HERMANN – The administration of Hermann Area District Hospital is in talks with local banks about the refinancing of $8.3 million in bonds that were approved several years ago. The move is being made to lower the interest rate and receive more favorable conditions for repayment.

Administrator and Chief Executive Officer Bill Hellebusch Thursday night reported to the hospital’s Board of Directors that the refinancing effort likely won’t be completed in time to avoid a scheduled increase in interest rate from 5 percent to 8 percent at the start of August. But, he noted, the effort should be completed shortly after the higher rate kicks in, limiting the number of payments at the higher rate.

HADH Chief Financial Officer Cindi Engemann last month told the board the higher rate would mean about $250,000 in additional interest over the course of a year. Under the current conditions for retiring the bonds, the interest rate is reset every five years.

The refinancing effort is among the steps Hellebusch and the hospital’s leadership team are taking to put the facility back on a solid financial foundation. Moves such as this are being coupled with efforts to increase patient-volume revenue and reduce costs to bolster the community owned hospital’s bottom line.

The board heard a presentation at last month’s session from a financial firm regarding a refinancing effort. However, hospital officials chose not to contract the Minnesota-based company for the project, preferring to seek a new payment arrangement on their own with local institutions. “They have asked for a lot of information,” Hellebusch said of the local banks having discussions with HADH. “And, we’ve given them a lot of information,” he said.

Meanwhile, some hospital officials will be getting busier in working to deliver healthcare services now that HADH has been named the anchor of the hub network established by state government. The hospital is the focal point of District 21, one of 27 such groups of counties in Missouri carved into sectors with “hubs” acting as the main conduit for various healthcare operations all aimed at connecting residents with services. District 21 includes Gasconade and Osage counties.

While still being fleshed out, the program is designed for the anchor to be connected to such providers as public health agencies, clinics and other healthcare-related organizations in an effort to provide better services for residents. It was noted earlier that being selected as a hub means receiving two positions — a so-called navigator to help residents connect with the various resources and a coordinator to oversee the program in the district.

Hellebusch said he still is awaiting further information regarding the federal Rural Healthcare Transformation (RHT) program aimed at strengthening hospitals such as HADH with grant money designed to upgrade a hospital’s infrastructure. A hospital can apply for up to $2.5 million through the program. The Hermann facility has applied for $2.9 million worth of projects, including a new elevator, heating -and-cooling equipment and other items. Hellebusch is concerned about the slow pace with which the RHT program is being put in place. There is a time limit on dispersing the funds; if they aren’t used by later this year, they must be returned to the federal government.

The administrator also pointed to legislation sponsored by U.S. Sen. Josh Hawley of Missouri that would make available to rural hospitals such as HADH up to $1 million during a 10-year program. Hellebusch said he’s optimistic about the bill’s success, as indicated by sources familiar with the proposal, but cautioned that Hawley’s effort to make money available could be met with legislative resistance during a time of cuts to federal spending on healthcare.

“We’ll see,” he told the board at Thursday afternoon’s regular monthly session. “It definitely has a huge hill to climb,” he added.