Trustees withhold construction funds

Hospital trustees held off paying $95,000 to Murray Construction because of some items still not completed or operating correctly in regards to the building’s construction.
It’s the first time trustees have withheld payment to Murray, the construction management company that oversaw construction of the hospital including hiring subcontractors.
Stonework on the exterior of the building, the air exchange in the hospital’s heating and cooling system, and some landscaping issues pose the greatest concerns and remain unresolved, said Ron Baker, chief executive officer of Allen County Regional Hospital.
Baker estimated about half of the items on the punch list had been completed since submitted to Murray early this fall.
“Some are easy and straightforward, such as a cracked toilet seat,” Baker said. In other instances, such as the air exchange requirements in various rooms, the hospital is waiting for a “test and balance report” to better document the precise levels to see if it needs to be corrected and to what degree.
“If the report does not go well and there are significant changes that need to be done to HVAC in order to comply, then there will be significant costs,” Baker said.
“I was not prepared personally to vote for the $95,000,” said Harry Lee Jr., trustee chairman. “I believe they are due 100 percent of what we owe them, and conversely we are due 100 percent of what they owe us.”
Trustees first discussed withholding half of the fee, but after further discussion aligned with trustee Glen Buchholz who moved they pay “not one nickel,” until the outstanding issues are resolved.
“I’m willing to hold their feet to the fire,” Buchholz said.
Sean McReynolds, trustee, pointed out that once Murray Construction is paid in full — $150,000 remains in its contract — “we lose the leverage to make them live up to their obligations.”
To that end, trustees asked that both the architect with Health Facilities Group and a representative of Murray attend their Dec. 16 board meeting to discuss the matter.

TRUSTEES approved the hospital to start the procedure to become a Level IV trauma center.
The designation proves “we can provide a certain level of care within a matter of minutes,” said David Paul Cavazos, director of radiology at the hospital.
“I would be very proud of our hospital if we had this,” he said in comments after the board meeting.
The change would ensure the hospital meets the standards of the service and undergoes regular reviews and audits.
Neighboring hospitals in Chanute and Garnett are Level IV trauma centers.

Hiccups with an eight-year-old ultrasound machine prompted trustees to OK the purchase of a new one. Replacement, with trade-in, will cost $99,700, with an annual service contract of $10,000 or more.
The technology is critical, Baker said. Ultrasounds create images of inside the body such as the stomach, liver, heart and blood vessels. They also are used to check on a baby inside a mother’s womb.
Baker said the hospital averages three ultrasounds a day.
Trustees agreed to seek a capital lease from a bank to finance the new machine.
“Our cash flow is decent, but we feel more comfortable with this kind of arrangement,” said Larry Peterson, chief financial officer of the hospital.
Interest rates would be below 3 percent, he said. “And we could pay it off at any time.”

KANSAS LEGISLATORS can expect to get an earful from hospital administrators about the need to expand Medicaid, Baker said.
If approved, it would enable almost 100,000 low-income Kansas adults to gain insurance coverage by 2016, and another 44,000 by 2017.
Currently, parents whose incomes are greater than 38 percent of the federal poverty level, about $5,600 for a family of three, and non-elderly, non-disabled adults without children are not eligible for any health care coverage subsidized by the state.
“Our Medicaid eligibility levels are well below the levels used in most states,” Baker said. “Nearly one out of every seven Kansan under age 65, 14.2 percent, were uninsured in 2013, exceeding the national average, and preliminary data suggest that number will increase for 2014.”
Kansas hospitals are bearing the brunt of this growing segment of people who cannot afford to pay their hospital bills.
“One way or another these costs have to be paid,” Baker said. “Is it going to come from our local tax base, or the federal government?”
Kansas said no to approximately $334 million in federal funding by refusing to expand the Medicaid guidelines.
Expansion also would have created more than 3,000 jobs statewide for 2014, which would have meant more than $6 million in state tax revenue.
“This is what keeps me up at night, wondering what the next five years will be like,” Baker said. “We need our legislators’ support. If you want the care, it’s got to be paid for.”