The Wrangell Borough Assembly Tuesday rejected Wrangell Medical Center’s request to seek a line of credit from a bank or financial institution.
Instead, the borough plans to set $500,000 aside for the hospital to access quickly in case it runs out of cash.
Medical Center CEO Marla Sanger said she does not think the hospital would have to use it, but it is important to have the option there. She said cash flow has been fairly stable, but now the hospital is getting significant charges from Medicare.
“We knew they were coming. Now they’re coming,” Sanger said. “And this is the reason that we’re seeking a line of credit. That’s one of the reasons.”
Each year, Medicare decides whether it will give money back to individual hospitals, or if it will ask hospitals for money. This year, Wrangell Medical Center has to pay hundreds of thousands of dollars to Medicare, which could leave the hospital with a shortfall in September and October.
Borough Assembly members said they were concerned about paying interest on a line of credit. And they worried that the community could be on the hook for that $500,000 if something went wrong.
Borough Manager Jeff Jabusch suggested setting aside a portion of the general fund for the hospital’s use. He said the money would not be spent at this point in time. It would be transferred to a different fund until it is needed.
“It would be no different than if they came down here and said, ‘We can’t make payroll, we need $100,000.’ And if the assembly approved it, we would write a check out,” Jabusch said.
Assembly Member Stephen Prysunka said he still does not want the borough to give money to the hospital, but it is better than seeking a line of credit elsewhere.
“I like that idea, in terms of, it creates greater control for the community. Because it’s incurring a debt for the community,” Prysunka said. “That’s what we’re talking about here.”
Sanger said she does not see an advantage to getting a line of credit from a bank.
“The reason that we’re doing it is because we felt that there was a strong desire that we not come to the borough for help if we needed to. I’m hearing a different message now,” Sanger said. “And I’m encouraged by that, because we need the partnership with the borough assembly.”
The assembly asked the borough manager to work with Sanger on a plan for this fund. The assembly will take action on the plan at a special meeting set for August 12.
