OHH Eyes Issuing $6 Mln More In Bonds
The Olney Hamilton Hospital Board of Directors considered Friday whether to issue an additional $6 million in general obligation bonds to help fund construction of the new hospital facility, and said it will pursue New Market Credits to fund operations and construction as revenue from other sources dip.
The new bonds will add to the $27 million in bonds previously issued last year, bringing the total bond issuance to $33 million. The board said the guaranteed maximum price for the new facility came in at $26.5 million last month. The additional funding is needed to cover equipment and furnishings in the new building.
The board announced that the groundbreaking ceremony for the new facility will be held on April 14 at 9 a.m. in Olney. The Olney Hamilton Hospital Foundation is also scheduled to meet on April 14 at 5 p.m. at the Fort Belknap conference room in Olney.
When voters approved the hospital bond in 2023, hospital leaders assured the community that the new hospital would be built without a tax increase and would offer the same services as the current hospital. The board later announced it would be eliminating labor and delivery services and reducing the size of the new hospital to 14,000 square feet — smaller than the combined square footage of the Clinic and Wellness Center across Avenue M.
In an effort to secure additional funding beyond bond financing, the board is pursuing federal New Markets Tax Credits — a program designed to encourage private investment in economically distressed areas. If successful, the hospital could receive $3 to $3.5 million in additional revenue to be used for operations or construction costs.
According to the hospital’s attorney Kevin Reed, the program would require the hospital to establish a nonprofit entity to receive the funds and carry the amount as a debt obligation for seven years, though the money would not need to be repaid. He cautioned that the program’s future is uncertain and may be discontinued as President Donald Trump’s Department of Governmental Efficiency (DOGE) slashes the federal budget. “A lot of [rural hospitals] want to close this quickly because of DOGE,” he said. “There is uncertainty about whether the program would continue.”
Some board members questioned whether the additional debt would affect the hospital’s credit. “It is going to look odd for those seven years as it accretes off,” Mr. Reedsaid.
Board member Dr. Jeremy Johnson expressed skepticism about the complexity of the financing scheme, calling it “the definition of funny money.” But board member Lonnie Rue, who chairs the finance committee, reported earlier in the meeting that the hospital collects only 35 percent of its billed charges, charges off millions each year in charity and bad debt, and experienced a $1 million drop in nursing home revenue this year as contract rates are renegotiated.
Board member Lyndsey Miller said the New Markets program came to light in her search for grants and other funding sources to help build out a second operating room in the new facility, which could potentially allow for the return of labor and delivery services in the future.
“We are holding our breath and hoping it happens,” she said.
Rural hospitals across Texas are facing mounting financial pressures driven by declining patient volumes, high numbers of uninsured patients, and shrinking reimbursement rates from Medicaid and Medicare. Many small hospitals, including Olney Hamilton Hospital, are struggling to stay afloat as operating costs rise and revenue collections fall—often recovering only a fraction of what they bill. The situation has been worsened by cuts to federal funding programs that previously offset the cost of caring for uninsured and underinsured patients. Without structural reforms or new sources of funding, healthcare experts warn that more rural hospitals could be forced to reduce services, close specialty departments like labor and delivery, or shut their doors entirely in the coming years, leaving rural Texans with limited access to essential healthcare.