Sedgwick County rejects proposal to help hospital weather coronavirus setback
On a split vote, Sedgwick County on Wednesday turned down a request by a new hospital in Derby seeking help to get through the coronavirus COVID-19 pandemic.
Rock Regional Hospital had asked the commission to act as guarantor of a $2 million loan as it struggles with financial difficulties. The hospital, which opened fully in August, is seeking a similar $1 million loan guarantee from the city of Derby.
The move to deny the request was led by Commissioner David Dennis, who said it would put the county at risk of having to lay off hundreds of employees.
“This is one of hundreds of businesses that are going to go broke in this crisis and we can’t bail them all out,” he said. “It doesn’t matter how important they are, we can’t do it.”
The case for the bailout was made by Kevin Hicks of CABE Consulting of Leawood, whose firm took over the management of the hospital on April 1.
The $40 million hospital has about 40 patient beds. That includes a seven-bed intensive-care unit — expandable to 12 — that’s currently not in operation.
Approximately 35 employees were laid off shortly before CABE took over and Hicks said his company is looking at bringing back some of those jobs to restore ICU capability.
Ideally, Rock Regional would handle patients who don’t have COVID-19 to free space at larger and more capable hospitals in Wichita to deal with the virus crisis, Hicks said.
However, the smaller hospital could be used to take up some of the overflow if coronavirus cases spike and overwhelm Wichita hospitals, Hicks said.
He acknowledged that the hospital has been losing money since it opened, but said that’s normal for start-up hospitals until they gain a foothold in the community.
Most new hospitals get the bulk of their patient admissions from their own emergency rooms until they develop a relationship with physicians who start sending referrals. When the COVID-19 threat hit, emergency room traffic dropped dramatically, he said.
He described the situation as “a start-up hospital, going through all the issues that start-up hospitals go through.”
“And then to be hit with this virus and then put the viability of that hospital in jeopardy as a result of that is why we’re here,” he added. “In the absence of the COVID virus we’d probably be in a break-even situation right now on a monthly basis.”
He said the financial models for the hospital show it will be a long-term success.
And if operations at the hospital can return to a somewhat normal state by June or July, “by this fall, the hospital will be in a positive cash-flow position,” Hicks said.
Dennis was unmoved and said the hospital is already behind on property taxes.
“We’re in the same financial situation you’re talking about as you’re in,” he told Hicks. “We’re going to see a decrease of tax money and funds coming into the county as a result of this crisis.
“What you’re doing is telling me that giving an unsecured loan for $2 million is more important than 300 or 400 of our employees, possibly, that we might have to furlough,” Dennis said. “We have 3,000 of the greatest employees in the world here and I cannot look them in the face and say that I’ve put out an unsecured loan for $2 million and by the way, we’re going to lay you off.”
Commissioners Jim Howell and Michael O’Donnell, who represent Derby and Haysville, sought to delay the vote on the loan guarantee for a week to give the hospital and county staff time to discuss alternatives.
But Dennis and Commission Chairman Pete Meitzner said the county’s senior staff is under too much pressure from the coronavirus response to spend any more time on the request.
“I wouldn’t mind getting more information and all these things that we do under normal times, but we’re not under normal times,” Meitzner said.
The motion to delay the vote failed 3-2 with Dennis, Meitzner and Lacey Cruse voting against it.
A follow-up motion denying the hospital’s request passed 4-1, with O’Donnell going over to the majority and only Howell dissenting.
This story was originally published April 8, 2020 at 1:58 PM.
