Intensive Process

Step by step, Cloud County is moving toward securing funding through the United States Department of Agriculture (USDA) for the construction of a new modern medical facility in Concordia.
After Cloud County Health Center (CCHC) went through an extensive Master Site and Facility Plan process, administrator David Garnas announced last July the plan to build a new 74,000 square foot, 14-bed hospital on College Drive, with an estimated cost of $40.35 million.
The decision was made by the CCHC administration and board of trustees not to seek local tax support for the new facility, but to pursue funding through the USDA.
“It is a very intensive process that can take many, many months,” Garnas said.
Garnas is confident that CCHC will receive approval on the funding from the USDA.
“There is absolutely nothing that is standing in our way at this point in time,” Garnas said, “This whole process is a living process. If we would have run into anything it would have been during the feasibility study, it would have been the number one, because it is all about money. And if we would run into any issues it would have been there.”
CCHC hired Doherty Mortgage, Inc., the largest guaranteed loan agent of the USDA, to provide assistance with the loan process.
“We are lucky that we partnered with them (Doherty Mortgage),” Garnas said.
CCHC is currently at 24 weeks into the loan application process.
Garnas expects to receive final approval on the loan from the USDA in February.
“The entire process is much more than just applying for a loan, and ultimately, it is because they want to make sure, they are loaning us a lot of money, that we have the capacity to succeed, to pay it back and not fail,” Garnas said.
CCHC, with the aid of Doherty Mortgage, has completed a number of steps in the application process.
Once CCHC had acquired the land on which the new facility will be built from the city of Concordia and Cloud County Community College, an American Land Title Association (ALTA) survey was done by Campbell & Johnson Engineers, PA, which was submitted to the USDA.
A major step in the process was the feasibility study, which includes a financial feasibility study and a market analysis.
“They look at our last five years of financials, and then they project out once we occupy the next five years so they can see where our business was, where it has been and where it can go,” Garnas said.
The market analysis looks at the market share of the hospital.
“The feasibility study takes a pretty long period of time,” Garnas said, “I am happy to report that from our debt retirement ratios to our current ratios, to everything that is looked at, we are well above any minimum requirements that USDA has. Our numbers look very, very strong to be able to get this loan.”
A two-phase environmental study was done on the proposed site for the new hospital, which has been completed and is under review by the USDA.
Once the application goes to the USDA loan committee, CCHC will have final approval in 48 hours.
Another key piece of the process has been the preliminary architect report (PAR).
“The preliminary architect report, along with the feasibility study, are two of the biggest pieces of the puzzle because the PAR outlines, what is their plan, what are they planning to build, how big is it, what is the need justification, etc.,” Garnas said, “It is really a recapitulation of the master facility plan that we had already done.”
The PAR approval was given in December, and that allowed CCHC to send out requests for proposals for Construction Manager at Risk (CMAR) firms that would provide professional services and act as a consultant on the design development and construction phases of the project.
CCHC originally received proposals from nine firms. One of those dropped out, and another did not attend the mandatory pre-bidding meeting that took place last Friday.
“We are down to seven firms, all of which are large firms, nationwide and regional, that have a lot of experience in health care,” Garnas said, “We are very lucky that, first of all, in Kansas we have that expertise. And secondly, is that they all seem to be interested and we should receive seven proposals back.”
The deadline for the firms submitting the CMAR proposals is January 22.
A nine-person selection committee made up of CCHC administrators and board members, administration representation from Salina Regional Health Center and the Salina Regional executive director of facilities, will select the top three firms.
Those top three firms will then be interviewed, and one will be selected as the CMAR.
“Whoever gets the CMAR will go to work right away,” Garnas said, “That is the beauty of going through the CMAR process, is that at the end when everybody has blesses it and says that is the design, that is where the outlets go and everything else, we have a firm, guaranteed maximum price and we go forward and build it and hopefully reduce our risk of any overages.”
Garnas is hopeful the design process will begin in February, and is expected to take about eight months.
That would lead to CCHC breaking ground on the new hospital in October or November of this year.
Construction is projected to take about 19 months.
“Which means that we would open the doors in the spring of 2022,” Garnas said.
Garnas said that the process has gone smoothly.
“We are sitting at about 24 weeks, this whole process I just outlined. It will probably be 27 to 28 weeks by the time we have approval, and the CMAR picked and everything. And that is pretty fast tracked,” Garnas said, “We have done a lot of work and we have done it very quickly. So we are pretty happy.”
When the process was started to pursue funding, interest rates were at 3.5 percent. There have been two rate reductions, and it is currently at 2.75 percent.
“Once we lock in, that would be the highest interest rate we would pay,” Garnas said.