Kaweah Delta Health Care District (KDHCD) leaders are going to have to find another way to pay for new construction if they want to keep their doors open, and at least one former detractor says they can do it without asking taxpayers for more money.
During a special election in August, voters said no to a $327 million bond to continue expansion and upgrade seismic standards for existing buildings at Visalia’s hospital. This month, those same voters may have replaced one of the District’s sitting board members in a vote where the main issue was that failed bond measure.
However, thousands of ballots remain to be counted in the contest between challenger Nevin House and incumbent Teresa Ramos, and House’s lead is less than 4%. Either way that election goes, KDHCD is going to have to find a new way to pay for seismic upgrades to a major portion of its downtown facility before a state-mandated 2030 deadline, and House will likely have much to say about that even if Ramos survives the election challenge.
All On Board
Those House might be working with on the Board already agree a new plan is needed.
“I would say within three years we need to have a definitive plan and be moving on that plan,” said KDHCD Board President Carl Anderson, who has served on the Board since 2001. “So, we’ve got some time to formulate a plan and involve the community and move collectively forward on that.”
House and Anderson also agree if they decide to go to voters for funding, they’ll have to do a better job of explaining themselves.
“One of the things we’re going to have to do is get substantial public input to explain how we are where we are,” Anderson said. “Once they have that information, find out what they really want. We will move ahead once a plan of action starts to come into focus.”
More Beds Needed?
House, however, doesn’t think the District needs to go public in its search for funds, and it may not need to build more rooms either.
“I’m not opposed to the expansion of Kaweah Delta, if you consider the replacement of the rooms they’re going to lose,” House said. “That has to be done.”
While he’s certain the 276 beds the hospital will be lost due to the age of Kaweah Delta Medical Center’s original building, which cannot be upgraded to meet modern seismic requirements, House is not so sure the District needs to add more beds beyond that.
“Most of the experts who study hospitals are saying they need to downsize,” he said. “The reason for that is new procedures. The reason is advances in technology are reducing the length of stays.”
More procedures these days do not involve a hospital stay, and that will become increasingly true over the next few years as medicine continues to move toward less invasive treatments, House said. KDHCD is already seeing that in its operations.
“All of these charts that show how many rooms we need are showing a great decline over the next 10 years,” said House. “We actually saw that at Kaweah Delta. Last year was flat. They didn’t have more patients.”
Measure H would have added half again as many beds beyond those being replaced.
Asking Too Much
Anderson thinks he knows exactly why Measure H failed.
“Measure H failed for one reason only. It was because we simply did not have a correct understanding of the mental set and what the public was thinking,” he said. “The consultants told us we were in good shape to get this passed. We won’t make that mistake ever again.”
House again sees more to the issue.
“When you read Measure H, it had four points,” he said. “Only one of the four was building a new acute-care hospital.”
He said the District also planned to use those funds to pay for the construction of a facility to house its new power plant, but did not inform voters.
“They hid the cost of three buildings,” House said. “They didn’t tell the people that was part of it.”
House said he has “five or six” ways the District can pay for its new beds without floating a bond measure, which requires a two-thirds approval from voters.
Discussing just one of those approaches, he says the District can use the $227 million it has on hand to begin construction.
“That leaves you short about $120 million (based on a $360 million estimate to construct space for 300 new beds),” House said. “Start it now. Shell out part of it and don’t fill it. It allows you to build the entire structure.”
The District could then use revenue bonds based on its average income to fund the remainder. Revenue bonds do not require voter approval.
“It’s based on (the District) can borrow up to 50% of their average billing of the last three years,” House said. “If the hospital did an average of $500 million, they can have a total of $250 million in revenue bonds out there, but the hospital’s revenue keeps going up.”
He estimated KDHCD’s earnings would average $650 million a year by the end of the next decade.
Not So Fast
Anderson says the District did explore other ways to fund the new beds it must have, and the bond vote was needed and still is.
“We examined every alternative. We examined the use of our funds on hand. We examined revenue bonds for part of this, and that maxed us out, and so what we were left with was this huge debt to make up,” he said. “So, looking at what alternatives we had, for example one of the things was why don’t you just sell the Lifestyle Center, why don’t you sell Quail Park? It’s like the doctor says you’ve got to lose 40 pounds, and I come to you and say why don’t you cut off your leg? You’ll be 40 pounds lighter.”
While it’s clear there is a difference of opinion on how it is to be done, both men agree the District must keep the doors open at Kaweah Delta. Anderson is hoping he can enlighten House, and that House can enlighten him and the rest of the Hospital Board.
“Quite frankly, I’m going to be working with Nevin to provide him the information and all the background he needs,” he said. “And, I’ll be looking for him to provide substantive input. The rest of the board will be looking at him.”
For House, it won’t be the first time he’s charted new territory.
“I had my own business I built from the backroom of a two-bedroom apartment to an international multi-million-dollar business,” he said. “Sometimes you have to invest to make money in the long-term.”
Anderson welcomes that experience and expects House’s presence will be constructive and meaningful.
“We thrive on discussion and different points of view, and we come up with the best plan of action,” Anderson said. “The Board has been around long enough to realize it’s not about getting your way. It’s about doing the best thing for the community.”
Meanwhile, no one should be worried Kaweah Delta is about to close down.
“The chances of (the state) closing this hospital down is almost zero,” House said. “But, we need a new hospital. The middle wing is obsolete, the seismic requirements aside.”