Hospital Type: Critical Access
Location: McLeansboro, Ill.
ProjectObjective: Renovation/Expansion
Financing Amount: $18.5 million
Source of Funding: Tax-exempt bonds enhanced by an “AA/A-1+” letter of credit. A swap will fix the interest rate to protect the hospital from market fluctuations.

Background and Challenges
Built in 1960, Hamilton Memorial Hospital District had aged past its useful life. The costs of operating and maintaining the building were creating a drag on the 25-bed hospital’s budget. Revenue-generating services could not expand to meet demand because of a lack of space.

Financial Solution
A 2003 conversion to critical access hospital status bolstered the hospital’s cash flow from operations. Additionally, the hospital’s leadership embarked on a successful capital campaign, evidencing strong community support.

Lancaster Pollard began working with the hospital’s board and management to structure a finance plan well before the hospital began the certificate of need application process. Lancaster Pollard then created a tax-exempt bond financing that integrated a local bank into the structure and avoided the use of any taxpayer dollars. Ultimately, the hospital was able to issue “AA/A-1+”-rated bonds fixed with a swap at barely 5 percent for 30 years. The bonds will fund the entire scope of Hamilton Memorial Hospital District’s four-phase project plan.

Outcome
The project will enable Hamilton Memorial Hospital District to expand and update its platform of services, upgrading the delivery of health care to McLeansboro and surrounding communities. The project includes a new operating room, clinic and emergency room. Further, departments such as physical therapy will be better able to respond to community demand with expanded services, which were previously constrained by space.

Improvements also will be made to an attached nursing facility, which will give Hamilton Memorial Hospital the ability to service the dietary needs of its patients in a more efficient manner.