Rural hospitals in Colorado and Idaho have become the first critical-access hospitals to receive financing from the Federal Housing Administration's Section 242 Hospital Mortgage Insurance Program, which previously has been associated with large urban hospitals.
Mortgage insurance commitments for Rio Grande Medical Center in Del Norte, Colo., and Shoshone Medical Center in Kellogg, Idaho, which are doing replacement projects, were announced at the National Rural Health Association's annual meeting in Salt Lake City this month. Many more critical-access hospitals are expected to follow, according to federal officials.
The U.S. Housing and Urban Development Department has been promoting the longstanding loan-insurance program, and recently streamlined its application process to make it easier for critical-access hospitals to qualify (Sept. 30, 2002, p. 14). The loan insurance enables facilities to lower the interest rates on their debt.
"We are looking forward to this new direction in the program and hope to consider more of these vitally important hospitals in the coming year," HUD Secretary Mel Martinez said in a written statement.
HHS' critical-access designation allows facilities in underserved areas to operate with fewer regulations and a favorable reimbursement system under Medicare.
The FHA will insure $18.5 million of a $20.5 million project to rebuild Shoshone Medical Center, which is managed by Quorum Health Resources, Brentwood, Tenn. The new 25-bed facility will offer expanded outpatient diagnostic and surgical services, a permanent MRI and a breast cancer screening unit.
The FHA will also insure $10 million of the $11.5 million cost to rebuild Rio Grande Medical Center, which will have 14 private patient rooms and an expanded emergency room, among other improvements.
Alan Richman, president and chief executive officer of InnoVative Capital-the New York-based mortgage banking company that helped Shoshone develop the financing plan for its new hospital-called the announcements "a seminal moment for hospital finance."
"You're now empowering small hospitals throughout the country," he said.