Friday, October 19, 2009

Oversight committee agrees expenditures all look appropriate


From freezer to fees, the Sonoma Valley Health Care District’s bond fund expenditures totaling $965,276.83 through September 30, 2009, look fine to the Citizens Bond Oversight Committee.

The Committee met on Thursday to hear a detailed description of the new design and project schedule and to review, line by line, all expenditures. SVHCD board member and Facilities Advisory Committee member Peter Hohorst made the presentation and introduced new Chief Financial Officer Tim Noakes, who guided the group through the details.

In presenting the overall strategy, Hohorst showed a graphic depicting the Master Plan, the Capital Plan and the Business Plan – crediting Carl Gerlach’s presentation flair with the conceptual drawing. “No matter which one you’re working on,” Hohorst said, “you have to consider the other two.” The point was that all three must all work together to sustain and improve Sonoma Valley Hospital’s services to patients so that people don’t have to drive long distances to get the healthcare they need. “We’re not aiming to do heart surgery,” Hohorst said, “but we should be able to do knee and hip surgery.”

Hohorst ran through the Master Plan, showing the “current best thinking” about the hospital renovation design which includes a new extension to house the Emergency Department, the Central Utility Plant, plus a new cafeteria and café.

Committee member Frank Mazzone asked whether the doctors have been involved in the planning. Hohorst said that Chief Medical Officer Dr. Robert Cohen has sat in on all the Facilities meetings. Noakes added that, “We’re still soliciting physician input, and that’s important.” Committee member Mary Smith said, “So there are two major entrances: one for the hospital and one for outpatients?” Hohorst said that was correct.

Committee Chair Pam Gibson asked when they planned to sell the next bonds. Noakes said it depends on the state of the project and the swiftness of OSHPD. “Sometime in 2010 or 2011,” he said. Hohorst added that it’s good to consider when the market is favorable, and not push it too far forward. “You don’t want to issue the bond until you really need it.” Noakes said that while 2013 may seem a long time away, it’s really not, in terms of building a hospital, with all the state and federal requirements. “To get this accomplished by 2013 is a pretty aggressive schedule.”

Noakes then explained the expenditures line by line. SVH labor costs cannot be included, he said. For example, if SVH used one of their own engineers to knock down a wall, even though it is part of the project, that labor cost can’t be paid from bond funds. Committee member Gibson said her understanding was that furniture could not be covered either and asked why a freezer was included in the line items. Noakes explained it’s a large, industrial, fixed “stand-in” freezer and so can count as part of the room. Committee member Mary Smith asked how the Carinalli rental was considered part of the project expense. Hohorst explained that leasing space to accommodate construction staging and parking is a normal cost for a general contractor, who has to make sure he can accommodate his construction needs.

Then Hohorst gave the group a surprise. He said that as part of making room for an electronic medical record, SVH had disposed of years’ worth of obsolete X-ray film. When this was reclaimed, they received about $16,000 for the silver. “Just about paid for the cost of movement of all the records,” he laughed.

As for the schedule, the next step, Hohorst said, is to select the “design-build” (D-B) contractor, which they expect to do by mid December. He explained that the D-B
process is more efficient than the competitive bid process in both time and money.
“We’re going to say, ‘Here is the money we have to spend; here are the things we absolutely have to have; and here are the things we’d like to have.’” He said they would decide which of the three bids they would accept based on which applicant can give them the most for their money.

Noakes, who had used D-B to build a new hospital for his previous company in Modesto, explained that D-B, being more time-efficient, saves money. He said he had been involved in two hospital builds. One, in Thousand Oakes, did not do design-build. “It took the better part of four and a half years from plan review to opening the doors.” The other, in Modesto, did. “In Modesto they did the same thing and it took sixteen months, from shovel-in-the-ground to opening the doors – and that was design-build.”

In conclusion, the committee voted unanimously that the current expenditures of the Sonoma Valley Health Care District’s GO bond funds have been appropriate. Gibson
made clear it was the job of the committee to review, not approve, such expenditures. “Our main responsibility is to review expenditures,” she said, “the other main job is to issue a report each year.”

The Citizens Bond Oversight Committee was established in January by the SVHCD Board of Directors to satisfy the accountability requirements of the Bond Measure, which voters passed in November. The Committee is charged with ensuring that the District’s general obligation bonds funds are expended only for the purposes described in the bond measure.