Hospital ‘getting close’ to paying off obligations

Northeastern Health System Sequoyah, which just last December was drowning in debt to the tune of about $14 million before Sallisaw City Commissioners stepped in to buttress the city hospital with a $12 million bond, can see the light at the end of the proverbial tunnel.

“We have about $500,000 more that we’re trying to negotiate down, so we’re thinking we’re going to end up with about $850,000 to a million dollars left over when it’s all said and done,” hospital administrator Stephanie Six told the Sallisaw Economic Authority Board of Trustees on Monday. The SEA administers the hospital bond, paying NHS Sequoyah’s bills as it regains its financial footing.

Stephanie Six

After the trustees approved payment for items on the most recent invoice payment request by the Hospital Authority, Trustee Julian Mendiola asked Six the logical question: “Is this close to the end of it?”

“We’re getting close,” Six said. Monday was the second partial list of debts that the board has paid on the hospital’s behalf. The first debt service was in March.

After closing on the bond in February, Six reported that there was $2.37 million left, which was applied to the remaining outstanding debt.

It was Dec. 9, 2024, when Todd Martin, who has served on the hospital board for 18 years and is currently the board chairman, asked the city to intervene on the hospital’s behalf with a financial lifeline. Eight days later at a special meeting, the commissioners affirmed the importance of saving the hospital, voting unanimously to buy a $12 million bond to give the hospital a clean slate as it charts a more financially stable course.

As the commissioners considered what Martin called “the best thing for our financial situation at this point,” the board was united in what is forecast as positive outcomes for the hospital, the city and taxpayers.

“I’m looking at brighter times down the road with all these things coming together. I think it’s going to be on the upswing for opportunities we haven’t seen in years,” Mayor Ernie Martens said in support of the bond proposal. “I just don’t see any downside to this. All I see are positives.”

“When you look at the big picture, I think it’s a good move to do it to help the hospital out,” decided Ward 1 Commissioner Kenny Moody.

Then Ward 3 Commissioner Julian Mendiola was proactive in quelling any dissent by taxpayers.

“I think what the biggest concern is that the people are going to want to know that taxes are not going to go up. And they’re not. The sales tax has been around longer than anybody can tell me, and it doesn’t have an end date, so that money will continue to come in at what it is now, or it will come in greater as the city grows more.”

Martens weighed any risks with the anticipated benefits for the hospital and the community.

“What’s the risk factor for the city? That’s what everybody’s concerned about. I don’t see it,” the mayor said. “I think the hospital board right now is one of the best boards we’ve seen in a long time. I think it’s a fantastic situation right now [for the hospital with the bond opportunity].”

That’s when Randy Nelson, a financial advisor who has worked on sales tax transactions throughout the state for counties and cities, including Sallisaw, reassured the commissioners.

“I don’t foresee any issues as far as the negative. Sallisaw’s pretty stable. I don’t foresee a headache,” Nelson said.

Paying off debt

“We want to use our sales tax that is dedicated to us and does not roll off to take out a bond, which you guys would have to do for us, and to pay off our obligations, at least most of them, and move on,” Martin told the commissioners in December. “It would kind of give us a clean slate. We think it’s the best thing for our financial situation at this point in time. It’s the best use of that tax that’s there instead of just having it sitting there as something that we operate off of. Our board, we’re all unanimous on it as far as thinking this is the best way to go.”

Martin then explained what the future holds for the hospital.

“We do have some great things going on at the hospital, and getting this kind of down the road would help us with one of the things we want to do, [which] is our new geri-psych unit,” he said. “It’s a pretty exciting venture for us to do. We’re proceeding quickly with it. The clientele is there, and they don’t need to be going to Fort Smith, they don’t need to be going anywhere. They need to stay right here. I think that’s one of our positives that we have going on.”

When Martin addressed the commissioners on Dec. 9, he reported that, despite its best efforts, the hospital is still in debt about $14 million.

So why a $12 million bond rather than a bond for the full amount?

Martin said hospital vendors and the hospital’s management team, in particular, have made considerable concessions to ensure the financial well-being of the hospital.

“It will not wipe it all clean, but the terms on the rest of it … first of all, it takes care of everybody outside of the hospital. NHS, we still would owe some money. They’re going to forgive some of that, quite a bit, to be honest. The rest is interest free paid out 26 times a year. It’s terms you would never be able to get at a bank, so it’s really a sweet deal for that. It’s kind of one of those deals, ‘Why would you pay that off with those terms?’ Depending on how much growth we get, I think we can pay that off in 6.72 years, maybe sooner,” Martin said.

Martin said the hospital will continue with Northeastern Health System, which became the hospital’s management system in 2017 and was the reason for the name change from Sallisaw Memorial Hospital. But he admitted that if there was another suitor with deep pockets, provisions are in place.