092509rHARNETT COUNTY BOARD OF COMMISSIONERS
Minutes of Reconvened Meeting
September 25, 2009
The Harnett County Board of Commissioners met in regular session on Monday,
September 21, 2009, in the Commissioners Meeting Room, County Administrative
Building, 102 East Front Street, Lillington, North Carolina.
Members present:
Staff present:
Timothy B. McNeill, Chairman
Beatrice B. Hill, Vice- Chaiiman
Dan B. Andrews, Commissioner
Gary House, Commissioner
Jim Burgin, Commissioner
Scott Sauer, County Manager
Wm. A. (Tony) Wilder, Assistant County Manager
Dwight W. Snow, County Attorney
Sylvia Blinson, Finance Officer
Gina Daniel, Acting Clerk
Chairman McNeill reconvened the meeting at 9:00 am. Commissioner Andrews led the
invocation.
Mr. Sauer introduced Mrs. Victoria Whitt with Sandhills Center and Gary Massey and
Gary Fuquay with Chansler Fuquay Solutions. Chansler Fuquay Solutions (CFS) is a
small consulting firm in Raleigh.
The commissioners had been provided with a draft report of the Good Hope Inpatient
Psychiatric Facility Business Analysis prior to the meeting. Mr. Massey gave an
overview of the executive summary which included four models. The models have a
variation of revenue that is based on the timing of when a projected revenue increase
could occur from Medicaid for services provided to Medicaid beneficiaries. Therefore,
high revenue will mean that the Medicaid adjustment will occur in Year 2; low revenue
will mean that the Medicaid adjustment will occur in Year 2.
Mr. Fuquay reported that all stakeholders are supportive of this project. The facility
would be operated under a contract arrangement with Horizon Mental Health
Management, Inc. Horizon will be the operating party responsible for getting license,
certification and ready for admissions as soon as renovations are complete.
Harnett County accounted for 228 out of the 364 admissions in to the Community and
State Hospital -Adult Psychiatric facilities for the twelve month period ended June 30,
2009.
In the best case, Model 1 (high revenue /low expense), cash flow needs (additional money
to sustain monthly operating losses) would be nearly $500,000 for Year 1. All cash flow
requirements will occur in Year 1 and be the end of Year 1 a positive cash flow is
beginning A combined positive cash flow from Year 2 and 3 are projected to be over
$600,000. Under Model 1 not only would there be positive cash flow, an operational
profit margin of 8% or over $300,000 is projected for Year 3.
In Model 2 (Low Revenue/Low Expense), cash flow needed (additional money to sustain
monthly operating losses) would be nearly $500,000. All cash flow needs are incurred in
Year 1 and by the end of Year 1 a positive cash flow would begin. A combined positive
cash flow from Year 2 and 3 is projected to be over $400,000. Under Model 2 not only
would there be a positive cash flow, but an operational profit margin of over 6% or in
excess of $240,000 is projected for Year 3.
In Model 3 (High Revenue /High Expense), cash flow needs (additional money to sustain
monthly operating losses) would be nearly $800,000. Cash flow needs would occur in
Year 1 and Year 2, but by the middle of Year 2 a positive cash flow would occur. A
combined positive cash flow from Year 2 and 3 is projected to be over $270,000. Under
Model 3 not only would there be a positive cash flow, but an operational profit margin
would begin in Year 2 and by Year 3 the profit margin is projected to be 3% or over
$130,000.
The worst case, Model 4 (Low Revenue/High Expense), cash flow needs (additional
money to sustain monthly operating losses) would be nearly $950,000. All three years
will have cash flow needs and by the middle of Year 3 a positive cash flow would occur.
A positive cash flow from Year 3 is projected to be over 100,000. Under Model 4 not
only would there be a positive cash flow, but a small operational profit margin of about
1% is projected by Year 3.
Based on Chansler Fuquay Solutions estimates, total funding for the proposed Good
Hope Impatient Psychiatric Facility could be approximately $4 million. All four models
proposed indicate that the Good Hope Inpatient Facility, given enough time, resources
and based on the assumptions applied, can prove to be financially sustainable.
Chairman McNeill said he believed we should base all assumptions on Model 3.
The cost information included in this report for renovation or new construction of a
facility to meet the needs of this 16 bed unit was provided by Wilkerson Associates. For
renovation of the facility, Wilkerson's projections estimate close to $3 Million. If
projected cost is in excess of $2 Million a Certificate of Need (CON) will have to be
filed. For new construction, Wilkerson's projections estimate close to $4.5 Million. CFS
recommends that the renovation be completed for the facility and that Good Hope not
pursue construction of a new facility. The group is not in support of demolition of the
unused portion of the building. Good Hope will go out for bids if this project is
approved.
Good Hope signed a Settlement Agreement with the State of North Carolina ion March
18th, 2009. Good Hope has forty -eight (48) months to license and open the mental health
facility.
It is believed the average stay at this facility will be less than 10 days and that this facility
will also benefit surrounding counties.
Commissioner House and Commissioner Burgin both recused themselves from voting on
this project. The three remaining commissioners voted to allow the recusals.
Commissioner Hill moved to instruct staff to pursue financing options for this project and
bring information back to the Board. Commissioner Andrews seconded the motion and it
passed unanimously with three votes.
Commissioner Andrews moved to recess the meeting until 10:00 am on Tuesday,
September 29, 2009. Commissioner House seconded the motion which passed
unanimously. The meeting recessed at 9:46 am.
cNeill, Chairman
. , • t Regina D
, Acting `lerk