Valley Regional Gets Pivotal Loan

  • Peter Wright, new CEO of Valley Regional Hospital, is photographed in his office at the hospital in Claremont, N.H. on Tuesday, March 26, 2013. Valley News - Libby March

Valley News Correspondent
Tuesday, November 28, 2017

Claremont — A $19.4 million loan from the U.S. Department of Agriculture will significantly improve the finances of Valley Regional Hospital, Peter Wright, CEO and president of Valley Regional Healthcare, said on Monday at the hospital, where the loan approval was announced.

The loan means the hospital can restructure its long-term debt incurred during a 2010 renovation and expansion by paying off traditional bank financing and replacing it with a 35-year USDA Rural Development loan at a lower interest rate, he said.

“This will save us about $700,000 a year and allow us to reinvest those savings in the hospital,” Wright said. “When you have a $40 million organization, $700,000 back on the bottom line is considerable.”

The additional capital could allow the hospital to provide more programs for substance abuse and mental health treatment, Wright said.

He said the hospital is currently investigating those services, which would be housed on the third floor where the birthing area was located until it closed several years ago.

The loan was announced during a tour of the hospital that included U.S. Rep. Annie Kuster, D-N.H., and officials with USDA Rural Development. It has taken two years for the application to be processed and approved.

In addition to the savings, the loan will also allow Valley Regional Health Care to acquire “certain hospital real estate assets” and lease them back to the hospital, Wright said in a statement released by Kuster’s office.

During the tour, Wright explained how the construction project improved the hospital’s ability to deliver care in all areas including the new emergency room, rehabilitation services, cancer and oncology and inpatient services. The additional space also allowed for an urgent care clinic in the former space of the emergency department. The clinic has reduced more expensive emergency room visits by about 2,000 to roughly 10,500, annually, Wright said.

But after the expansion and increased debt, Wright said major changes took place in the health care field that resulted in less inpatient services and less surgery.

“There was a lot less volume,” he said.

The result was that the debt payments hurt the hospital’s financial stability at a time when more services were needed.

“We are in a bit of distress but are climbing out of the hole in slow, sustainable way,” he said during lunch.

He noted that Valley Regional, not unlike many rural hospitals with demographics similar to Sullivan County, has a patient mix that is 65 percent Medicare, Medicaid or no insurance at all.

The loan is backed by a promissory note; real estate mortgage; accounts receivable; and all equipment, fixtures and revenues, Pollaidh Major, public affairs specialist with Rural Development, said in an email. She further stated that interest rate on the loan is fixed at 3.25 percent, and with a longer term than the previous loan, additional savings are realized with lower principal payments.

“This transaction is critical to the financial stability and continuance of the hospital,” Major said. “It will reduce the hospital’s interest rate by almost 50 percent, with the annual savings of $700,000 through 2041. The savings will allow the hospital to continue provide vital services that would likely be closed or limited without this project.”

Major said the savings will also allow the hospital to become a clinical trial site for “new long-lasting (30 day) medication therapy for substance abuse patients.

“This trial is in conjunction with the Yale and Dartmouth Schools of Medicine, The Dartmouth Institute of Health Policy and Clinical Practice, and the National Institute of Health,” Major said.