New Leadville hospital dealt major setback after feds withhold loan
Lake County’s only hospital, St. Vincent in Leadville, has put plans to build a new facility on hold after financial projections came up shorter than expected, indicating the small hospital has recovered from the financial brink but still needs to improve its balance sheet before a much-needed building upgrade.
In 2014, the hospital announced it would be shutting down because of critical building repairs and declining revenues, but service cuts and a partnership struck several months later with Centura Health — which also runs St. Anthony Summit Medical Center in Frisco — kept the 138-year-old hospital open.
Under the new arrangement, St. Vincent cut staffing from 152 employees to around 72 and eliminated costly services, including long-term care and home health. Last August, the hospital announced its plans to build a new facility.
On Friday, however, St. Vincent announced in a news release that the U.S. Department of Agriculture has “paused” — but not rejected — a loan for the new building, citing “the hospital’s slower than anticipated financial turnaround.”
Paul Chodkowski, CEO of both St. Anthony and St. Vincent, said that belt-tightening has shored up the hospital’s finances, but the USDA nonetheless wants to see the numbers improve over the next several months before re-evaluating the loan.
Chodkowski said he was confident the hospital could pass muster but there were other options available should it fall short.
“These are challenging times for health care, particularly rural health care,” he said. “We’re working with the board and looking at other options if we do have to go down a different route.”
A USDA spokeswoman confirmed the accuracy of the St. Vincent press release and referred any questions to hospital spokeswoman Karen Onderdonk.
“The hospital was built in 1958, so there’s no doubt that something needs to happen,” Onderdonk said. “The only thing the USDA has said to us is ‘come back to us with better financial performance’ and I feel really confident that we can do that, and so does our administrator.”
St. Vincent faces numerous revenue challenges, including low patient volumes and high numbers of uninsured patients. The population of Lake County is only around 7,300, and St. Vincent primarily provides critical care before transporting patients to other hospitals like St. Anthony.
But officials say things have improved since November 2014, when they announced St. Vincent would be closing just weeks after voters rejected a tax increase that would generate roughly $1.6 million a year for the hospital.
Centura, however, offered a lifeline, agreeing to take over management of the hospital. That gave St. Vincent access to the nonprofit health care system’s large network and rate negotiation leverage, which produced savings, Chodkowski said.
Lake County taxpayers also seem to have gotten the message; in 2015, they approved a version of the hospital funding tax they had rejected just a year before.
Despite those gains, however, the hospital’s 2016 finances came out less rosy than expected. Chodkowski said he couldn’t comment on the magnitude of the shortfall but indicated it was manageable.
Onderdonk said the hospital was currently waiting on more comprehensive financial documents that could shed light on how it missed the mark.
In a follow-up email, she said, “The 2016 audit is not finalized yet but the un-audited financials suggest a net income that was less than would be needed to support the new loan. We anticipate providing quarterly financial report(s) that show the projected cost savings, increases in revenue and progressive improvement in the hospital’s financial performance.”
The current hospital building has numerous infrastructure problems, particularly its antiquated HVAC system. Centura would prefer to invest in a new facility entirely, Chodkowski said.
“The issue is, do we put more money in the existing building or move,” he said. “If we can’t move, we’ll work on a plan and do our best to keep the current hospital open.”
The valley’s commercial and residential property markets are similar in some ways — availability is tight and nothing is what you’d call “cheap.”