Franklin Co. and Its IBA Stepping In to Keep Ty Cobb’s Doors Open

By MJ Kneiser, WLHR Radio, Lavonia

Just two years after its grand opening, Ty Cobb Regional Medical Center in Lavonia is in a financial crisis so severe they cannot make their next bond payment, which is due December 1st.

It now falls to the County to make those payments.

In a joint press release issued Tuesday, officials with Ty Cobb Healthcare, Franklin County, and the Franklin County Industrial Building Authority said they are working together to stabilize the hospital’s financial condition and ensure its future.

“When the county made this hospital possible through its guarantee, no one expected the financial crisis in healthcare. Even though we wish the county did not have to assume these payments, we know that it is in the best interest of our citizens to do what is necessary to keep the hospital open,” said County Commission Chair Thomas Bridges.

Ty Cobb Healthcare CEO Greg Hearn said the move is part of a long-term plan to bring the hospital back to solvency.

“It’s part of an overall strategic process that we’ve undertaken that actually includes restructuring the debt,” Hearn said Tuesday. “It actually will put the hospital on a more stable financial basis. The debt restructuring is one part of the plan and then a strategic partnership with a larger hospital. That’s also underway although nothing is yet final. So that’s all part of a plan to ensure the hospital’s long-term success.”

By restructuring, Hearn said that does not mean the hospital is filing for bankruptcy. Hearn said hospitals throughout the United States are facing similar issues.

He said Medicare and Medicaid reimbursements have been cut under the Affordable Care Act, other reimbursements have decreased, costs have increased, and the number of patients who are unable to pay for the care provided has increased.

According to Hearn, Ty Cobb Regional Medical Center provides over $1.5 million in indigent and charity care to Franklin County residents per year. In addition, the hospital writes off another $8 million per year for other uncompensated services.

Franklin County originally guaranteed approximately eight million dollars of the total $47-million dollar debt used to build the new hospital in Lavonia.

The payments on that debt come to $51,861 a month, but the bond is paid twice a year or every six months.

That means Franklin County must come up with $311,166 dollars by December 1st or the hospital will be in default – two years after it opened.

It would also ruin the county’s credit rating for future bonds and loans, according to Bridges.

Franklin County manager John Phillips admitted Tuesday, the County doesn’t have the money to make that December first payment, so the IBA is stepping in.

“That’s correct, that money is not in the budget for Franklin County,” Phillips said. “We are actually in talks with the Industrial Building Authority. We think they are going to partner with us, in all likelihood in the form of a loan to make this December 1 payment. Now, Franklin County may actually end up reimbursing the IBA later for those funds. But due to the fact that the funds are not in our budget, we’re working with the IBA to come up with a plan as to exactly how those funds will be obtained.”

For the past year, Ty Cobb has been actively seeking a partnership with another major hospital facility and WLHR News has learned Ty Cobb Healthcare officials could be close to finding that white knight.

But until then, the County will assume the $51,000 a month bond debt repayment.

Bridges said Tuesday, the IBA has committed to the December 1st payment, which buys the county time until the next payment is due in June of 2015.

“My thought is to take care of that, the Industrial Building Authority received approximately 20% of the SPLOST primarily to bring the hospital to where it is,” he said. “I feel like the best way to go about it is to designate monies from the IBA SPLOST funds to take care of that so that it does not come back on the taxpayers.”

Using IBA SPLOST monies to pay off the bond debt might have to be approved by the voters in a special SPLOST amendment referendum, however.

And with the county already struggling to find the funds to build a new wing to the Franklin County jail, Phillips said that hospital repayment might have to come from the taxpayer if the IBA’S share of the SPLOST won’t cover the debt.

“We definitely are looking at all of the options that we can come up with if we are required to make those future payments,” he said. “There is the potential that there could be a millage increase at some point, yes.”

In the press release, Hearn said his office is optimistic they will find a partnership with a major hospital or medical group, but even if that happens, it is not clear whether that bond debt would be part of the deal.

According to Diane Toney, Chairman of the Ty Cobb Regional Medical Center Board of Managers, “Many hospitals receive local tax support for the charity care they provide. We have been able to survive without that type of help until now, but the health care landscape has changed dramatically. We appreciate the fact that the county understands the value of a local healthcare system and is willing to help us find solutions.”