Bill Oldham,Twin Lakes Regional Medical Center Director of Planning and Marketing, contributed this article to K105.
During a time when many hospitals across Kentucky as well as the rest of the nation are struggling with mounting operating losses and an uncertain future, a cooperative effort by five Grayson County banks will save Twin Lakes Regional Medical Center more than $1.7 million, and help ensure that the community will continue to benefit from having a strong, local hospital.
In 2009, Twin Lakes Regional Medical Center issued 20-year, $12.5 million Build America Bonds (BABs) to pay for the expansion and renovation of the hospital. During the economic recession, BABs were issued to help stimulate the economy by having the federal government agree to pay 35 percent of the interest on the bonds.
In early 2013, automatic spending cuts to United States federal government spending known as the sequester or “sequestration” began. Once the federal government stopped paying its full share due to sequestration, a clause kicked in that allowed the hospital the opportunity to refinance the bonds. When senior administrators at the hospital realized they could take advantage of the opportunity to refinance the bonds, they quickly took action.
That is where the five local banks come in. The banks – Bank of Caneyville, Bank of Clarkson, Cecilian Bank, Leitchfield Deposit Bank, and Wilson and Muir Bank & Trust – joined together to present a bid to purchase the bonds on Tuesday.
The combined bid by the banks of 3.25 percent fixed for 15 years was the best submitted, and the bonds were sold to the local financial institutions. As a result of the sale, the hospital will now pay 2.2 percent less in interest. The cooperative action by the banks is very much appreciated by the hospital.
“In a time of financial instability for hospitals all around the country, the refinancing of our bonds is one way to reduce expenses and maintain our financial viability. For our five local banks to partner together in this way is unprecedented,” said Twin Lakes Regional Medical Center CEO Wayne Meriwether, MHA.
“Their support for our hospital shows a real commitment to our community and our Mission of healing the sick and relieving pain and suffering.”
Because the hospital is owned by the county, it had to undergo a competitive bidding process for the bonds which meant the banks were not guaranteed to be the winners.
TLRMC Chief Financial Officer Scott Arndell says the bond refinancing comes at a good time and foresees the newly available monies being reinvested into patient care.
“Over the last several years the survival of our hospital has been due to our employees working harder and harder with almost no additional pay,” states Arndell. “The savings realized by refinancing the bonds will make it possible for us to spend more on our employees and buy additional equipment for them to treat our patients. The people of our communities are the real winners with this action.”