[StBernard] St. Bernard Parish to break ground on new hospital Friday; some funding questions remain, though

[Westley Annis]

St. Bernard Parish to break ground on new hospital Friday; some funding
questions remain, though
Published: Thursday, July 15, 2010, 5:51 PM     Updated: Thursday, July 15,
2010, 5:57 PM
 Chris Kirkham, The Times-Picayune 
 
As St. Bernard Parish government officials mark a long-awaited
ground-breaking on the parish's first post-Hurricane Katrina hospital Friday
morning, questions over long-term financing still loom large while the
initial phases of construction move forward.


The biggest unknown is how the proposed 40-bed hospital will pay for
operating costs once construction is complete. The Parish Council will
likely soon consider whether to put a dedicated tax on the November ballot
that would help cover an estimated $16 million in operating shortfalls
during the first few years the hospital is open.

Within days, contractors are expected to move forward with preliminary site
work on the donated land across from the Chalmette Battlefield, including
filling the area with sand in order to begin laying a foundation. That
process will take at least two months, and full construction is not expected
to begin until fall. 

St. Bernard Parish has been without a hospital since Chalmette Medical
Center was swamped by Katrina's waters in 2005, and the lack of a
full-service health care institution has been seen as a critical roadblock
to the parish's recovery.

St. Bernard's hospital board recommended this week that the council consider
putting an 8-mill tax, lasting 10 years, on a ballot for residents to vote
on later this year. Board Chairman Wayne Landry said the tax would pay down
a $16 million dollar loan to pay salaries and other expenses up front and
convince investors that the hospital will be financially viable once
construction is complete - estimated now in early 2012.

"We're going to have to do something to demonstrate to the investors that we
have something to operate it,'' said Landry, also chairman of the Parish
Council. "The easiest, or the most financially sound or viable way to do
that would be to pass the 8-mill ad valorem tax."

To get a sense of how that would fit into St. Bernard's tax structure, the
library millage is set at 3.59 mills, the Lake Borgne Basin Levee District
at 11.10 mills and the school district at 45.84 mills.

The $69 million hospital and medical office building project is being built
with several pots of state and federal money, each with differing
requirements and separate agencies that oversee the distribution. All of the
money is nailed down except an anticipated $10 million that will come from a
U.S. Treasury tax credit program that requires outside investors to partner
with the parish. 

Phil Wendling, a project executive with the Hammes Company, the parish's
hospital program manager, said some potential investors have brought up
questions about the operating costs.

"When we open the doors and start seeing patients, no matter what
reimbursement is there at that time - if it's through insurance, Medicaid,
Medicare - at best you're six, nine months, maybe a year from being
reimbursed for those expenses," Wendling said. "So somehow you've got to
have money to pay your employees, your supplies, pay your bills, do
everything to keep the hospital in operation, even though you've got no
money coming in."

Parish Councilman Ray Lauga said he is hopeful for the future of health care
in the parish, but is critical that the project has increased in cost over
the past year, with the addition of the medical office building.

"I just think it's gotten too big. It's overbuilt, and it's wishful
thinking," Lauga said. "I would have preferred them to scale down the size
of the project so it doesn't go back to the citizens of St. Bernard."

The hospital board has already chosen a contractor, The Lemoine Company, for
the initial site work phase of the project. In order to put the major
construction phase of the project out to bid, the hospital board must still
present the state with a written agreement among all the different investors
for the project.

Landry said the combination of funding mechanisms for the project and
different oversight agencies naturally require more approvals at every
phase.

"We're setting a path that, because of the funds we're using, has basically
not been done before in Louisiana,'' he said. "It's requiring an enormous
amount of work, an enormous amount of effort and an enormous amount of
information."

Chris Kirkham can be reached at ckirkham at timespicayune.com or 504.826.3321.