Citrus County Hospital Board looks for investment opportunities

Local financial adviser John Ceparano told the trustees during this week’s public hospital board meeting that if it invested about $4.6 million in government bonds, yielding an average 3.7 percent return amid an average 2.5 percent inflation rate, and a continued annual spending rate by the board of about $180,000 for operations and other expenses, the trustees would run out of money by 2049.

Fallows said that when all the hospital board’s financial books are closed, financial disputes with government health care agencies are settled, and lease monies are released from escrow, the hospital board’s pot of money will be about $16 million, not $4.6 million, and will last much longer.

But Fallows said that the hospital board’s role in overseeing hospital lease money will end long before 2049 and that any remaining money will most likely go to the Citrus County Community Charitable Foundation.

The hospital board owns HCA Florida Citrus Hospital in Inverness and its medical campus and some satellite properties and leases the properties to Hospital Corporation of America. It uses the lease money to help fund local health care projects and educational endeavors. It also funds the Citrus County Community Charitable Foundation, which awards grants to local charities providing health care services.

The issue of investments was a topic before the trustees after hospital board member Dr. Jeffrey Wallis proposed creating an investment policy. The hospital board does not currently have one.

Ceparano told the board members that they are not required to have an investment plan, but being without one allows the council to invest only in such things as US treasury bonds, interest bearing public depositories, SEC registered money market funds, and government investment pools.

Having an investment plan would allow the hospital board to diversify its investments into stocks and other financial vehicles to make more revenue.

Wallis said that with an investment policy, and more investment opportunities, the hospital board could continue indefinitely, especially if expenses are significantly brought down as the board’s responsibilities diminish.

Richard Powell, the hospital board’s CPA, told trustees that the hospital board currently has about $8 million earning less than 1 percent interest. At 4 percent (from government bonds) Powell said the board could at least earn $320,000 annually.

But Wallis asked what good is 4 percent interest if inflation is really double that?

Trustee Rick Harper replied, “Right now we’re making zero.”

Ceparano said if the trustees wanted to correct the amount they could invest in government bonds, greater than the $4.6 million, he could re-tabulate that and show how long the principal pot of money would last given the estimated financial environment.

“Doom is what we face if we don’t do anything,” Fallows said.

The hospital board directed Powell to return with a potential plan of how to invest trustee money in staggered government bonds for three to 12 months providing staggered interest rates.

The hospital board also directed hospital board attorney Bill Grant to return next month with a copy of the Citrus County Community Charitable Foundation’s investment plan and see if that was something trustees wanted to mirror.

Harper, Fallows, and trustee Allan Bartell agreed the board should continue working to sunset and hand off its work, namely soon only enforcing the HCA lease, to another government body.