Hospital nixes real estate purchase

Published 7:16 pm Friday, February 26, 2010

Memorial Hospital and Manor Authority voted unanimously at the monthly meeting on Tuesday not to proceed at this time with either the proposed new medical building construction, or the purchase and renovation of the buildings on Amelia Avenue formerly occupied by the Department of Family and Children Services.

For some time the hospital has looked at ways to address a need for additional medical professional office space. Plans have been drawn for construction of such a building on East Shotwell Street on land currently owned by the hospital.

When the Amelia Avenue building complex became vacant, it was offered for sale to the hospital authority as a suggested alternative space.

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The board had previously requested a property comparison study be made. Those figures from the study were presented to the board at Tuesday’s meeting by Assistant Administrator Lee Harris.

During the presentation, discussion and deliberations of the real estate purchase and/or construction, board member and local Realtor Charles Tyson, excused himself from the meeting.

Total estimated cost of purchasing and renovating the existing Amelia Avenue property came down to $1,508,427, or $119.15 per square foot, compared to projected costs for new construction on the proposed Shotwell Street building, of $2,278,433, or $127.49 per square foot.

The Amelia Avenue complex consists of three buildings with a total of 12,660 square feet of space. The proposed medical office building on Shotwell Street would have 17,871 square feet of space.

Hospital President and CEO James Peak informed the board that it was the recommendation of administration to decline the offer of purchasing the old buildings and do nothing further at this time due to present financial conditions.

Board member Johnny Grimsley made the motion not to proceed with either project at this point. He cited the current financial condition of the hospital and the continuing unexpected and sometimes unbudgeted maintenance expenses on a building that is now 50 years old and equipped with aging systems.

One of the repairs referred to by Grimsley was the replacement of the ICU chiller system. The Trane chiller and water pumping system installed in 1986 failed in January and the board on Tuesday approved replacing it with a new York system and pump at a total cost of $78,160.

Chief Financial Officer Billy Walker said payment of this unexpected expense would need to come from savings rather than from budgeted operations.

There have also been ongoing problems with the Willow Ridge Center Pod air-conditioning system. Three service calls since August have required 81.5 pounds of refrigerant to be added at a total cost of $1,588. Proposals have been requested for replacement of this unit, as well.

Key indicators for January 2010 reflect the financial condition of the hospital. Gross patient revenue for January was $6,321,922, down from the December figure of $6,775,695. While expenses were also down for the month, it could not offset the net income loss year-to-date figure of $2,142,575. Last year-to-date income loss was $1,000,693, for a difference of $1,132,882.

Walker explained the figure for this year is as high as it is due to the fact the hospital has not yet received any indigent care fund reimbursements, estimated to be approximately $1.1 million.

Peak advised that Memorial Hospital in Decatur County is not alone in its financial woes. Information he has gained from attendance at state meetings indicates other hospitals, “even those with good margins, are seeing funds slashed to the bone,” he added.

Peak, in closing remarks, announced that the appointment of Joe Livingston to the board of Georgia Hospital Association was confirmed at their February meeting.

The hospital continues to make preparations and plans for the 50th birthday celebrations.