The prospective sale of $146 million in bonds by the Memorial Health System will go before the Washington County commissioners Thursday for final approval.
Sale of the bonds will cover refinancing of roughly $78.6 million of past debt while providing funding for additional expansion of the health care system locally, hospital officials said.
Representatives of the health system and the Southeastern Ohio Port Authority met Monday, and the port authority gave its approval of the proposal.
"We've had a lot of growth over the last couple years," said Eric Young, chief financial officer for the Memorial Health System. "What this lets us do is continue to provide for that growth within our system."
Since 1997, Marietta Memorial Hospital and the Memorial Health System financed six projects, most of which operated on a variable rate loan, Young explained.
Included in those projects was the opening of the Glendale Retirement Community in Marietta in 1998, the opening of the Belpre Medical Campus in 2000 and a $25 million expansion to Marietta Memorial that broke ground in 2003.
The Southeastern Ohio Port Authority and representatives of Memorial Health System met Monday to approve the sale of $146 million in bonds.
The bonds will be used to refinance roughly $78.6 million in past debt while also paying for additional projects.
Memorial Health System officials began working with the port authority on the proposal in February and hope to have it completed by July.
A meeting with the Washington County Commissioners on the proposal will take place at 9 a.m. Thursday.
Source: Memorial Health System.
Each of those projects were financed at varying rates, and hospital officials elected to consolidate the loans under a fixed rate of an estimated 6 percent, similar to the way a home owner refinances, said Terry Tamburini, executive director of the port authority.
"It's good business for a family and it's good business for a community," he said.
While they received a lower interest rate that will generate savings in the long run, health system officials said it was not the driving force behind the proposal.
"We're not doing it for low interest rate savings. We're doing it to fund the growth we're seeing," Young said.
Exact figures for how much the health system will save through the refinancing was not available, as the variable rate loans change according to the U.S. Treasury note.
Though a little more than half of the funds generated through the sale of the bonds will be used to refinance, additional projects will also take place.
One of those projects is the addition of a parking garage at Marietta Memorial Hospital, 401 Matthew St., Young said.
Other projects include the federally mandated electronic medical records upgrades which have already begun, as well as development in the oncology and cardiology departments, he said.
"It's all local enhancement to the health care system, whether it be equipment or renovation of space for patient comfort and ease of access," said DeeAnn Gehlauf, Memorial Health System senior vice president of business and organization development. "It's a win-win. It's good for the community."
Since the merger between Selby General and Marietta Memorial to create the Memorial Health System in 2008, efforts have been made to reduce redundant services at the two medical campuses. Sale of the bonds will also allow those efforts to continue, Gehlauf explained.
As a nonprofit organization, the Memorial Health System could not file the proposal using tax exempt funding without going through the port authority, Tamburini said.
Since the port authority is a government organization, Memorial Health System could then receive the lower interest rates, Young said.
Port Authority officials unanimously approved the proposal because they felt it would benefit the community as a whole, Tamburini said. Marietta Memorial is the largest employer in the county, and will continue to provide jobs and health services because of the resolution, he said.
"I look at it just as a momentous event," Tamburini said. "It's a great honor for the port authority to be involved in something like that."
The sale of the bonds also requires authorization from the county commissioners, according to federal statutes.
"In the IRS code rules, because we are the applicable elected representative for the Port Authority, we need to approve this transaction," said Washington County Commissioner Tim Irvine.
County commissioners received a draft of the proposed two-page resolution Tuesday afternoon.
Health system officials hope to have all of the bonds sold and the funds in place for future projects by the end of July, Young said.
Typically, approval for the sale of bonds and refinancing such as the Memorial Health System is doing takes about twice as long as the expected time frame.
"I really don't see any downside for the organization with this project, because we continue to have very rapid growth within the community," Young said.