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June 28, 2012

Barco Oncology Institute faces refinancing

By Keith Gushard Meadville Tribune

MEADVILLE — A refinancing of Meadville Medical Center’s Yolanda G. Barco Oncology Institute will help the hospital better control its costs, according to its officials.

Crawford County Hospital Authority voted 4-0 Wednesday to allow Meadville Medical Center to refinance the project with a tax-exempt loan of up to $6.85 million through First Niagara Bank. Board member Dean Fair was absent from Wednesday’s meeting.

Meadville Medical Center currently has a 15-year loan from 2006 with a variable interest rate — currently set at 1.99 percent — with First Niagara, according to medical center officials.

However, the hospital is looking to lock in an interest rate in anticipation of rates rising in the coming years.

“We’re looking to control our costs with a predictable interest rate,” Rene Santay, chief financial officer at Meadville Medical Center said to the Crawford County Hospital Authority.

The Yolanda G. Barco Oncology Institute opened its doors in May 2008. It offers a whole-person approach to healing, addressing not only a patient’s cancer, but aspects like nutrition, art and music therapy for patients, counseling for the patient and his or her family’s emotional needs, and a medical library.

The hospital looks to complete the refinancing by late July or early August, Santay said. The interest rate on a fixed loan currently is approximately 2 to 2.05 percent — though the rate could change between now and the loan closing, said Bob Muth, director of investments at Meadville Medical Center.

“You really can’t borrow much cheaper than 2 percent,” Muth said. “Only time will tell, but we think it’s appropriate to go from a variable to a fixed interest rate.”

The tax-exempt note through the hospital authority will be for up to $6.85 million for nine years to be paid off in 2021, according to hospital and First Niagara officials.

The $6.85 million is the balance on the original $10 million, 15-year loan approved in 2006 that was scheduled to be paid off in 2021.

For the loan to be tax-exempt for the bank, it has to be issued through the hospital authority.

While the hospital authority has approved the loan, it still is subject to approval by the Crawford County Board of Commissioners, said John Swick, attorney for the hospital authority.

Commissioners are expected to act on the approval at a meeting next month.

County government and the authority won’t be held liable for the loan as it will be backed by assets of Meadville Medical Center.

Wednesday’s vote by the Crawford County Hospital Authority was the second loan action take by the board in as many months. In May, both the authority and Crawford County commissioners approved a $3 million five-year loan to Wesbury United Methodist Retirement Community of Meadville through First National Bank of Pennsylvania.

That loan is for renovations to Wesbury’s skilled nursing, memory support center, personal care and health care facilities on upper Park Avenue plus purchase of equipment, software and furnishings. That project is expected to finish by early 2013.



Keith Gushard can be reached at 724-6370 or by email at kgushard@meadvilletribune.com.

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