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Town Hall Finance Q&A

1) How will this project cash flow? Can you show the funding/income versus the expense/payment?
2) Explain the financing – how will it be paid for and what does it require of us versus the government?
3) How much of the mill levy will be used for building a new Health Center versus current operations?
4) With the Health Center’s current financial struggles, how can you afford a new facility – income is income, correct?
5) If the PBC is not approved by the voters, can the Health Center afford/continue to operate the current facility with the current tax levy?
6) How will we sustain the new Health Center financially?
7) How does this impact the entire district, even beyond Ashland?
8) Is there a guarantee that Medicare will continue to pay at the 80 percent reimbursement?
9) Who will buy homes within our community if taxes are too high?
10) What happens if there are fewer tax payers and lowered valuations?
11) What happens to those people and their homes who are unable to pay their property taxes?
12) Does the price include just the build, or equipment?
13) What happens to swing bed if Medicare payments dwindle to where the Health Center can no longer maintain quality care?
14) What is the strategy for grants from private foundations, and both state and federal to help with funding to build the new facility?

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1) How will this project cash flow? Can you show the funding/income versus the expense/payment?
Below is the Public Building Commission Revenue Bonds spreadsheet indicating debt services and off-setting revenues.

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2) Explain the financing – how will it be paid for and what does it require of us versus the government?
Public Building Commission Revenue Bonds will be issued for the cost of the project, or $15,100,000. Those bonds will be repaid over a 20 year period. It is projected that 80 percent of debt service will be funded through Medicare reimbursement. The remaining 20 percent of the required debt service will be paid with funds generated as a result of the proposed increase in mill levy.

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3) How much of the mill levy will be used for building a new Health Center versus current operations?
Our current projections show that the proposed increase in the mill levy will be used for the payment of the Public Building Commission Revenue Bonds. There is an exhibit illustrating the breakdown of the project cost of $15.1 million, including the projected payments to service the bonds. It is anticipated that the mill levy increase will be approximately 20 mills. The cash generated from this mill levy will be used to repay the outstanding bonds.

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4) With the Health Center’s current financial struggles, how can you afford a new facility – income is income, correct?
Expenses and healthcare service revenue from an old to new facility are not comparable.


Much of our financial struggles can be attributed to maintaining outdated components – pipes and sewer lines, boilers and chillers, ductwork and electrical systems – essential to operations of the current facility are simply wore out and cost a great deal to try and maintain.

The current facility’s focus was on an outdated model of inpatient acute care, with no flexibility to expand services for revenue generation by incorporating the new model of healthcare, which is outpatient services. Visiting specialist, telemedicine and expanded therapy services are all opportunities for expansion and revenue generation that we cannot meet in our current facility.

 

5) If the PBC is not approved by the voters, can the Health Center afford/continue to operate the current facility with the current tax levy?
No, the tax appropriations would still need to be expanded to provide the necessary money for ever increasing maintenance and operational cost during the remaining life-span of the facility, generally considered to be three to five years.

 

6) How will we sustain the new Health Center financially?
The design of our current facility is unable to effectively meet the future of healthcare. The new facility focuses on outpatient services, physical therapy, specialty care, Immediate Care, imaging and diagnostics.
The proposal optimizes the current reimbursement model for outpatient services, but should reimbursement change, the facility is designed for maximum flexibility, enabling us to adapt to those changes. Options simply unavailable within our current facility, which was designed for the now antiquated inpatient acute stay model.

 

7) How does this impact the entire district, even beyond Ashland?
From the very beginning, our approach for the project has been with the understanding that ours is not simply an Ashland City issue, but rather an opportunity to positively impact our entire community district.

 

8) Is there a guarantee that Medicare will continue to pay at the 80 percent reimbursement?
No. As within any business, there are no guarantees. And, Medicare payment rates have fluctuated over the years, but the new facility has been designed for maximum flexibility to adapt to future changes and regulations within healthcare.

 

9) Who will buy homes within our community if taxes are too high?
Based on a $50,000 home, it will cost $109.25 per year. The added expense is likely less than cost of obtaining healthcare – including primary, emergency and pharmacy in another community.

As a major economic driver within the community, without an Ashland Health Center, many other businesses could soon falter. The valuation of homes in the community would drop. Without a school or hospital, likely very few people will be purchasing homes.

 

10) What happens if there are fewer tax payers and lowered valuations?
While that is a possibility, building a new Health Center could help stabilize the population, and could eventually lead to some growth through new opportunities for younger families to move into Ashland.

 

11) What happens to those people and their homes who are unable to pay their property taxes?
The Homestead Act, provided through the State of Kansas does refund some of the property taxes paid to certain people. The people who qualify are those who own their home and have paid their property taxes, have a household income is less than $33,400 for the year (of 2014), and were residents of Kansas all year. They also must either be over the age of 55, be blind or totally and permanently disabled, or have a dependent under the age of 18 living with them all year. The state will refund a percentage of their property tax up to $700. The refund is proportional to how much income they have, so the lower the income, the more they will get back. And household income for this program includes 50 percent of your social security benefits. Check with your tax preparer, or the County Clerk’s office – a free service – to see if you qualify.

Our projections are based upon 95 percent tax collection. Yes, we recognize that taxes will increase, but we
have done everything possible to minimize the local impact. The design of the new facility allows us to shift the vast majority of the burden off the local tax payer onto the state and federal level.

Below we have included the breakdown for the additional expense of a new facility:

80 percent Medicare Reimbursement Rate (95 percent tax collection) for a
$15.1 Million Facility (20 Years)

Cost to Homeowner of Projected Mill Levy Increase
 

Home Value Annual Property Tax
$50,000 $109.25
$75,000 $163.88
$100,000 $218.50
$150,000 $327.75
$200,000 $437.00

 

 

 

 

 

 

 

 

12) Does the price include just the build, or equipment?
The price does include the expense of some additional equipment and furnishing.
Much of the equipment for the new facility will be transferred from our current facilities. We are currently carrying a budget of $310,000 for furniture, fixtures and equipment (FFE). This figure anticipates utilizing many of these items that are still serviceable from the existing facility.
For instance, the existing patient beds will be transferred over to the new facility, as will over bed trays, some night stands and recliners. Doing so will save approximately $450,000 from the cost of new patient beds and furniture.

Through leasing arrangements with our Mobile CT supplier, we are able to have a unit installed in the new facility for roughly the same cost as we are paying now for the Mobile Unit. The current X-Ray unit will be relocated.

In addition to the FFE budget, we have included $240,633 in the construction cost for much needed updates in dietary and kitchen to meet codes.

 

13) What happens to swing bed if Medicare payments dwindle to where the Health Center can no longer maintain quality care?
Our focus has always been – and will continue to be – providing, enhancing and preserving the healthcare of our community with compassion, dignity and excellence. Changes in Medicare payments are a risk in either an old facility or a new facility. We can’t control all of what happens to us but we can position ourselves as well as possible to be able to adapt to any changes in the future. The proposed facility allows us to be versatile and efficient, enabling us to adapt to a changing payment paradigm – which, our current facility does not.

 

14) What is the strategy for grants from private foundations, and both state and federal to help with funding to build the new facility?
Very few grants actually provide funds for the “bricks and mortar” of a new building. However, some are available – and we have obtained – grants for various equipment and exploration of new services. We have explored USDA opportunities, but were led to financing options, not grants. Prior to a community vote approving a new facility, it would be of no benefit to begin a capital campaign.

 

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Ashland Health Center625 S. Kentucky St.Ashland, KS  67831

p. 620.635.2241f. 620.635.2229

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