SWMC CFO: financially a perfect time for renovations, additions

Southwest Medical Center Chief Financial Officer DeLany Fawkes says it is the right time to take on an estimated $22.35 million hospital project for renovations, additions and to build a medical office building.

"It is a perfect storm for the project," said Fawkes. "We have a need. We haven't done a project in 20 years. A healthy hospital needs to continue to improve. Every home or business needs to keep pumping money back in. That's your enterprise."

A multi-million dollar hospital project, planned during a time of national economic troubles, can be a problem for struggling hospitals. Fawkes said that is not the case for SWMC. The hospital is in a state of financial stability.
Interest rates are lower and construction costs are down, the SWMC proposed project will benefit by taking advantage of the lowered costs.

"What a perfect time, interest rates are at a 40-year low," said Fawkes. "The projections, I have seen recently, are at 4.65 percent. What we want to do is lock in on low interests rates on payments up until 2038."

The proposed $17 million general obligation bonds will pay for upgrades made to the infrastructure, renovations and expansions on the first and second floor, a new MRI magnet, instillation of a electronic medical records system, furnishings and fixtures.

No taxpayer money will go towards payment on the bonds. Hospital revenue will pay for the project.

"We have never taken tax money in 45 years and we don't want to," said Fawkes. "We don't think we need to. We are smart and if we can do the right thing, we wouldn't have to take tax payer money."

The medical office building will cost an estimated $5.35 million and will be built using the hospital cash reserves.

Fawkes said the hospital cash reserves have built up greatly in the last nine years. In 2001, the hospital stocked up $4.4 million. Today, the cash reserves are at $18.7 million.

The hospital administration's ability to save and transfer $150,000 nearly each month from operating funds into the cash reserves has created a safety net. The hospital administration views the cash reserves as a way to invest in the future. Currently, the SWMC administration sees the medical office building as a tool for investing in the future.

The 1991 SWMC tower project was the last major update made to the hospital. The bonds for the 1991 project will be paid off in 2013. The proposed $17 million general obligation bonds will be issued by George K. Baum Company, an investment company. The hospital does not fear the two-year overlap in debt service payments, said Fawkes.

"(George K. Baum Company) will wrap the new (debt) around the old (debt) for that short period of time," said Fawkes. "I think for two years we will have $700,000 a year more in debt service payments."

Fawkes dismissed the fact that hospital will increase service prices in order to pay off the bonds. He said, that will not happen and there is no plan to increase services in efforts to pay off the debt.

Seward County voters will have the opportunity to pass the proposed project on Mach 2. If the project is passed by voters on, Fawkes will not be on SWMC staff to see the end result of the project. He is retiring in May and moving back to Maryland to be with family.

"I am a retiring CFO, who cares about this community," said Fawkes. "I've been here for eight years and I am leaving with a lot of mix emotions. This vote is critical for the future of this community. I really believe that ... (the need) is only going to get worst ... People have to get out there and vote."

For full story please see Sunday's Times

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