’Not in imminent danger of immediate closure,’ Riverdale hospital seeks Clayton County help in refinancing $40 million in bonds

Charlie Hayslett, a spokesperson for Southern Regional Hospital in neighboring Riverdale, issued the following statement Friday:

RIVERDALE, Ga. (Dec. 12, 2008) – In an effort to clarify inaccuracies appearing in various press reports, Southern Regional Health System today issued the following statement regarding its financial condition and its discussions with the Clayton County Commission regarding county support for a hospital bond issue.

“First and foremost, we want to emphasize that the hospital is not in imminent danger of immediate closure, as some media reports have suggested. We do, however, face major financial challenges that threaten our viability over a period that can fairly be measured in months rather than years.

“Second, we want to correct media reports that Southern Regional ‘lost’ more than $80 million in its last fiscal year. That is not the case. The $83 million figure that has appeared in at least two media reports represents the approximate combined amount of uncompensated medical care and bad debt that Southern Regional absorbed in fiscal year 2008, which ended June 30, 2008. Like most community hospitals, Southern Regional has experienced a dramatic increase in uncompensated care costs in recent years.

“Our actual loss for FY 2008 was $7.07 million. Of that, we lost $3.76 million on hospital operations and another $3.31 million on investments due to the downturn in the market.

“Third, we want to clarify the nature of our immediate problem and the reason we are seeking support from the county government in connection with $40.2 million in outstanding bonds.

“Due to the deteriorating impact on hospital operations, Southern Regional is no longer in compliance with several requirements associated with the bonds. While we have vigorously worked to address and correct these problems, the current state of the credit markets has made this task extremely difficult.

“The best available solution, and the one we have been pursuing with the county, is for the county to provide support for our bond issue that will allow us to restructure and significantly reduce the interest rate on our debt. As part of this arrangement, the hospital would set aside sufficient funds to cover two years of principal and interest payments on the debt, thereby minimizing the county’s risk. Southern Regional is not asking the county for any cash.

“The problem we face is primarily a credit market issue and a matter of timing. With the county’s help, we can bridge our way through this crisis, stabilize our operations, lower the cost of our debt, and continue providing superior medical care to Clayton County and the Southern Crescent.”

The above statement was from Charlie Hayslett, a spokesperson Southern Regional Health Systems.