A plan to finance a new facility for Southside Community Health Center goes before Erlanger's main financial panel tonight. If the proposal is approved, the hospital's full board of trustees will vote on it Thursday.
If Erlanger trustees approve a strategic plan to build a new Southside Community Health Center, they have two options: build their own facility for $1.3 million up front, or ask a developer to do the work for $2 million spread over 15 years of lease payments.
A hospital business plan indicates they'll be steered toward the latter option, owing partly to the fact that Southside and Dodson Community Health Centers have reported operating losses for three of the last five years.
"Would you invest $1.3 million in that operation?" said Joe Winnick, Erlanger's vice president of strategic planning.
The health centers host more than 30,000 primary-care patient visits a year, mostly to inner-city patients without health insurance.
For 43 years, Southside has operated inside what used to be Franklin Middle School -- a dilapidated building situated away from bus routes and heavily traveled roadways.
Erlanger's $1-per-year rental arrangement with Helton Construction, Franklin Middle's current owner, expires in May 2012, potentially exposing the public hospital to increased lease payments, maintenance expenses and structural improvements, documents show.
A new building is long overdue, Winnick said, but he stressed the need for incremental financing since "a lot of people" want a piece of Erlanger's $26 million capital pie.
Dozens of small-print line items flood Erlanger's four-page budget for capital projects, including $6,000 for a "blood bank freezer" and $1.5 million for physician office renovations.
"When you have limited capital, you've got to make sure you're getting a return on your investment," Winnick said.
Under the terms of the hospital's business plan -- all based on estimates at this point -- Erlanger would get ownership of the building after 15 annual $137,020 lease payments to a third-party developer. Hospital officials said buildings similar to the one they're proposing have an "estimated life" of 20 or 25 years.
Beyond the financing of the building, hospital executives are optimistic about merely having a new one. The business plan predicts "a slight surplus" for the health centers within a few years of construction.
"The facility won't make the necessary corrections," health centers executive director Bill Hicks said. "It's what we do inside the new facility that's going to make a difference."