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Banks get $3.5 million

Mike Marshall doesn’t mind throwing money around.

Last year, when his hospital only had so much budgeted for pay raises, he didn’t care. When nurses deserved a pay increase, he gave it to them. And when merit employees hadn’t received merit raises in the past year, he put the budget in the drawer and approved them anyway.

Marshall, CEO and administrator of BWWMH, also doesn’t mind throwing money to people he knows and trusts. With a CFO who understands the books, Marshall can make financial decisions that much easier.

This week, Marshall and Arthur Evans, CFO of BWWMH, took some of the hospital’s debt out of a New York bank and brought it back home to two locally owned banks.

When officials at the hospital decided to complete the oncology, outpatient and third floor construction in 1998, they took out a bond issue with the Bank of New York. In part, that long-distance loan was necessitated by a lack of cash availability through local banks.

A lot has changed in the past six years, and on Friday, Robertson Banking Company and Commercial Bank assumed the $3.5 million the hospital still owes on its bond issue.

Evans, who began considering the option at least two years ago, spearheaded the financial transaction.

“Art deserves the credit for this,” Marshall said Friday. “It was pretty simple because I told him to go ahead, and that’s all I had to do.”

To the people of Demopolis, a restructuring of the hospital’s debt may sound like bureaucratic blabber. What residents should understand is the financial impact such a move has on the city.

First of all, Robertson and Commercial now receive the revenue generated from interest on the bond issue — which is actually a lease-mortgage agreement. In other words, the interest earned from the debt goes to pay the salaries of local citizens rather than New York citizens.

Secondly, the hospital now has increased availability to use more cash to operate the hospital.

“Right off the top, this saves us $50,000 in interest,” Marshall explained. “With our local banks, with interest the way it is, we could get a better rate than we had in New York.”

Along with $50,000 more to spend annually toward hospital improvement, the hospital has been freed from a burdensome bond agreement that mandated certain profit levels.

“We always had to keep enough money to satisfy out debt on an annual basis,” Evans said.

Though that sounds confusing, the hospital was kept under the watchful eye of New York bank agents who made sure BWWMH had annual profits that equaled more than the annual debt payment. Being released from the restriction means the hospital can spend more money to improve its facilities.

When Marshall gave pay raises earlier this year, that expense was not budgeted. Having reduced interest payments will help compensate for the personnel expense. At the same time, both Marshall and Evans believe the hospital now has the opportunity to add needed services and technology.

To start, the hospital plans on upgrading some of its surgical equipment. More impressive is the computer system BWWMH will install, thanks in large part to more cash flow.

“We’re going to do a $700,000 computer upgrade,” Marshall said. “Basically, it will allow us to have bedside documentation of every patient, and the doctors will have immediate access to medial records. Their efficiency will greatly improve.”

BWWMH is a non-profit hospital. In that sense, every penny saved or earned must be re-invested in the facility. By having more available cash, this financial move allows BWWMH to expand facilities, continue to pay employees better, and purchase more equipment that helps lure more specialized doctors to town.

Marshall also indicated that he met with architects recently. Doctors now occupy all hospital space at BWWMH, and the only way to grow is to add more space. No decision has been made on expansion, yet.