The Memorial Hospital will start setting aside nearly $60,000 a month to demonstrate its ability to pay the debt service on the proposed replacement hospital.
Details about the new hospital have yet to be finalized.
The construction site hasn't been chosen.
The size and scope of the facility have not been decided.
But putting money aside will prove the hospital can pay for a new facility, said Sue Lyster, chairwoman of The Memorial Hospital Board of Trustees.
Scenarios being discussed include building a facility at a new location, building a facility at the current Russell Street site and building a partial replacement hospital, in phases, at the current site.
Members of the board have said the hospital could afford the debt service on a facility in the $20 million range, but not much more.
The only scenario that fits that budget without requiring taxpayer support is the partial replacement plan, in which administrative and other nonclinical functions would remain in the old building until TMH could afford to add them to the new hospital.
The board voted unanimously Wednesday night to set aside $58,000 a month into a building fund.
The money will be invested in Colotrust, an investment pool for local governments and government agencies in Colorado.
Trustee Melton Sullivan told fellow board members that the building fund has three advantages:
It places the board and the administration in the mindset of making payments on a new hospital.
It demonstrates to the public the hospital's ability to pay for a new facility.
It demonstrate to creditors, namely the U.S. Department of Housing and Urban Development, that the hospital has been setting aside money in anticipation of the new debt it plans to incur.
If TMH experiences short-term financial troubles in the future, the fund could be used as a cushion, Lyster said.
"By the time we build the new hospital, we should have a pretty good fund," Lyster said.
"In a year, there would be more than $600,000."
Board members stressed that the $58,000 figure is largely hypothetical because key decisions about the construction are undecided. The number is loosely based on a $19 million debt at an interest rate of about 5.5 percent.
Also figured into the number is the assumption that Medicare will pay about half the monthly bill for the construction of a new hospital.
The motion to plug money into the fund is retroactive to the first of the year.
TMH will put $58,000 into the fund for each of the first three months in 2004.
It will begin monthly payments in April.
The fund will be restricted. Money can be withdrawn only upon a vote from the board of trustees.
Jeremy Browning can be reached at 824-7031 or firstname.lastname@example.org