The New Moab Hospital Faces Financial Meltdown

Sep 10, 2012

The new Moab Regional Hospital, a year and a half after opening its doors, faces a grave financial crisis, and the new long-term Care Center may have to close soon unless local government coughs up substantial funds.

On Friday, local officials were told the new Moab hospital, already the county’s largest employer, may be $1,000,000 in the red and is slowing payments to creditors while making significant changes to its operations.

Roy Barraclough, the hospital’s CEO, said  “we are taking a hard look at our contracts,” but talks about restructuring have not included bankruptcy “at this point.” He said St. Mary’s Hospital in Grand Junction was approached about taking over the Moab hospital, and St. Mary’s declined.

Just three years ago ground was broken for the $35 million medical complex, envisioned as a one-stop “campus” for local medical services. The only private facility in Utah’s rural hospital system, the project was called a “poster child” by HUD, the federal agency that backed the low-interest construction loans. Locals raised another $5 million in a capital campaign. Concerns about economic viability were dismissed by consultants, who projected revenues that would leave a “comfortable margin” to make bond payments. But those revenues have not materialized. Saying, “It all happened at once,” Barraclough cited a long list of shortfalls: payments from Medicaid were lowered, the bed tax on hospitals was raised, and Utah increased the amount that must be paid to the employee pension system. He also cited indigent and uninsured patients, and scofflaw tourists who get treatment and never pay.

Moab’s elected officials are most immediately concerned about the 37-bed long-term Care Center. Partially financed by county mineral lease revenues, it now faces a $40,000 shortfall each month and may soon not be able to make payroll. Moab Mayor Dave Sakrison suggested a new sales tax to support the local Health Services District. But the soonest a tax could go to voters is next June. Meanwhile, the town and county are considering the hospital’s request for $250,000 in matching money to get state funds earmarked for Medicaid, low income and indigent patients. With its current debt load, prospects are slim that the medical complex will become publicly owned. Gene Ciarus, chair of the Grand County Council, said “You have investors to take care of the hospital. The county doesn’t have a bankroll for this kind of money.”