When does a hospital have dealings with the U.S. Department of Agriculture? In Man (W.Va.) Community Hospital's case, it looks to the federal agency when it is in danger of extinction and in desperate need of cash.
This 46-bed hospital in rural West Virginia was shuttered last July by its owner, not-for-profit Appalachian Regional Healthcare, Lexington, Ky. Now it has prospective new owners that hope to reopen it on Jan. 29, and it's primarily because of the intervention of the USDA.
A community group had formed before the facility closed, desperate to save the money-losing hospital but unable to raise enough money to do so. Even when ARH offered to donate the facility to the group, members were unable to come up with the nearly $1 million they needed to buy the equipment and pay for unemployment insurance. Banks, it appeared, were nervous about lending to a facility that lost $7.1 million on revenue of $9.8 million in its latest fiscal year.
But thanks to the USDA's guaranteed business and industry loan program, the hospital was able to get a $1.9 million loan from three local banks, with a guarantee on 80% of it from the federal agency.
"I do financial planning," says Millard Tomblin, president of the hospital and chairman of its board, as well as one of the leaders of the community group. "That just happened to be my background, and I knew that's where we were going to have to go."
Tomblin says the community raised $400,000 in contributions through churches and fund-raisers and, by doing so, attracted the attention of the local, state and federal government representatives who were able to include the guarantee in the USDA's appropriations for this year. The hospital has also since been awarded $375,000 from outgoing Gov. Cecil Underwood's contingency fund, a matching grant for the USDA loan guarantee.
The loan guarantee program is available to most types of businesses, including hospitals, although it's a complicated application process, Tomblin says. The loan guarantee was not a sure thing until Congress passed its budget, including the USDA appropriation, during its lame duck session at the end of last year.
"I sure wouldn't want to have to do it again," Tomblin says. "It's just been an effort of the communities, the state and the federal government; all that has to work together or a USDA loan is not going to work for a public entity."
The three banks providing the loan are United National Bank in Logan, W.Va., Logan Bank and Trust, and the Bank of Mingo, Gilbert, W.Va.
"The USDA approval was a major part of the deal," says Scot Mitchell, the hospital's new chief executive officer. "But we had to jump through so many hoops it isn't even funny."