BBandT acts to prevent RMC default on loan

June 28--The Regional Medical Center has received relief from BB&T in the refinancing of a 1998 bond to help prevent the hospital from defaulting on its loan, RMC's chief financial officer told the board of trustees.

RMC CFO Cheryl Mason said the bank reduced the hospital's days-cash-on-hand requirement to 100 days rather than the 120 days as previously contracted.

"They did waive the days-cash-on-hand covenant for the March period and changed that going forward," Mason said.

In February 2009, the hospital board voted 9-5 to refinance its outstanding 1998 debt through a three-year, variable-rate bond with BB&T.

As part of its contract with BB&T, the hospital had to maintain the amount of cash it would need to operate for 120 days if no other money came in, without defaulting on the loan.

In May 2009, the hospital had about $87.1 million, or about 165 days, worth of cash on hand, he said. Today, the hospital has 118 days worth of cash on hand, or about $66.5 million.

As part of the bank's look at its contract with the hospital, the hospital had to pay a $5,000 fee.

As part of the reprieve, Mason said the hospital was able to explain to BB&T its situation as well as the number of performance improvement items the hospital has put in place to enhance operating margins.

In related matters, RMC Finance Committee Chairman Danny Covington said the operating income data he presented at the May board of trustees meeting, which showed the hospital running a deficit in its operating income six out of the last seven years, was inaccurate.

Instead, the hospital has run in the black each year: fiscal year 2004 -- $1,441,129; 2005 -- $2,301,886; 2006 -- $976,358; 2007 -- $2,811,005; 2008 -- $536,870; 2009 -- $2,448,396.

So far this year, the hospital is $2.3 million in the red.

Covington received data from a website that posts hospital data utilizing Medicare cost reports and did not include other operating revenues.

According to the website data, the hospital experienced an operating income loss of $2.7 million in 2004, $2.7 million in 2006 and $4.3 million in 2008.

During a brief discussion on a way for the hospital to reduce expenses, trustee Dr. Oscar Butler Jr. expressed concerns about the effectiveness of hiring and paying consultants to assist the hospital.

"We hear they have been here," Butler said. "I can't figure out the impact whether we are better off after they left or before they got here."

Covington said the hospital's budget for consultants is about 29 percent or $100,000 over where it should be.

RMC President Tom Dandridge said Stockamp & Associates, which the hospital hired to investigate its billing cycle and improve revenues, was held to certain standards and goals that were monitored.

"We did not want them to get a windfall for something that was not their responsibility," Dandridge said.

In other business at Tuesday's meeting:

-- Trustees approved a roofing contract with South Carolina-based Southern Roofing Services Inc. for up to $190,000 to place a new roof on the Mabry Cancer Center. The current roof, which is about 20 years old, has a leak.

-- Trustees signed a master services agreement contract with pension fund administrator Aon Corp. to place a $1 million liability clause agreement within the contract.

The hospital hired Aon last July to review its pension plan and examine such things as increasing life expectancy, the number of employees on the verge of retirement and how to fund the program going into the future.

Contact the writer: gzaleski@timesanddemocrat.com and 803-533-5551.

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