The number has been out there in the public for more than a year, but privately many residents of Cook County have been asking, “Where’s the $20 million to renovate and refurbish the Cook County North Shore Hospital and Care Center going to come from?” The long answer is complicated and filled with a myriad of complicated mathematical formulas best understood by hospital administrators and business staff, said Kimber Wraalstad, administrator of the Cook County North Shore Hospital and Care Center.
The short answer is that a significant amount of the funding will come from Medicare payments, and to a lesser extent, from Medicaid and other payers, said Wraalstad and Vera Schumann, director of finance for the hospital/care center.
Because the hospital is designated as a “Critical Access Hospital,” Medicare reimbursement is at a higher rate than a hospital located in a city, or one that is near other hospitals.
“Medicare reimbursements are based on our costs and depreciation is a recognized cost. As the building gets older we have less building depreciation so we get less money from them. That means, if we don’t improve or reinvest in the facilities, we will receive less payment from Medicare and will have to become more dependent on the tax levy than we are now,” said Wraalstad.
One of the things that the hospital board stated when this process began more than four years ago was they didn’t want to see county taxpayers pay more than the $800,000 yearly hospital/care center levy they are now paying.
That is still the goal today.
“But if we do nothing the levy will increase and our ability to provide services will diminish. We have 1950s infrastructure— such as old pipes that will need to be replaced soon. Our utility costs are higher than many other hospitals. If we repair and fix these things, we will see an immediate savings. Plus, we will be more efficient in staffing and have the ability to offer more services that will bring in more revenue. Of course there will be some initial costs to bringing in some of those services,” Wraalstad said.
At a meeting last year Rory Smith, head of maintenance, told the board that the electrical equipment located in the boiler room was original to 1958 construction. He said, “It should be evaluated to determine if it should be replaced within the next five years.”
He also said that the 1958 100HP boiler needed to be replaced because it was becoming too inefficient to operate. No action was taken at that time to replace the boiler.
Heading to the drawing board
On February 11, 2014 the hospital board entered into negotiation with DSGW Architects to draw plans for a remodel and renovation for the 16-bed critical care access hospital and 37-bed skilled nursing care center. A month later DSGW was hired and they have been meeting with the staff and administration on a weekly basis to determine what should be addressed. Public information gathering meetings for county residents will be held in August and September, said Wraalstad.
As of now, some areas that will almost certainly undergo renovation under any building project are: . The emergency room as it offers little privacy when more than one person is being treated and there is no waiting space for families and no appropriate space for computers. Wraalstad said they are also looking at making a private hallway that will take emergency room patients to their hospital rooms without going by the public spaces. “We are striving for visible and auditory privacy.” . The hospital laboratory: There is a need for more space for machines and supplies and regents. The radiology dark room is obsolete and the CT area is too small and there is no space for computers. . Patient rooms: They are too small for two patients and difficult to get medical equipment into and out of. The rooms also aren’t uniform and once again, there is no space for computers. . Nurse station: Currently offers no privacy for private conversations or making phone calls regarding patients. The space is not efficient. Current plans call for a unified care team area so they could more efficiently share staff. . Improving hallway flow and entry points—especially making one main entry point—are also central to new plans. Current hallways are like a mouse maze and employees have to shepherd people unfamiliar with the hospital/care center to their destinations.
Another outcome could be that the hospital could allow for the provision of certain chemotherapy procedures that would allow cancer patients to receive chemotherapy in county instead of making a twohour drive to Duluth.
New space would also allow a variety of outpatient surgical services, outreach physician visits and telemedicine services that provide for growth and expansion of services, said Wraalstad.
The current pharmacy hood and mixing area are outdated and need to be updated.
In general, said Wraalstad at a meeting last winter, the hospital building was designed as a silo and does not allow for the efficient use of staff to address the needs of the patients and residents. The widespread use of computers is increasing, she said, and the building is labyrinthine and difficult for patients and guests to find their way.
The care center also has a lot of issues that need to be addressed either sooner or later.
The dining room is loud and causes behavior issues for some residents, said Wraalstad, adding, “The current situation with four beds to one bathroom and shower is outdated and doesn’t offer enough privacy and the shower mechanisms are old and need to be replaced.
“The nursing station and medication room are separated, causing inefficiency, and when visitors enter they can’t see the location to receive assistance.”
If improvements are made, Wraalstad said it should be easier to attract business to both the hospital and care center, thereby increasing the bottom line.
Currently the board is looking at having the care center and hospital rooms remodeled and turned into single rooms (cottage style) with each having its own bathroom.
A project manager is expected to be hired soon. They will oversee the hiring of contractors and make sure the work is done correctly and in a timely fashion.
Plans this fall include completing site and rock survey work, developing a final schematic design, establishing a final project budget, and completing the design review with the Department of Health and other required agencies. Bids for the work will be let in early January 2015 with a contractor selected by February 28, 2015. Ground will be broken on or about April 30, 2015.
Upfront funding being finalized
AgStar Financial Services is helping with obtaining a USDA loan for the project. AgStar Rural Capital Network is an $8 billion lending institution that works within the Farm Credit System and offers interim financing for essential community facilities with a USDA direct loan takeout as permanent financing.
While AGStar is not part of the USDA, it does not charge a fee for their services, instead taking a percentage of the loan as its pay. Currently the hospital could qualify for a direct loan of about 4.5 percent through the USDA Community Facilities program.
“This is a federal government program that ensures that capital is available to facilities that are essential to a rural community,” said AgStar representative Bob Madsen.
Terms of the loans are typically 30 months for construction and 30 years for financing. The hospital would have to put up between $2 to $4 million under a USDA loan. Money that Wraalstad says the hospital has earmarked.
“We asked Gordon Forbert, an independent consultant, to give us a worst-case scenario that included no increase in revenue and no decrease in cost. How much improvement could we afford? We also asked DSGW the same thing and they came at it from two different directions and both came up with about $18 to $22 million we could qualify for and pay for to spend on improvements,” Wraalstad said.
That doesn’t mean there is a blank check floating around out there, said Wraalstad.
“There is a limit to the amount of money we can have at our disposal. We will be judicious and appropriate with our spending. Everything is being well thought out with a lot of input from a lot of people to decide what is needed the most and what will give us the best bang for our buck. We are striving for efficiencies that we do not now have.
“This will be a 30-40 year project. We have to create a plan that will allow flexibility, that can adapt to whatever changes that will come down the pike. Changes will occur in the Critical Access Hospital program and we will need to improve the quality of care that we provide. We are 83 miles from the next hospital in Two Harbors.”
Of all rural critical care access facilities, Cook County’s hospital is the furthest from the next critical care access in the state of Minnesota.
Wraalstad has submitted a pre-application for USDA financing and will meet with USDA representatives to obtain more information on this financing option.
The next step, said Wraalstad, will be to hire a CPA firm to conduct what is called and Examined Forecast at a cost of $35,000 to $40,000. This document, said Wraalstad, will verify the feasibility of the project. Should it be determined that the project is not feasible the hospital board will stop the project. Each design can be completed on its own without being dependent upon other stages.
The work will be done in multiple stages and is expected to take between 18 months and two years to complete.
For now, it’s all systems go.
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