Samaritan application turned down; new study on the way

MOSES LAKE — Samaritan Healthcare’s application to the U.S. Department of Agriculture for funding to build a new Samaritan hospital has been declined, but hospital district officials have options for keeping the project moving forward.

Samaritan Chief Executive Officer Theresa Sullivan announced during the regular commission meeting Tuesday that the application for funding had been rejected.

Hospital officials will conduct a second feasibility study to determine whether the assumptions made when the project was approved are still applicable.

Hospital commissioners didn’t comment on the announcement during the commission meeting. Afterward, commission chair Katherine Christian and commissioner Dale Paris didn’t return phone calls asking for comment.

In a statement released Wednesday, hospital officials said the project might be delayed, but it hasn’t been canceled.

“Most likely this financial feasibility study work will delay the groundbreaking, but we don’t know how long,” said Gretchen Youngren, Samaritan’s executive director of development and communications.

Kelly Arduino of the accounting and consulting firm Wipfli said the goal is to have a new feasibility study ready by January. The estimated cost of the new study is $50,000 to $75,000, Youngren said.

To fund construction of a new facility, hospital district officials had applied for $100 million, the entire anticipated cost of the project. They were confident the application would be approved until about a week before they received the rejection, Sullivan said.

Hospital officials planned to finance the project without asking district patrons for a construction bond, and USDA officials cited the lack of a bond as part of the reason for rejecting the application. The USDA also was concerned about the hospital’s cash flow and business in the time of the COVID-19 pandemic, Sullivan said.

“Because of COVID-19, the USDA wants an updated feasibility study. However, we will need an updated one regardless of who we finance the project through,” Youngren said.

Hospital commissioners voted in October 2018 to build a new 50-bed hospital. Sullivan said Tuesday that at the time the project was approved, hospital officials thought a publicly approved construction bond was not needed.

Commissioner Alan White asked if USDA officials had any guidelines for an adequate construction bond proposal. Sullivan said they wouldn’t be specific, just that they suggested a construction bond approved by district voters.

Hospital and USDA officials have continued meeting, Sullivan said. In the meantime, Arduino said, commissioners have three options to fund the project.

District officials can reapply to USDA but ask for a smaller amount and make up the difference by issuing bonds that don’t need voter approval. That will be more expensive, Arduino said.

Hospital officials also could apply to banks and other private partners for funding. That also would be more expensive, Arduino said.

The third option would be to delay the project, save more money and pay off some existing debt.

Hospital officials were preparing to advertise for bids when the coronavirus outbreak halted work on the project. Consultant Joe Kunkel said changing the project probably would require some redesign, which would be difficult at this stage of the planning.

Sullivan said a lot has changed between the time of the original feasibility study and now, so a new feasibility study is the first step. The results will be submitted to the USDA and the commissioners.