NEWTON — Ten years ago, Newton Regional Hospital was closed, seemingly for good. In 2005, the hospital, which has been operating profitably since 1996, will have a brand new home: a $6.5-million, 50,000-square-foot health care facility, located on Mississippi 15 near an industrial park in Newton, just north of Interstate 20.
A $403,261 U.S. Department of Health and Human Services grant and a $6.5-million U.S. Department of Agriculture loan awarded last month paved the way for construction to begin on the 30-bed hospital, which will replace an outdated medical facility that was built in 1952. The project will take 18 months to complete.
“I am pleased the Newton Hospital is receiving federal support for construction of a state-of-the-art health care facility,” said U.S. Sen. Thad Cochran (R-Miss.), who was instrumental in securing the grant. “This funding will allow the hospital to continue to serve the people of their community by providing access to quality care.”
Third District Congressman Chip Pickering, who also assisted with the grant procurement, said the new health care facility will assist East Central Mississippi’s aging population. “An investment into our medical infrastructure will continue to provide for our citizens, and increase the community’s ability to compete for economic development dollars,” he said.
The 150-employee hospital, which serves residents in Newton, Jasper and western Scott counties, was built under the Hospital Survey and Construction Act, enacted in 1946 and better known as the Hill-Burton Act named for its sponsors, Senators Lester Hill of Alabama and Harold Burton of Ohio. The hospital-building program was geared toward providing health care in rural communities regardless of race, nationality or income, in facilities with less than 50 beds. As a result, many hospitals were built with 49 beds.
“Our state is peppered with ‘Hill-Burton’ hospitals … and while these hospitals have provided great care, many of them are in poor repair and are in need of replacement,” said Nick Walters, USDA state director, who has shifted more USDA Rural Development resources toward rural health care. “Also, many are simply not built to take advantage of the great technological changes that have come to health care over the past 50 years, and to make them so would be prohibitively costly. Rather than undertake such renovations, it is often less expensive to just build an entirely new hospital.”
Newton Regional carves its niche in ways typical of rural hospitals with a nearby urban center, Meridian, said Walters, who added this hospital project marks the first one built from the ground up with USDA dollars.
“It provides acute care and looks at Medicaid and Medicare as more of a profit center,” he said. “It also operates a rural health clinic staffed by four doctors, who also cover emergency room and admissions. The new hospital will have 30 beds, down from the current 49, which reflects the changing nature of health care and the shift toward more outpatient care. It will expand the clinic from 4,800 square feet to 7,500 square feet.”
The road to a new hospital
Since 1982, Rush Foundation Hospital, a 189-bed facility in Meridian, which at one time operated four satellite facilities, had been leasing the hospital, then known as Rush Hospital Newton. Because the hospital lost $354,000 on $2.9 million in revenues in the year ended Dec. 31, 1993, Rush decided to shut it down in November 1993. The controversial move — some people believed the deficit occurred because Rush was using the Newton hospital to shuttle patients to its primary facility — left more than 100 people without jobs.
Bill Freeman, senior vice president of Newton County Bank and former mayor of Newton, rallied support with the fundraising campaign slogan “Because We’re Needed,” and paved the way for the community to reopen the hospital. More than 160 people pledged $1,000 apiece to guarantee a $150,000 bank loan needed for cash flow until accounts receivable financing could be obtained. East Central Planning and Development District paid the remaining costs, and the hospital reopened as Newton Regional Hospital in August 1994 with 49 beds, managed by Nashville-based Ameris Health Systems.
“The hospital struggled tremendously in its first and second years,” said Timothy W. Thomas, hospital administrator since 1998. “We’re very proud that we went all the way from a closed status in 1993 to paying off the hospital in 1998 to a new facility now in just 10 years.”
The road to a new facility wasn’t easily traveled. In October 1999, an independent evaluation report showed the existing hospital had several restrictions, including being located on a low 7.6-acre landlocked site adjacent to a busy train rail that could block ambulance access and pose significant noise levels. The facility’s HVAC system was obsolete and did not meet current air flow and filtration requirements, sewer piping was deteriorating under the concrete slab, and electrical systems were not in compliance with current standards.
When consultants submitted a $13.5-million budget for a new 62,000-square-foot facility in November 2001, the hospital board agreed to put the costly new hospital on hold, and instead file a certificate of need application with the state department of health for construction of a less expensive project — 60 new nursing home beds. According to hospital data, building a new hospital would cost $150 per square foot; building a nursing home would cost $75 per square foot. But in August 2002, the CON application was denied.
“The nursing home process proved to be an invaluable tool for getting the new hospital project back on track,” said Thomas, who challenged the architect to design a smaller facility with substantially lower construction costs. The result: a $6.5 million, 50,000 square foot facility.
With a new plan, the hospital filed a new certificate of need for the construction and relocation of a new hospital facility on Nov. 27, 2002. It was approved April 24. The most significant change required substituting the funding source from HUD to USDA Rural Development. The HUD loan financing terms were 90% funding over a 25-year period. USDA Rural Development loan financing terms were up to 100% funding over a 40-year period, resulting in a significant reduction in monthly debt service and eliminating the need for alternate funding for the other 10%, said Thomas.
“When the loan application for funding was filed with the USDA Rural Development last December, the $6.5-million request was more than the entire state budget allotment,” said Thomas. “The state office would have to file a request for a significant portion of the amount from the Federal Loan Pool, which is based on unused state budget allotments. The loan would have to wait for the completion of the Federal Loan Pool sometime in August 2003 and would require extensive support from our Mississippi congressional representatives. We immediately began our campaign to garner that support, which was readily and enthusiastically provided by Rep. Chip Pickering and Senators Thad Cochran and Trent Lott. Finally, on Sept. 15, the public announcement was made for the approval of the $6.5-million loan for our new hospital.”
Since Newton Regional reopened, it has expanded its emergency departments and added services in surgery, radiology, rehabilitation and geriatrics. In the last two years, the hospital has spent about $500,000 in new equipment and staff to fund the improvements.
“With our new facility, we will have everything we do now,” said Thomas. “At this point, there won’t be any new services because we’ve carved out our niche and are doing well. One of the big traps with building a new hospital is to start looking and saying we can do a
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