I can hardly believe it, but the end of September is almost here; where did this summer go? I am sure many of you are wondering, "Will our HUD loan request for the new hospital be approved by the end of this month?" That is a very good question and one that I been hearing a lot recently. The question makes sense because we have repeatedly made reference to the fact that more than 50% of the loans approved by HUD in any given year are approved at the end of September.
The short answer to this question is no, we do not expect to have anything finalized with HUD by the end of September. In fact, at this point I would guess that we are realistically looking at a December or January time frame. That probably is not the answer you were hoping for, nor the answer I wanted to give you, but if you give me a few minutes, I think I can show you that it is not a huge cause for concern; in Star Trek terms we do not need to call a "Red Alert!"
As I have shared with the board, the medical staff, and the hospital employees, we started this fiscal year rather slowly. I am happy to report that this trend changed in August and we are back on track. There are a number of specific reasons that we can point to, that contributed to our slow start. In addition, looking back over previous years, the first 4-6 months of our fiscal year are typically our slowest, our weakest, and our poorest performing from a financial perspective. But when you are on the cusp of borrowing $32 million and need to explain a four-month trend of this kind, it can be very nerve racking!
Understanding all of this, we have taken a very slow and deliberate process as we have updated the financial proforma that will be an important element in the Board's final decision to borrow these funds. As we have updated the proforma to be in the HUD format, we have taken care to revisit all of our expense and revenue projections to make sure that they are conservatively realistic. And, we have taken the additional step of trying to project the impact that healthcare reform will have on our volumes and bottom line. We have been very open with the HUD folks and they are appreciative and supportive of the robust "due diligence" process we are using. In effect they have told us that the hard questions we are asking now are questions they would be asking us later. So we may well be saving time in the formal review process.
The hospital Board should have the last bits of information that they need to complete their review within the next few weeks. And while all of this financial stuff is going on, we continue to work with our construction manager to fine tune the design and equipment specifications for the new building. Just last week Tony Rebo and I met with members of our design team in Kalispell and reviewed a variety of new hospital design elements. The team was in agreement that everything looks positive for a spring 2012 construction start. Of course this assumes that the board is comfortable taking on this debt, especially in light of all of the negative economic indicators that are out there, and that HUD ultimately approves our loan.
As I have said many times, the bad economy has not changed the need for the new hospital, the delay in getting our HUD loan approved has not changed the need for the new hospital, and our slow start to this fiscal year has not changed the need for the new hospital. With your help, WE WILL be able to overcome these external influences that are making it difficult to make this vision a reality. I encourage you not to become discouraged; this is not a question of if the new hospital will be built, it is merely an issue of when. And for now, unless something changes, it looks like the when will be the spring of 2012!
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