Council approves $3 mil bond for HSDMay 13th, 2013 | By Jessica Gonzalez | Category: News
The St. Bernard Parish Council unanimously approved a $3 million revenue anticipation note for the eight-month-old St. Bernard Parish Hospital Service District at their Tuesday night meeting.
A revenue anticipation note is a short-term municipal bond that will be paid with anticipated funds collected from a project. Citing sluggish collections from third-party sources like Medicaid and Medicare, along with growing pains of being a newly-opened startup, the St. Bernard Parish Hospital’s bond attorney Jason Akers said that the bond was a precautionary measure to tide the fledgling hospital over until those revenues are received.
“The note is in anticipation of revenue that has been billed, but not collected,” said Akers. “This is not unusual for a small hospital…It’s more so to handle cash-flow issues that hospitals who handle third-party
Hospital Service District CFO Joseph Kempka explained that the hospital currently has $29 million in billed charges, and they anticipated collecting around $9 to $10 million from those third-party sources. The hospital’s current operating cash balance is $2.5 million.
“The bond will just be to provide cash until we can collect outstanding receivables,” said Kempka.
That $2.5 million cash-balance figure raised some eyebrows from members of the council, especially
since in January, Hospital Service District chairman Wayne Landry reported a $9 million cash balance
during his update to the council.
“It makes me uncomfortable to vote on this, when a few months ago you all were saying you had a cash
balance of $9 million,” said District A Councilman Ray Lauga.
Kempka explained that the hospital is still paying down construction costs and used some of the funds for
operational costs, which quickly ate into the $9 million operational cash balance.
“In the last 3 months, we’ve payed around $3.5 million to contractors and we used the remainder for operations,” said Kempka.
The resolution to approve the bond passed unanimously.