UPDATE | Jefferson Healthcare nixes bond approach for hospital expansion project

Posted 8/3/22

Jefferson Healthcare has decided to scrap its initial plans for a publicly voted bond measure to raise funds for its hospital expansion project, which is currently expected to cost around $70 million …

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UPDATE | Jefferson Healthcare nixes bond approach for hospital expansion project

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Jefferson Healthcare has decided to scrap its initial plans for a publicly voted bond measure to raise funds for its hospital expansion project, which is currently expected to cost around $70 million to $75 million without bond support.

During their Wednesday, July 27 meeting, Jefferson County Public Hospital District No. 2’s board of commissioners unanimously voted to move on without the planned $35 million bond measure, which would have been brought to Jefferson County voters on the November General Election ballots.

The hospital district would’ve been required to submit the bond measure by Aug. 2.

“I think this is the right way to serve this community at this time with the non-bond plan,” Hospital Commissioner Kees Kolff said after the final vote.

Jefferson Healthcare’s Campus Modernization and Expansion Project will bring new spaces and add specialty medical services to the healthcare provider’s campus on Sheridan Street, with two decades-old hospital buildings there set to be demolished and replaced with new, seismically-retrofitted structures.

Citing an increase in patients and the hospital outgrowing the size of its current campus, the hospital district plans to add a dermatology clinic, medical oncology space, OB-GYN clinic, and other services for patients.

Jefferson Healthcare’s board of commissioners held five virtual meetings throughout May, June, and July to share plans and ideas for the expansion project before deciding to go without the bond measure.

Key changes to the district’s new, bond-free approach includes a price point that’s around $20 million less overall than the bond-supported plan, a reduction in the expansion’s square footage, more debt that the district will take on to cover costs, and the shell space — also known as a shell floor, or extra room left for future expansion — being removed from the final plan.

“Basically the difference from the district’s point of view … what we lose is 16,000 square feet of shell space, which might necessitate another smaller building in the future if we continue to grow with our needs,” said Hospital Commissioner Marie Dressler.

With the new price tag set around the $70 million mark, the estimated square footage of the hospital expansion will be 53,000 to 58,000 square feet. Although losing the 16,000-square-foot shell floor could make future hospital expansions more difficult, Dressler added that the next expansion would likely be for office spaces, and wouldn’t be subject to the same rigorous hospital building standards that the current project is obligated to follow.

“Should we find that in five years time we need more space, it would tend to be office space and not require building to hospital standards,” Dressler said.

Jefferson Healthcare officials shared information on funding sources for the non-bond approach.

The majority of funds will come from the hospital district, with an estimated $45 million in loan debt it will take on, $11 million from hospital cash reserves, and $2.5 million from the district’s 2023, 2024, and 2025 budget.

Also, the hospital district is expecting to use an additional $12.5 million from state and federal funds to aid the project.

While commissioners expressed support for the self-funded plan, Jefferson Healthcare CEO Mike Glenn considered potential consequences of dropping the shell space from expansion plans.

“We are comfortable that this meets our community needs for three to five years,” Glenn said of dropping the bond.

“There will be a day where you say, damn, [it] sure would be nice to have that extra shell floor,” he said.

Hospital commissioners listed the current state of the economy, locally and nationally, as one of the primary factors for the board’s decision to continue without the $35 million bond ask.

“I think we have a lot of support from the community, but with the economy and inflation and things the way they are right now, I don’t think it’s the right time to ask them for more,” Hospital Commissioner Bruce McComas said after the vote.

“Money is money and there are a lot of people right now who are feeling the hurt,” Dressler said. “This seems to be the better option.”

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