Aspen Valley Hospital won’t seek relief from $8.2 million PPP loan
Leaders of Aspen Valley Hospital have decided to not seek relief from an $8.2 million loan the hospital received through the Paycheck Protection Program because it does not meet forgiveness requirements.
At its monthly meeting held Monday, the board of directors took the advice of the hospital district’s attorneys and both its chief executive and financial officers to satisfy the Small Business Association-backed loan. Hospital authorities said nearly all of the money was used for the very reason it was borrowed — to maintain staffing levels without any layoffs during the pandemic-riddled 2020.
“As you might imagine, it’s a little painful to give the money back, but it’s the right thing to do,” board member Lee Schumacher said.
The call was made on the basis that the 25-bed public hospital received additional revenue in 2020 with $7 million through the CARES Act stimulus package, $13 million in accelerated and advance Medicare payments, and another $2.1 million in unprojected revenue from the Aspen Valley Hospital Foundation.
The extra funds helped the hospital salvage a year of lost business due to the six-week suspension of elective surgeries, a drop in orthopedic volume because of early ski-area closures, and other factors related to the pandemic.
Last year also saw hospital admissions number 774, an 18.9% drop from 954 in 2019. Emergency visits also decreased 20.5%, from 8,430 in 2019 to 6,703 last year. Surgeries dropped 9.2% from 1,395 in 2019 to 1,266 last year, and patient revenue missed budget by 13.6%, generating $136.1 million compared with the projected $157.6 million.
Even so, the hospital had a break-even year because of outside revenue sources. The hospital also has $2.8 million in remaining stimulus funds that it must spend on COVID-19-related expenses by the end of June. Add it all up, and the hospital did not have a financial hardship to justify forgiveness of the loan.
“Based on 2020 and the expectation of what the funds were meant to be used for, and us having the ability to get the stimulus grant, we’re actually recommending a resolution to authorize to repay this $8.2 million in PPP funds,” hospital CFO Ginette Sebenaler told the board, which in turn unanimously adopted a resolution authorizing repayment of the loan.
The hospital could certainly use the $8.2 million for something else were the loan forgiven, but CEO David Ressler the money was used for its expressed purpose.
“I know the sensitivities surrounding this topic, and the hospital has very significant headwinds ahead of us and we have an accountability to the community to maintain the viability of our hospital,” he said. “And we have significant capital demands.”
But, Ressler added, “None of those are the purpose of the funds, unfortunately. Our recommendations are based on what the funds are intended for and what the requirements are associated with them.”
Because the hospital received more than $2 million in PPP funds, it would be subject to a full review process by the SBA if it were to seek forgiveness of the loan.
The PPP program was established last year through through the CARES Act and it is overseen by the SBA. The program, intended to help small businesses meet payroll during the economic fallout of the coronavirus pandemic, has been extended through June 30, with the deadline for PPP applications set for May 31.
With the board’s approval last year, AVH applied for PPP funds in April 2020 and received $8.25 million in May. The hospital spent 96% of the money on payroll and employee benefits, according to Sebenaler. That included $6 million on wages and salaries, $1.1 million toward pension and $848,000 on health insurance. The remaining 4% went toward rent payments and utilities.
“When we applied for this loan back in April (2020), AVH had missed budgeted revenue by $15 million,” Sebenaler said. “We did not know what the rest of the year was going to look like.”
This week’s $69-million purchase of the Silver Lining Ranch next to the Aspen Club included a 10-bedroom mansion, more than 6 acres and something else of value to the new ownership — a short-term rental license.
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