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LINE OF CREDIT 3-10-14 LMS

Steele Memorial Clinic Chief Executive Officer Jeff Hill and Chief Financial Officer Gregory Hexem met with the Lemhi County Commissioners Monday, March 10, to explain why the hospital wants to apply for a one million dollar line-of-credit.

Hexem said there is no anticipation of using the credit. He said the purpose is to have the credit established as a safety net so that if there happened to be a need for cash it would not have to be drawn from current cash reserves. If used the interest rate would be three and a quarter percent. Application for the line-of-credit will be made to Wells Fargo Bank which is the hospitalís regular financial institution.

Hexem said the hospitalís 2013 audit has just been completed and indicates it was a very positive and solid year. He said the audit shows 152 days cash on hand which equates to about $6.9 million.

He said the hospital will be taking on two major projects this year. Equipment replacement will amount to about $2.5 million. The federal government has guaranteed $1.5 million if meaningful use specifications can be met. Receipt of the funds is expected in from six to nine months after application is made. Another large project will be the federal government conversion from ICD-9 to ICD-10 which has to do with the uniform medical billing and diagnosis codes that are presently in use. Hexem said the ICD-9 currently contains approximately 13,000 codes. The new ICD-10 contains around 68,000 codes.

He said the change over project will be a big one and there is a concern about the anticipated decrease in cash flow due to not all the payers being ready for the October 1st transition deadline. Hexem said that conversion is the main reason for the backup line-of-credit which represents about six percent of the facilityís budgeted net revenue. Another reason is the yet unknown impacts connected with the Affordable Health Care Act.

The commissioners moved and seconded Resolution 2014-6 thereby approving Steele Memorial Clinicís request to apply for the $1 million line-of-credit.




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