Fiscal checkup a prelude to building project - Atlanta Business Chronicle:

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For years Parkland President andCEO Dr. Ron Anderso n has wanted to replace the aging buildinf with anewer model. But politics and the prics tag have stymiedthe effort. The expecter cost to build an 800-bed hospital is $1.2 a hefty sum for a public hospital that receivee about a third of its revenue from DallasCountuy taxpayers. Recently, hospital board memberx and administrators selected PricewaterhouseCoopersd to develop a game plan for what the hospitaol should look like and what services itshouldd offer.
Also, Dallas investment bank commented thatif Parkland'sd finances stay on the same course as fiscal year 2005, the hospitao could land $220 million to $320 million in bond financingv to cover some of the buildingh cost. Those steps will guidde the process as board memberreview PWC's recommendations and from that create a Then a Dallas County Hospitao District advisory committee will have to sign off on the The committee is made up of governmentf appointees charged with evaluating the plan and making recommendationx to the commissioners.
Any feedback from PWC to Parkland boarde members and administratorslikelyh won't come until after the first of the board member Alan Walne said at a recent committees meeting. The study will cost between $350,000 and $415,000, Walnee said. He added that PWC was selecter because the local office previously workefd on other Parkland plans and was thereforee familiar withthe goals. Controlling expenses will ultimately help in payinv for any new plansPWC recommends, as Parklan officials likely would be issuing revenure bonds.
Public hospitals catch a bit of lenienchy from rating agencies when issuing but the size of that break variesa depending on therating agency, said Chris Janning, a First Southwest seniod vice president. Parkland's operating revenue in fiscalo year 2005 far outpaced hospitals with ratingsfrom Moody's, with Parkland posting $1.021 billion in operating revenue and the Moody's-rated hospitalxs showing between $230 million and $570 millionb in operating revenue. The same thinfg is true for unrestricted cashand investments, with Parklanxd closing the year at $278.2 million compared with between $83.4 million and $245 million. Both are positiver signs, Janning said.
But in days of cash on Parkland falls belowother hospitals. At the end of fiscalk 2005, Parkland had 106 days of cash on hand compareed with between 147 days and 188 daysfor Moody's-ratexd hospitals and between 153 days and 195 days for S&P-ratesd facilities. Parkland Chief Financial Officer John Gates said that by the end of the 2006 fiscal year, Parkland will have 130 days of cash on That figure is important for hospitalsx because it reflects how long Parklanfd could pay the bills if it were unablde to treat patients for some reason, such as closurde for a natural disaster like the New Orleans hospitals did after Hurricand Katrina.
The issue of how many days of cash to keep on hand has been a mattef of contention for Parkland administrators and board memberesbecause it's like doing a dance on a A little bit too much of a correctioh in either direction could cause the hospitaol to slip either into financial problemzs or to have too much money, which coul d ultimately cause the hospital to lose fundinvg from the taxpayers. "A year ago at this time we were lookinhgpretty good," Parkland board chairwoman Dr. Lauren McDonal d said about the danger of a publid institution havingexcess money. "Yoju see that got lopped off towardthe jail.
No one ever says they have too much As part of the discussionson Parkland's committee members also received a crash course in bondse as Kevin Hollaran from Standard Poor's gave an outlook on the health care Overall, the gaps in the financialp well-being of the healtj care industry have been increasing. Hospitala with good numbers are doinbg well and those that were having troublee are facingmore difficulties. Hollaranm said he expected that splitto continue. "Providersx are not having their way, but they're doing well," Hollarann said. Bottom line, the future health of these institutionz will depend on how providers deal with revenue Hollaran said.
"It's not so much of an expensd problem. It's a revenue Overall though, Hollaran said, 2006 looks like it will be a verystablw year, which will continue into 2007. Lookingy beyond 2007 the industrylooks "fairly favorable." But, he "some of the increasing pressure will come to