Last month’s Northern Inyo Local Hospital District meeting revealed that Northern Inyo Hospital is financially stable with strong assets, clear accounts and ongoing plans for a secure future.
At the regular meeting of the NIH Board of Directors, held Sept. 19, discussions of several loan transactions, new earthquake insurance, employee pensions, funding sources and other agenda items ended on one note: a strong bottom line for Northern Inyo Hospital.
NIH will come under new leadership effective Nov. 1. Dr. Shiva Shabnam, an NIH staff physician for two years, will replace Medical Director Dr. Asao Kamei. The board approved a $16,000 relocation reimbursement to Shabnam, a perk of her new position.
“Thank you, Dr. Kamei,” said Board member and Vice President Dr. John Ungersma. “Your leadership has been a rousing success. It shows we are in the forefront of medical management.” For example, said Ungersma, Kamei implemented the in-house internist Hospitalist Program at NIH two years ago.
The Hospitalist Program provides new patients who have no primary care physician with an NIH physician so the patient can receive medical care. It’s a program that all the big hospitals have, Ungersma said. “(Kamei) has gone over and above” during his two-year tenure as medical director, added Hospital Administrator and Chief Financial Officer John Halfen.
Another change at NIH will generate more funding for the hospital – the ongoing installation of an Electronic Health Record system. “All hospitals are moving in that direction,” said Ungersma of EHR. “All patients’ records are being digitized … They’re currently doing that with X-rays as well.” It’s an efficient system, explained Ungersma, since there will be no redundant paperwork sent off to third-party payers like Medicare. Once EHR is in place, the hospital will net roughly $2.5 million from Medicare over the next five years, said Halfen.
Good news for NIH employees. The hospital’s pension plan is in excellent condition, said Ungersma. NIH “contributes $330,000 per month to the account, putting it at 125 percent of contributions, a strong financial situation for our employees … ahead of the state which is at 70 percent.”
The issue of earthquake insurance was “a first” to come before the board, said Halfen. Earthquake and flood damage are not covered under NIH’s current insurance policy. Diane Corsaro, of Corsaro’s Insurance Agency, 371 N. Main St., presented a three-carrier insurance quote for $3 million contents coverage on the radiology building and $4 million on the main hospital, at a cost of $17,407.95 per annum with a 10 percent deductible.
Robert Beach of Robert Beach & Associates Agency, 459 W. Line St., presented an alternate single-carrier quote for the same $3 million and $4 million coverages, with a percent deductible and $11,800 per annum premium. Beach suggested increased coverage on radiology to $6 million to insure attached equipment, for a per annum premium of $18,300. He said, “Radiology equipment could be construed as part of the building since it is bolted down.”
Halfen said that in the event of an earthquake, “we will get flooded if the aqueduct goes, so we really need flood insurance. Since we don’t know what (future) replacement costs will be at this time, don’t go for the big number.” The item was tabled pending more research by Corsaro and Beach.
The agenda also included several lease/loan items.
Halfen called an approved $697,000 lease-based note through G.E. “a shoring up situation.” The funds will go to leasing medical equipment, a common practice because it is more financially sound than purchasing, said Ungersma. For example, $497,000 will lease cardiac monitors.
NIH has applied for a $10 million loan: $6 million to defease (the equivalent of refinance) an outstanding 1998 bond and $4 million to reimburse NIH for payments made to Turner Construction Company, the contractor for the new facility.
Currently, NIH has $7.5 million in cash. It should be at $13-14 million by the end of 2013, Halfen said. NIH also has a total of $55 million in net assets per NIH Controller Carrie Peterson.
Halfen said that the 2013 budget “will produce a $5 million cash load … a positive cash flow … then we have a shot at Phase 3 (of the construction project) in 2-3 years.”
Phase 3 involves remodeling the old hospital to provide office suites and patient care facilities. “It is a valuable piece of real estate which we don’t want to let go to waste … a real asset to the hospital and to the community,” said Ungersma.
The board approved a $600,000 first-mortgage loan, on NIH’s Birch Street Annex at 2957 Birch St., through Oak Valley Community Bank. The CFO said that the loan is “looking pretty good … at a 70 percent loan-to-value ratio… We have six months to get this loan through.” The annex is currently used for warehouse and board room purposes. The Eastern Sierra Breast Cancer Alliance also has offices here. In the future, said Halfen, the annex will provide more meeting and educational venues.
The public is welcome to attend the next regular board meeting of the Northern Inyo County Local Hospital District at 5:30 p.m. on Wednesday, Oct. 17.