Clayton says no to Southern Regional hospital

Clayton County voted Tuesday against backing a bond for the county’s only hospital, leaving hospital officials to look at other options, including federal aid, layoffs or — if there’s no solution — closing.

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The county commission voted 2 to 3 Tuesday night against a proposal for the county to back a $40 million bond for Southern Regional Health System.

The 331-bed Riverdale hospital must pay $40 million to creditors by the end of the month or risk defaulting — and possibly shutting its doors.

On Tuesday, commissioners told the hospital’s President and CEO Edward Bonn to come back with a better plan.

“My main concern is we don’t have a plan here,” said Commissioner Virginia Burton Gray, who voted against helping the hospital.

Commission Chairman Eldrin Bell and Commissioner Michael Edmondson also voted against backing the bond.

Bonn said he was disappointed in the commission’s decision, but will go back to the hospital’s creditors to see if there are any other options. “We will have to look for other alternatives. We will look at federal programs or other ways to deal with debt,” he said.

Without the county’s help, the hospital will likely have to write a $40 million check to SunTrust at the end of the month. The hospital has $48 million in reserves, Bonn said.

“We can not afford to lose that hospital,” Gray said. “But it seems like they are in a better position than we are.” The county has less than $20 million in reserves after overspending by $22 million this year.

The hospital may be able to write a check from its reserves, but it likely could not continue to pay its $20 million a month operating expenses if it continues to operate with a loss.

“The hospital is not in imminent danger of shutting down,” Bonn said. “But in a worse-case scenario, the bond would be called and we could close.”

Last week, hospital board chairman Ron Dodson told the commission that the hospital might be forced to close without the county’s help.

The hospital vote came after a 20-minute argument between Bell and Commissioner Wole Ralph about the hospital’s finances. Ralph accused Bell of hiding financial information from the commission.

Bell maintains the county’s finances are in trouble while Ralph, who voted in support of the hospital bond, said the county budget is stable.

The state has frozen grants to Clayton because of incomplete financial records, and auditors have said they cannot trust information from the county’s finance office.

Bell and Gray said they need more information on the county’s finances before helping the hospital. However, that financial information likely won’t be available by the end of the month, Bell said.

“I can’t back someone else if I don’t know where we are,” Bell said. “I have to be thoroughly satisfied that the taxpayers will not have to pick up the hospital’s bills in three or five years.”

If the commission ultimately approves a bond issue for the hospital and the hospital falls behind on payments, taxpayers could be left paying the debt, county attorney Michael Smith said.

The hospital ended the 2008 fiscal year with a $7.07 million loss, $3.76 million of it on hospital operations and the rest from investments, hospital officials said.