The Kennewick General Hospital board of commissioners announced today a financing package for construction of a new $128 million hospital at Southridge that includes $86 million in voter-approved tax obligation bonds, with the remainder coming from revenue bonds repaid with future hospital revenues. "This financing plan is the result of months of hard work aimed at making certain we have a responsible and sound financial package that relies as much as possible on the hospital's own resources," said KGH Board President Wanda Briggs. "We have done everything we can to keep the cost to district residents to a bare minimum while providing a modern hospital that will allow us to continue to deliver top quality healthcare for our district residents into the future."
"We had strong marching orders from the hospital commissioners to pay for as much of the new hospital as possible with KGH's own money and credit," said CEO Glen Marshall. "I feel comfortable that we have lived up to that mandate. We look forward to introducing this package to our community." The hospital's leadership team developed KGH's financing proposal with input from its Planning Committee, which includes several citizen members and physicians. The hospital's Community Advisory Council also gave the financing plan its stamp of approval.
"For the past several months, the KGH board and administration have reached out to district residents through many avenues and heard what citizens are telling them, which is: We understand we need a new hospital, but make it as affordable as possible," said Skip Novakovich, a local business owner and a KGH Community Advisory Committee member. "Our community should feel confident that KGH is bringing our hospital facilities up to date for the best price possible."
"The tax rate to finance an $86 million bond would be about 63 cents per $1,000 of assessed property value, to be paid by residents of the public hospital district. For the owner of a home assessed at $100,000, that amounts to $63 per year. It is important to remember that the assessed value of your home is usually quite a bit lower than the market value, or what you might be able to sell it for today," said Briggs. According to the Benton County Assessor's office, the average assessed value of a home in the KGH hospital district is $140,000. To meet lenders' minimum requirements, KGH is building its cash reserves to 50 to 70 days of cash on hand, equivalent to $11 to $15 million. The hospital sold its Dialysis Center in 01/2007 for $4 million and is considering other potential sales of non-core assets. "Just like someone who's buying a new house, KGH has to show we've got our financing in order and that we're a good credit risk," said Briggs. "KGH is an important part of our local economy, one that we need to value and nurture by reinvesting in the hospital to keep it strong," said Kennewick City Councilman Tom Moak. "The proposed new hospital at Southridge is the right way forward for KGH and for our community." "The investment we are asking our community to make in KGH is significant, but absolutely necessary," said Marshall. "KGH is delivering 21st century healthcare but we're doing so in a small, patchwork facility that is more than 55 years old at its core and hasn't seen a major expansion in 14 years. We need 75 percent more space than we have today just to meet our current patient load, but we have no room to expand on our current campus. A new facility at Southridge will lock in our ability to provide quality care to our community for years to come."
If voters support the bond measure, it will be the first time since KGH opened its doors in 1952 that residents of the hospital district have financed bonds to support the hospital's growth. "It's vital that we bring KGH's facilities up to date and add more space to serve our growing community. Without a good facility with modern infrastructure and the latest technology, we will struggle to attract and retain the number and caliber of physicians and nurses our patients need," said Briggs. "The proposed new hospital at Southridge will solve those problems and give us room to grow in the future."
KGH has undertaken an intensive planning process over the past two years to calculate its space needs and plan for the future. Last summer it launched a "Community Conversation" to discuss the future of the hospital with residents of the public hospital district. In the fall, KGH announced its preference for a major hospital expansion near Southridge high school, where it already owns 40 acres of undeveloped land. Although there is no more room to expand on KGH's current campus, the hospital is committed to keeping some clinical and nonclinical services at its current 900 S. Auburn location.
"Our commitment from day one has been to be open with the public about our pressing space needs, transparent in our communications, and to keep the public informed every step of the way," said Briggs. "We need the public's support and trust, and we continually work hard to earn it."
As part of the Community Conversation, KGH has given presentations to community groups, held employee forums, and made information available on its web site, in HealthBeat Magazine, and through print and television ads. In January, the hospital hosted three community meetings and subsequently mailed a report to all households in the district to let them know what feedback KGH was hearing from the community and to provide residents with another way to ask questions and give input.