November 30, 2017 at 10:44 a.m.
Marshfield Clinic wants to borrow $200 million more
Bonding plan includes option for Arbor Vitae hospital
Marshfield Clinic wants to borrow $200 million more
By Richard Moore-
In a new petition for revenue bonds to the Wisconsin Health and Educational Facilities Authority (WHEFA), Marshfield is seeking another $200 million for various projects, including a planned 12-bed hospital in Minocqua, or for an alternative location on Hwy. 51 North in Arbor Vitae.
WHEFA has scheduled a Dec. 14 public hearing at its Brookfield offices to consider the bonding proposal.
Marshfield says it will use the proceeds to finance or reimburse itself or its affiliates for costs associated with the "acquisition, construction, demolition, installation, renovation, improvement, equipping and/or relocation of facilities used in, benefitting or relating to the provision of health care, including land acquisition costs, as well as necessary and attendant equipment, facilities, sitework and utilities."
Among the listed projects, the bonds would finance renovations to and equipping of Marshfield Medical Center in Marshfield; the construction, renovation and equipping of health care facilities in Eau Claire; the expansion, construction, renovation, and equipping of health care facilities on an existing Wausau campus; the construction and equipping of a replacement health care facility in Ladysmith; the expansion, construction, renovation and equipping of health care facilities in Wisconsin Rapids; the expansion, construction, renovation and equipping of health care facilities in Stevens Point; and the expansion, construction, renovation and equipping of health care facilities in Minocqua.
Marshfield also states that the money could be used to fund a debt service reserve fund for one or more series of the bonds if deemed necessary, to pay certain capitalized interest on the bonds, and to pay certain expenses incurred in connection with the bonds.
In August of 2016, Marshfield sought to borrow $1.1 billion to help fund expansion plans. However, WHEFA approved the issuance of $209 million in October of 2016. Just this past August, WHEFA approved the issuance of $314.3 million in bonds.
Hospital in Arbor Vitae?
Interestingly, the notice of public hearing for the bonding includes not only the current Townline Road address for projects but possibly at 1747 N. Hwy. 51 in Arbor Vitae.
That property is located not far from the Allied 100 headquarters, on the west side of the highway.
The inclusion of an Arbor Vitae address helps illuminate Marshfield's current attempt to build a 12-bed hospital in the Lakeland area, after Oneida County nixed its bid to build a skilled nursing facility at its Townline Road location.
Marshfield's current application for the hospital at the Townline Road property has also been rejected by the county's zoning committee. Marshfield has appealed the rejection to the county's Board of Adjustment, which will hear the appeal on Dec. 14, the same date as the Brookfield bond hearing.
However, Marshfield officials have said emphatically they will build a hospital in the area and that Arbor Vitae might be an option if Oneida County blocks them in Minocqua.
Dr. William Melms, regional medical director for the clinic, said in a short July 6 statement that Marshfield would contest the Oneida County zoning committee's denial of the permit, but on July 11 he said the clinic would also pursue other options if necessary, and he dismissed talk at the time that the clinic's reported consideration of an Arbor Vitae location wasn't serious.
"We have made it clear on a number of occasions that we want to build an acute care facility in northern Wisconsin," Melms said then. "Minocqua is our first choice, but we are considering alternatives should Minocqua not pan out. Arbor Vitae is one location under consideration - not a bluff."
The listing of the Arbor Vitae property in the bonding proposal seems to substantiate Melms's claims that Marshfield is looking seriously at Arbor Vitae as a back-up plan.
At the time, Melms cautioned that the clinic would have to win approval in Vilas County as well if Marshfield headed in that direction.
"It would be great to experience a more welcoming approval process than we have encountered in Oneida County, but Vilas County has its own process which we would need to follow, whatever that would entail," he said. "We have an excellent project which will enhance whatever community it lands in."
Melms also said those who have opposed Marshfield in Oneida County might well contest the clinic in Vilas County.
"That doesn't mean those who want to avoid competing with Marshfield won't try to use the administrative process to slow us down," he said. "The size and scope of any facility we build will depend on the location we choose and will be scaled to the service area."
Howard Young Medical Center officials have driven opposition to Marshfield's bid to expand in the Lakeland area - both the proposed hospital and a skilled nursing facility it wanted to build in 2015 - but has said its opposition is not about avoiding competition but about the ability of both facilities to survive in an over-capacity market.
Marshfield's debt
In 2016, Marshfield proposed to borrow $1.11 billion through tax-exempt, low-interest bonds for expansion and improvements, according to public-hearing documents posted in August 2016.
About $300 million would have been used refinance existing debt, including loans in 2008, 2009, 2010, 2011, and 2012 from the U.S. Department of Agriculture to the Family Health Center of Marshfield, Inc., as well as lines of credit with BMO Harris Bank and Associated Bank.
The largest amount - about $800 million - would have been used to pay and, in some cases, reimburse costs for a host of new and ongoing projects, including acquisitions and land purchases, construction and demolition, improvement and renovation, and the equipping and/or relocation of its facilities.
In October 2016, WHEFA completed financing for bonds totaling $209,005,000 of that amount, the proceeds of which were used to refinance certain loans, leases, and bonds, and with about $103 million used to finance acquisition, renovation, construction, and equipment costs.
WHEFA issued $314,315,000 in September of this year, ostensibly to refinance a portion of debt incurred with the purchase of St. Joseph's Hospital, as well as certain other capital expenditures. That increases the clinic's annual debt service requirements from about $23 million a year, or $716.6 million through 2046, to approximately $45 million a year, or $1.5 billion through 2050.
According to the clinic's acute care strategy laid out in that bonding proposal, Marshfield has entered into a non-binding letter of intent with the Rusk County Board of Supervisors to acquire and operate Rusk County Memorial Hospital, with the intent to invest up to $35 million for the acquisition, construction and furnishing of a new health care campus, including the construction of a new hospital facility to replace the current facility.
The plan also calls for Marshfield to add more than 26,000 square feet to its existing Wausau ambulatory surgery center and include three operating rooms and one bronchoscopy room. The expansion will also expand the space for radiation oncology services.
The existing 12 comfort and recovery suites would be converted into inpatient rooms, with construction expected to be completed by fall 2018. Preliminary costs for that construction and equipping are approximately $38.4 million, and Marshfield says it expects to finance costs through a combination of cash from operations, philanthropy, debt financing, and cash reserves.
The acute care strategy in the bonding proposal also included the clinic's plans for the 12-bed hospital in the Minocqua area, and a cancer center and an acute care hospital adjacent to its ambulatory operation in Eau Claire.
Finally, the strategic plan stated, Marshfield expects to undertake significant facility improvements of approximately $28 million at Marshfield Medical Center, with additional investments in excess of $60 million are anticipated over the course of the next five years.
As of Aug. 30, when WHEFA issued the statement of the $314.3 million bonds. Marshfield was reported to have approximately $519 million of other notes outstanding.
Richard Moore is the author of The New Bossism of the American Left and can be reached at www.rmmoore1.com.
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