Sierra Vista Hospital out of compliance with loan—again

Sierra Vista Hospital is out of compliance with the loan that is paying off the $30-million new wing and has been out of compliance for four of the eight years of the loan’s existence.

The elected officials who made the decision to purchase that much new hospital must have been blinded by hunkydoryism.

Chief Financial Officer Chun-Ming Huang confirmed in a recent email that “We didn’t meet the 130% reserve requirement in FY17, FY18, FY23 and NMFA is aware of it.

As of today in FY24, we do not meet the requirement due to system conversion.”

Fiscal Year 2024 ends June 30, so it is doubtful the hospital will meet the loan requirements by then.

The yearly loan payment owed to the New Mexico Finance Authority is about $1.46 million; therefore the required reserve amount is nearly $1.9 million.

Note that CFO Huang attributes the lack of compliance to a “system conversion.”

For the last two fiscal years the hospital hasn’t put $1.9 million in the reserve account because of software?

It’s much more likely the problem is lack of tax money that has been earmarked to pay off the loan.

The hospital’s most recent audit is for fiscal year 2023. It’s available on the state auditor’s website. It states the hospital took in nearly $650,000 in property-tax revenue in FY 2022, but only about $50,000 in FY2023.

The hospital 2.00 mill levy is collected by Sierra County from every property owner within its boundaries. It expired and wasn’t put on the ballot in time, the audit states. It has since been renewed by voters through 2028.

It is unfathomable that all 12 elected officials on the hospital’s Joint Powers Commission as well as the 9 people appointed by them to sit on the hospital Governing Board could have missed the need to re-up the mill levy.

The loan is also paid from gross receipts taxes each of the owners levy and agreed to dedicate to the loan’s repayment through 2046 in the Joint Powers Agreement, amended to that effect in 2018 after the hospital was out of compliance with the reserve requirement in 2017 and 2018.

The county hospital GRT is .25, T or C’s is nearly .19, Williamsburg’s is .25 and Elephant Butte’s is .25 percent. In FY2023 a whopping $1.04 million was collected compared to about $836,000 the year before.

Nevertheless, the hospital only had $1 million to meet the $1.46 million loan payment. The hospital obviously had to rely on the reserve account for the balance and hasn’t re-upped it to the required $1.9 million for two fiscal years.

The FY2023 audit also showed the hospital is no longer getting $1.1 million a year from the Cares Act to handle the covid epidemic, salaries were $1 million more than the year before, expenses were nearly $3.9 million more than the year before and Medicaid paid $1 million less than the year before. Patient revenue was up $1.4 million, but it didn’t make up the difference. The audit showed the hospital’s revenue was $31.5 million but its expenses were $37.8 million—a $4.3 million operating loss.

Why our elected officials thought the people could afford a $30 million hospital (which would have been $35 million if not for then-Senator John Arthur Smith) is unfathomable.