ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, April 4, 1996 TAG: 9604040086
SECTION: VIRGINIA PAGE: C-5 EDITION: METRO
SOURCE: SANDRA BROWN KELLY STAFF WRITER
A proposed $86 million upgrade of Memorial Hospital of Martinsville and Henry County is not the most cost-efficient way to improve the facility, a state review agency said Wednesday night.
The Southwest Virginia Health Systems Agency board concurred with a staff report and said the nonprofit hospital should reconsider its plans. The board voted to deny a certificate of need for the project, which would reduce the number of beds from 264 to 150 and change the hospital's focus to outpatient services instead of services for patients who spend long periods in the hospital.
The staff report points out that the project's $323,285 per-bed cost exceeds the $300,000 state standard. It said the project cannot support itself unless it can increase business, which may not be possible because of declining population in Henry County and a loss of industry in the area.
The application projects that net patient revenue, which was $48 million in 1994, will rise to $59.5 million by 1999.
The hospital's board of trustees has supported the concept. But Richard Roark, the agency's outgoing executive director who wrote the staff report, noted that the board has not yet approved the scope, cost or amount needed for the project's debt service. The capital cost of the construction is expected to be $48.5 million with financing costing another $37.5 million.
New health-care facilities must be approved by the state health commissioner before they can be built, and gaining the backing of the health systems group is a first step. The recommendation for denial now goes to the state's Office of Resources Development, which will do its own review of the project.
Hospital officials said in February that they hoped to sell industrial revenue bonds for the project this year. The hospital has a letter of support from the Martinsville Industrial Development Authority. Some $12 million would be paid from the hospital's cash reserves.
The hospital's application says that extensive renovation is the only alternative to building a new facility at an even higher cost.
As proposed, the project would create a new main lobby, new dining facilities and improved parking and roads.
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