Petersburg Medical Center will repay $1.2 million it has borrowed over the past seven years without voter approval. The medical center started a line of credit in 2006 to pay for equipment and meet payroll without dipping into investment money. Borrowing money without a public vote is not allowed under the state constitution and PMC will use some of its cash reserves to repay that line of credit.

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The state constitution does not allow borrowing by government entities without voter approval, with a few exceptions. That was the message to the medical center from the Petersburg borough government this month.

At a meeting of the medical center board Thursday, president Tom Abbott explained the problem was unearthed during the process of forming the new borough. “Once we became a borough, going through the process of the borough, changing a lot of language to change from a municipality to a borough government, it became clear that this had happened against state law,” Abbott said. “It all happened without our knowledge that it was not allowed. We didn’t know it through a series of CFOs or a series of CEOs.”

The seven member board of the community owned hospital approved taking out the line of credit in 2006 on the recommendation of a former chief financial officer. The board also approved using the borrowed money to help pay part of the cost of the $1.4 million expansion and renovation of the Joy Jansen clinic. That borrowed money also helped cover operating costs at the medical center. The board Thursday considered a motion to repay the credit line using the hospital’s cash reserve account. That account was at $4.1 million this year. However, administrators have since used 400,000 dollars to cover an operating loss. Repaying the line of credit will drop it down to $2.5 million.

Using that money was a concern for board members.
“I don’t wanna come back on ourselves and think we’re gonna borrow more if we haven’t done better on our accounts receivable and things like that,” said Phil Beardslee. “And I think we should be looking at the starting it toward the beginning of next year and we gotta give it some time, I understand that. Once we get CPSI in place and everything and I think maybe we can get the accounts receivable set better then I think we’ll be in better shape and we gonna have to build this account back up I feel.”

That CPSI is a new information system the medical center is putting in this year. It’s expected to cost PMC 700-thousand dollars. The medical center is also working to collect three and three quarter million dollars in accounts receivable owed by patients and insurance providers.

“I don’t think we’re gonna be able to do it, when you look at the financials,” said Rocio Tejera. Beardslee responded, “Well then there’s a problem with how we’re spending money and we better start looking at other things too.”

PMC staff notes the financial future for the facility looks dismal and projects an operating loss of over a half million dollars by 2017. The board met with the borough assembly earlier this month and discussed possibilities for future public funding to help support the hospital.

At Thursday’s board meeting, board president Abbott said public money would be needed for future building renovations and equipment replacement. “We are in a situation where we, also with the opportunities of grants slowing down and drying up, we are in a situation where moving forward we will be able to take care of the operations but we’re not going to be able to take care of capital improvements. That’s where we need to be working in partnership with the borough and so when we do need capital improvements we’re gonna need to have partnership with the borough and get borough support.”

The board is scheduled to continue that discussion with the borough assembly on August 22nd.
The five members of the board at the Thursday’s meeting voted unanimously to pay back the borrowed money.