it has no experience in projects involving critical access hospitals trying to get HUD-backed financing, Phelps said.

The other two firms do, but the difference in bids is more than $100,000.

"We're trying to balance the differential in price quotes against a proven track record," Phelps said.

Hospital officials are also interviewing three companies to serve as project manager.

The project manager would oversee the work of the architect and construction companies.

"The project manager is sort of an owner's advocate who would be a member of the administrative staff on a consulting basis," Phelps said.

The project manager would be paid about 3 percent of the total project cost, Phelps said.

The price of hiring a consultant and project manager has been figured into the total project cost of $18 million, Phelps said.

Phelps said next week the hospital will have closed on 15 of 18 properties the hospital wants to purchase in the area of the current hospital where officials want to build a new hospital.

"I don't see the properties we don't have as a barrier in the project," Phelps said. "We have the ones we need. We are fully committed to the location we are pursuing for a new hospital."

Due to HUD-backed financing, the recent conversion to critical access status and the newly created hospital foundation, Phelps said tax support would not be necessary if a new hospital can be built for less than $18 million.

"We've got ourselves in a position in which we probably won't need an election to do this," he said.

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