Mercer County Board approves Genesis affiliation
On Saturday, Nov. 20, 2010 the Mercer County Board heard nearly an hour and a half’s worth of testimony from around 20 Mercer County citizens on the Mercer County Hospital affiliation with Genesis, and voted 7 -3 to seal a deal for Genesis to take over the hospital’s assets and liabilities sometime within a four-year period, if Genesis chooses to go that route.
The agreement contains language saying that Genesis will not change the operations of the 25-bed acute care hospital for five years.
At the special County Board meeting held after the hearing the board voted to approve the affiliation agreement were County Board members Tom Haines, Dan Schroeder, Terry Elliot, Dave Manyard, Fred Utz, Bill Olson and Maxine Henry. Opposed to the affiliation were board members Charlie Box, Bill Thorp and Bob Vickrey.
Genesis has had a management agreement with the Mercer County Hospital Governing Board for a little more than a year. In that time, Dan Rogalski, a Genesis appointed administrator, has been the CEO of the hospital.
Prior to the public comment, Donald Lee Johnson, president of the Mercer County Hospital Governing board spoke to the standing room only crowd about the history of the hospital. Rogalski then addressed the crowd about Genesis’ goals.
Johnson said the hospital board had spent the prior two years researching ways to keep the hospital going in Mercer County. He said the board heard proposals from OSF, Trinity and Genesis, with the only proposal to keep the hospital as a viable working hospital coming from Genesis. During some of the hospital’s last few years a $200,000 line-of –credit has had to be taken out to pay the bills, Johnson said.
“The Illinois Department of Public Health is the agency that controls hospitals in Illinois,” he said. The IDPH issued mandates for the hospital to comply with safety and fire laws. “We would have to go the whole route to keep the doors open. We would have to do everything,” said Johnson. “We had to send in monthly reports showing what progress we had made in getting this building up to code.” He said that the vast majority of the $10 million financing for hospital renovation that is currently being sought "Is just to bring it up to code."
Johnson said in the past year and a half Genesis has begun to bring the hospital’s financial picture into the profit zone, last year with a profit of $500,000.
Johnson pointed out that one problem the hospital has always faced is getting new equipment when it was standing alone. "We always had to borrow money to get a new piece of equipment."
Rogalski pointed out the current financial facts of the hospital, including its current value based on the latest audit -- $5.8 million, minus $3.7 million in debt for informational system as well as the debt from the previous building -- bringing the value to $2.1 million. With the new renovation needed, the owners costs for things like architects, financing and legal fees would cost the remaining $2.1 million. "Currently there is not a value to the organization," said Rogalski.
He said that Genesis would assume "the assets and liabilities," if it chose to assume the option of owning the hospital.
In the meanwhile, the Mercer County Governing Board will continue to govern the hospital, with Genesis managing it and the county assuming the annual costs for Illinois Municipal Retirement Funding -- a cost that has been estimated at between $400,000 - $500,000 annually.
"Genesis is not going to exercise it's option on Monday," Rogalski said. Should Genesis assume the transfer of the hospital, it would "continue to fund the retirement."
He pointed to the impending renovation -- "We need to update to survive," he said. He said the loans for the renovation would carry "an annual interest of over $500,000."
Genesis is interested in Mercer County Hospital, said Rogalski, because it is working to become the "strongest regional health organization in the area." He said Mercer County Hospital covers the southeast corner of the Genesis market. "Genesis is in the top 100 healthcare systems in the nation," he said. "It is one of the most wired (technology) and in the top 50 cardiac centers in the country."
Rogalski said the benefit of having a Genesis affiliation is to strengthen the local hospital, bringing its resources to this community -- whether the resources are reduced spending on supplies, technology or equipment.