HOT SPRINGS, S.D (July 17, 2014)—Fall River Health Services (FRHS), a 25-bed critical access hospital in Hot Springs, S.D., recently funded a $6.2 million expansion with a $4 million supplemental FHA loan, according to Bill Wilson, senior vice president with Lancaster Pollard, a national investment banking and mortgage banking firm headquartered in Columbus, Ohio. The firm was responsible for structuring the financing and underwriting of all three phases of the hospital's replacement project and subsequent expansions via HUD/FHA mortgage insurance programs.
"Our community was in serious need of a modern facility that could provide long-term care to area residents," said FRHS Chief Executive Officer Tricia Uhlir. "Once completed, the new LTC unit will provide quality care efficiently to 48 residents."
Prior to 2010, Fall River Hospital and its long-term care (LTC) facility were housed in the same century-old facility. For a number of years, it was quite apparent that the rural area needed new health care facilities to keep up with modern medical standards. To secure funding in 2007 as the financial crisis unfolded, the capital project was divided into three stages to make it financially feasible. First, FRHS completed a 15-bed replacement hospital in 2009, financed by the FHA 242 mortgage insurance program. Meanwhile, the LTC unit, now called Castle Manor, continued to operate in the original facility. Next, FRHS expanded the project in 2010 by an adding another 10 inpatient rooms. The final stage, which began this year, will bring back long-term care to Fall River Hospital by building an addition to house a 48-bed LTC unit. To finance the construction, Lancaster Pollard recommended using the FHA Sec. 241(a) program to obtain a $4 million supplemental loan. The hospital would then contribute $2.2 million in equity to completely fund the addition, which is expected to be completed by the fall of 2014.
"By constructing the entire project in stages, FRHS was able to keep its overall risk to prudent levels," said Wilson. "In addition, the drawdown feature of the structure is saving the hospital considerable interest expense because funds are allocated at each construction phase instead of being funded entirely at the project's start."
Lancaster Pollard helps health care, senior living and affordable housing organizations expand and improve their services by providing financing solutions. The firm offers a full range of investment banking, mortgage banking and investment advisory services and has one of the largest groups of financial professionals dedicated to health care in the country. As a leading underwriter of bonds and mortgages, Lancaster Pollard has earned a reputation for delivering sound financial advice and the most cost-effective financing options available in the market.
For more information about the Fall River Health Services transaction or other hospital financings, visit www.lancasterpollard.com/hospital-financing.aspx.