Lenawee County OKs issuing $177M in hospital bonds

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ADRIAN, Mich. — After venting frustration over services that are not planned for ProMedica's new hospital in Adrian Township, Lenawee County commissioners Wednesday approved issuing bonds to finance the hospital's construction.

The commissioners voted 9-0 to approve issuing $177 million in bonds, which will be financed by Toledo-based ProMedica. They will be used to finance the $150 million hospital, pay off $26.9 million in outstanding bonds and cover administrative costs and possibly a debt service reserve fund. The vote came after a brief public hearing during which no comments were made.

Tim Roberts, director of treasury for ProMedica, told the board ProMedica wants to issue the bonds this year because of changes proposed by the U.S. House and Senate in their tax reform bills regarding how 501(c)(3) can issue bonds.

Commissioner Ralph Tillotson, R-Adrian Twp., said he and other commissioners would have liked to have had more time to consider the request. The commission discussed ProMedica's request Tuesday during the personnel/ways and means committee meeting, which is a committee of the whole. Tillotson was absent from that meeting.

"In general, it's tough to ask for over $100 million of somebody's full faith and credit without much discussion," he said, adding that he'd been told the county's full faith and credit is not involved and that it would be less expensive for ProMedica to borrow through the county than otherwise, "but nobody seems to know how much the savings is."

He continued with complaints about the new hospital not including in-patient mental health services or a morgue where the county medical examiner can perform autopsies. Other commissioners also aired their concerns about mental health services.

"A good number of (people with mental health problems) are ending up in our jail and are assaulting our officers," commission chairman David Stimpson, R-Tecumseh, said.

"These are real concerns of ours," commissioner K.Z. Bolton, D-Adrian, said. "We need to find something that can benefit this community and the surrounding communities."

Roberts said ProMedica would save about 1 percentage point on the bonds' interest rate, and that they would likely extend their repayment out to 30 years. Stimpson, R-Tecumseh, said that would save ProMedica about $35 million.

The county's bond attorney, Timothy Sochocki of the Miller Canfield firm, confirmed the county's full faith and credit is not being used for this transaction and that the bonds will be repaid by ProMedica. He said the theory behind state law allowing hospitals to finance projects through municipal bonds is that they will take the savings and provide more care within the community.

Dr. Julie Yaroch, president of ProMedica Bixby and Herrick hospitals in Adrian and Tecumseh, told the commissioners she "didn't disagree" on the need for mental health services in Lenawee County but said the reason the new hospital doesn't have in-patient mental health services is a national shortage of psychiatrists that is particularly acute in Michigan.

"Without having providers, I cannot provide that line of service," she said.

She said ProMedica struggled for three years to hire a psychiatrist to provide out-patient mental health services in Lenawee County before hiring one Wednesday.

She also said that there are services that community hospitals such as Bixby, Herrick and the new hospital often don't offer, such as vascular surgery. For some services, the community hospital's role is to stabilize a patient before transferring them to another hospital that can provide those services.

Regarding the morgue, she said when the county owned Bixby Hospital, it included a morgue within the facility. When ProMedica took over Bixby, it allowed the county to continue to use that space for autopsies.

"Now, as I am looking to move into a new hospital, construction costs are not going down," she said. "Unfortunately, I do not have room in my budget for a morgue."

Stimpson said commissioners did not find out the hospital wouldn't have a morgue until medical examiner Dr. Bader Cassin started to remind them during the summer. Cassin reminded them again last week during the commission's criminal justice committee meeting. After that meeting, Cassin said when he took over as medical examiner in 2015 that he asked about ProMedica's plans for autopsy space at the new hospital and was told there would not be space.

Yaroch said she thought that had been communicated to the county before she took over as the hospitals' president in 2015 and apologized that it had not been made clear to the commissioners before this year.

A statement issued Monday by ProMedica said, "In most communities, the morgue is maintained by the county and funded through tax dollars. We informed the county back in 2014 that we would not be able to include a morgue without financial assistance from the county. However, the county declined to provide the funding."

Yaroch told the commissioners she would be willing to work on finding space for a morgue at the new hospital if she was provided with funding for it.

After Wednesday's meeting, county administrator Martin Marshall said the county is examining the possibility of including a new morgue in plans for the renovated sheriff's building or other work that will be part of the project.

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