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Countdown on to leadership change at hospital

Perham Memorial Hospital and Home is in a good position to accommodate the mass of Baby Boomers who will begin needing higher levels of care in the coming decades.

That's the assessment of the 12-year manager who will be departing just as a new, $34 million hospital begins to take shape.

Chuck Hofius, who guided the medical and long-term care facility through a series of expansions, improvements and initiatives, has accepted a position in the Twin Cities. A farewell reception for the outgoing chief executive officer is Jan. 13 at Mulligan's, 5 to 6:30 p.m.

The announcement from Hofius came just as earth was being moved in preparation for the new hospital--prompting some concerns about the project, and its future without Hofius as a driving force.

"The hardest part of the project is not the construction phase-I'm confident the hospital board will carry straight through to the opening without any hiccups," said Hofius. "The worst time for me to leave would be when the building is done."

Launched on a parallel path with the building project is the PMHH strategic planning process. With a new long range plan in the works, Hofius believes that the best time for a new administrator is in the early stages of a strategic plan.

"It is much better for a replacement to come in on the ground floor, rather than two years from now-and finish somebody else's plan, " said Hofius.

Financing for the hospital project is still in progress, said Hofius.

With the lending industry in such flux over the past two years, PMHH has been juggling several different plans. Initially, the board was planning to bond for the project-until bond rates climbed late in 2008. This prompted the board to consider conventional bank financing, with Bremer being one of the potential lenders. But bond rates have fallen back down, with long-term rates that are attractive.

"In all likelihood, we will be looking at working with two companies...selling tax exempt gross revenue bonds," said Hofius. By February, bond rates could drop well below six percent, he noted.

The breakdown for the building project is:

--About $34 million in hard construction costs. Because of the slump in the building industry, PMHH benefitted from very competitive bids from hungry contractors.

--PMHH will be investing $5 million into the financing package.

--$3 million will be invested, most from the local fundraiser in late fall of 2009.

--PMHH expects to bond for about $30 million. The bonds could be sold as early as February, said Hofius.

Based on debt load, cash flow and income projections, there will be no need to tax hospital district property owners for the building project, said Hofius-which has been reiterated often during the campaign for the project.

Repayment of the building debt is expected to break down as follows:

--40 percent from Medicare payments.

--40 percent in anticipated growth. With the East Otter Tail lake country projecting growth for the coming decades, Hofius believes that the aging "Baby Boomer" population will require increased health care.

--There will be a price increase of 10 to 15 percent for medical services. However, all or most of the increase will be covered by health insurance carriers. PMHH received prior approval of the rate increase from the five major insurance companies, including Blue Cross-Blue Shield, the most common health insurer in this area.

As far as his future goes, Hofius will be overseeing Volunteers of America senior care properties in Minnesota and in Ohio.

"I'm excited about the new opportunity, but I'm also grieving the loss of so many people I've grown close to over time," said Hofius. "And the closer the farewell day comes-the harder it gets."