Davey: Hospital is financially viable

August 03, 2009

While questions have swirled among county hospital skeptics as to whether or not constructing and running the hospital will be financially viable, Valencia Health Commons Chairman Bob Davey says the hospital project is viable.

“Certainly, you can start the answer, as we have, by stating the obvious: Healthcare providers like Covenant, Quorum, and the four or five others who responded to the original request for information with reactions to the study completed in 2006, all said they agree with the study conclusion that a hospital was needed and viable,” Davey said.

In addition to that, he said, a number of organizations, including First Choice Community Healthcare, Laurel Healthcare, New Mexico Oncology and Hematology, the Heart Hospital, and the University of New Mexico have all expressed support for the project and their intent to participate in some way. He also said Stern Brothers wants to underwrite bonds for the project.

“Their profitability, as well as their reputation, is tied up in the success of the issues they underwrite,” he said.

Covenant Health System, the company that was going to run the hospital until it dropped out of the process last year, also produced a report detailing in “some 30 pages of financial analysis and projections of revenues and expenses” the hospital’s viability, Davey said.

“Those projections were reviewed by an independent auditor, who provided a written opinion that they had been put together in a way that conformed to accepted standards,” he said.

Davey conceded that the economy has taken a hit over the last year, so the preliminary information in the original 2006 study is outdated and needs updating. He also said he anticipates that Valencia Health Commons will update the information to assess the project under more current economic conditions.

“Even the best and most comprehensive study is now two years old,” Davey said. ”We have said since the effort to derail the hospital started that we’ll have to update all the assumptions that served as the basis for financial projections, as well as the current cost data. I would be very surprised if we didn’t have to make some changes as a result of what’s happened economically over the past two-plus years.”

The hospital project is tied up in litigation, awaiting a decision from the New Mexico Court of Appeals.

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