THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Tuesday, July 12, 1994 TAG: 9407120321
SECTION: LOCAL PAGE: B3 EDITION: FINAL
SOURCE: BY TOM HOLDEN, STAFF WRITER
LENGTH: Medium: 55 lines
Norfolk Community Hospital Inc., struggling to remake itself in a quickly changing health care market, has fallen into delinquency on a $3.5 million city loan, city officials said Monday.
The 202-bed hospital on the city's east side failed this month to make its annual payment of $176,500, according to city records.
``It's delinquent,'' said Sterling B. Cheatham, Norfolk's director of finance. ``This note has been outstanding since 1987. We received a payment or two since then, but it's not current.''
The city agreed to lend the money on Feb. 1, 1983. The 20-year loan carried an interest rate of 7.91 percent, and all of the hospital's equipment, fixtures, inventory and accounts receivable were pledged as collateral.
But starting on July 1, 1987, and continuing through this year, the hospital has missed payments.
``We fully expect the hospital to fulfill its obligations,'' Cheatham said, but he conceded that no immediate plans exist to lay claim to the money.
``The interest clock continues to tick,'' he said.
The money was spent for a new boiler room, to renovate an outpatient service area, and to improve an inpatient surgical area.
Phillip Brooks, the hospital's administrator, acknowledged the financial problems that have troubled the hospital in recent years. In the fiscal year ending 1992, for example, the hospital reported a net operating loss of $1.3 million.
But Brooks struck a hopeful note, saying the financial picture should improve this year. He said the hospital anticipates turning a small profit for the fiscal year ending in September.
Brooks attributed the improved performance to the hospital's decision to open a 20-bed inpatient mental health unit, to cutting costs, and to reducing staff through attrition.
``And we hope to open a 15-bed child and adolescent psychiatric unit within the next 45 days, pending approval from the state health commissioner,'' Brooks said.
``The city and the hospital are aware we owe the money. They appreciate our position. They balance the fact that we owe them with the public good we do for the city. . . . We'll make the payments as soon as we're able to.''
Darlene L. Burcham, Norfolk's assistant city manager for administration, said that while the money is important, the hospital provides important services that must be considered, particularly its role providing care to Norfolk's poor.
``Other hospitals provide care to the indigent, too, but this one has more than its fair share,'' she said. ``We take into account the role that hospital plays in the community.'' by CNB