TOPEKA — A small hospital in the central Kansas community of Ellinwood is the latest beneficiary of a federal loan program aimed at helping rural health care facilities modernize and take care of longstanding infrastructure needs.
The Ellinwood District Hospital will receive a $237,000 low-interest federal rural development loan to replace an aging boiler system, the U.S. Department of Agriculture announced Tuesday.
The Ellinwood loan is part of a targeted effort by three federal agencies to help rural hospitals in Kansas and several other states upgrade their facilities. Since 2009, the USDA, working with the U.S. departments of Health and Human Services and Veterans Affairs, has provided more than $90 million in loans and grants for “health care projects” in Kansas, said Jessica Bowser, a spokesperson for the USDA’s state rural development office.
A pilot program initiated by the federal agencies to identify healthcare technology needs also has resulted in increased grants and loans to rural hospitals and clinics in Illinois, Iowa, Mississippi and Texas, Bowser said.
A $17.6 million loan to a critical access hospital in Onaga was among the biggest awarded in Kansas this year. Announced in March, it is funding a renovation and expansion project at the hospital, which is part of a seven-county network of healthcare facilities operated by the nonprofit Community HealthCare System. The expansion project follows a 2012 initiative by Community HealthCare to install a new electronic health records system. That project was funded by a $4.9 million USDA loan.
Janette Womack, a USDA community program specialist in Topeka, said loans issued by the agency can provide tightly-budgeted rural hospitals with lower interest rates and more time to pay back the money. For example, she said, the Ellinwood hospital has 25 years to pay off its loan.
A 2010 analysis commissioned by the American Hospital Association said that USDA loans require more paperwork and time to process than other financing alternatives. Still, it recommended them as a way for hospitals to deal with the recession-induced credit crisis that has made it harder for them to access needed capital since 2008.
“This is especially true for smaller hospitals, which almost always have experienced a more difficult time accessing capital than larger organizations,” the report said.
The Ellinwood loan was issued under the USDA’s Community Facilities Direct Loan program, which funds projects deemed “essential” to rural communities with populations under 20,000.
“For years, the community facility program was underutilized but now it’s starting to come around,” Womack said. “For the last few years we’ve gotten over $20 million (in federal allocations) and spent every penny of it.”
In addition to hospitals and rural health clinics, loans have gone to enhance public safety, renovate and expand libraries and improve infrastructure, Womack said.