Lafferty reveals Plumas District Hospital upgrade plans
Proposal maintains Measure B cap on property taxes
Chief Executive Officer Doug Lafferty presented his proposal for a hospital upgrade to the Plumas District Hospital board April 5. The price tag on Lafferty’s proposal comes in at less than half of the ill-fated Measure A proposal: $9 – $10 million, with completion by fall 2013.
The previous hospital administration’s plan projected costs of $21.7 million and completion in December 2011. Officials at the time steadfastly maintained the project was bare bones.
In utilizing the originally proposed 12,000-square-foot plan, Lafferty provides essentially the same elements as the earlier proposal, with the exception of a second floor, on the west side of the hospital.
The CEO told directors he considered, but discarded, “shelling in” a second floor to provide for later expansion. The potential exists for future regulations to require significant modifications before interior construction could proceed on a second-floor shell.
Lafferty told directors the area between the current lobby and the Quincy Family Medicine building could easily provide room for future expansion.
The $9 million price tag includes repayment of the Measure A bond obligation and an almost 10 percent contingency allocation. To lock in a current 3.38 percent interest rate, the hospital must submit its loan application to the Food and Drug Administration by April 30.
In contrast to the previous financing plan, Lafferty said the loan repayment schedule would maintain the $50 per $100,000 assessed value property tax revenue. Lafferty said PDH revenues would guarantee the balance.
Director John Kimmel broke the stunned silence. “This makes me anxious. I thought we had decided to wait until the current general obligation bonds were repaid.” Kimmel also worried about the proposal to guarantee the hospital’s debt obligation with future revenues, questioning whether PDH would have the revenue.
Lafferty said he was confident revenue would continue to grow, explaining that the electronic medical records conversion, improved collections and expanded services would soon have a positive effect on revenue growth.
Board president Valerie Flanigan and director Bill Wickman asked for more information and appeared willing to consider Lafferty’s proposal. “I’m confident in our growth; our concern is patient safety and there are reasons to move forward,” said Flanigan while acknowledging Kimmel’s concerns.
Director Kathy Price asked about the advisability of going forward with construction plans before employees had received long-deferred raises or profit-sharing contributions.
Lafferty said 80 percent of hospital employees were at or above wage parity, with the remaining 20 percent evenly split between being overcompensated or being underpaid.
He said the real problem lies with employees hired after the hospital’s wage freeze took effect. Often new employees could command a higher starting salary, leading to wage disparity with longer-serving staff. He said it had been a mistake not to address the starting wage issue at the time of the wage freeze.
Only board member Dr. Mark Satterfield was outright supportive of the plan. He said the construction, particularly in the emergency room and operating room suites, would attract doctors and lead to more services available to patients in county.
Lafferty agreed. “Fifty percent of our potential business goes out of county,” he said. Later, he added, “Procedures are where the money is. With a substandard OR, our growth is constrained.”
Lafferty told the board he was not asking for a decision at this point, merely laying out his proposals and would have more information in the next two weeks, especially if the board approved his request for a new feasibility study.
Price said she was “overwhelmed at the pace of change,” which Lafferty acknowledged. He and Facilities and Physician Practices Director Dan Brandes will present more information to the public and the board very soon. Lafferty has been insistent on public involvement in any construction plans.
On a motion by Wickman and second by Satterfield, the board approved the feasibility study by Pacific Hospital Management. Lafferty said he would begin the FDA application process to lock in the 3.38 percent interest rate.