Shelby County seeks $350M to build new Regional One Health

Shelby County is exploring options including hiking car-renewal fees or county sales tax as it enters into more serious debate over how $350 million could be found to help build a new Regional One Health.

With budget season in swing and the hospital — West Tennessee’s only level 1 trauma center — saying a dramatic improvement in facilities is needed to provide the level of care its perpetually-increasing patient pool requires, the county is looking at any avenue that could yield funds for a new hospital.

Harold Collins, Shelby County’s chief administrative officer who has been part of a committee examining funding possibilities as well as how the state and the University of Tennessee Health Science Center should be involved with Regional One, told the commissioners a new hospital was needed for multiple reasons, including the fact that the current one does not meet seismic standards.

“If a major earthquake were to hit us, where would we go?” he said. “We’re it.”

The hospital has long needed a significant facilities overhaul that would cost hundreds of millions. A study completed last year by A2H Inc. found replacing all the current facilities could cost about $850 million. The hospital is a nonprofit that leases its facilities and land from Shelby County Government for $1 annually.

The discussion came during the commission’s budget retreat at the Memphis Zoo Saturday. Commissioners heard presentations from a variety of county officials on topics ranging from Regional One to Memphis-shelby County Schools to fiscal year 2023 revenue collections. No action was taken Saturday.

Commissioners are set to discuss a resolution about funding for the hospital on Wednesday.

Phased construction plan

Regional One has requested the county fund the first two phases of facilities construction. The first phase would include a new women and infants center with antepartum and postpartum rooms, c-section operating rooms and neonatal intensive care beds and a new power plant. The current power plant is more than 75 years old.

The second phase would be an acute care tower that would include emergency and trauma services. The price tag for those two phases has fluctuated but was estimated at about $350 million.

Funding for the third phase, which would include a critical care tower, could come from public and private sources, such as the state, the federal government and philanthropic donations, officials have said.

Tish Towns, chief administrative officer for Regional One, said the hospital gets money from the county annually to provide medical care to inmates and uncompensated care for uninsured patients but not for capital improvement projects.

Regional One also receives operational funding from the federal government, the state and from the states of Mississippi and Arkansas, since the hospital treats patients from across the region. Neither the hospital nor the county have the legal authority to require additional payment from Mississippi or Arkansas.

Towns said $234 million has already been invested in updating the existing facilities and continuing to renovate — rather than building a new hospital — was cost prohibitive. Seismic retrofitting of the current buildings alone could be upwards of $600 million, hospital officials said previously.

In addition, hospital officials said they also simply do not have enough room currently for all their patients.

Dr. Peter E. Fischer, medical director of the Elvis Presley Trauma Center at Regional One Health, said the hospital was built to care for about 4,000 patients a year. They’re now seeing about 15,000 a year and about 6,000 of those will require admission, he said.

‘Ripe for replacement’

Charles Franklin, director of engineering services for Regional One, said the oldest buildings on the campus date back to the 1940s while what the hospital calls the “new buildings” were built in the 1990s.

The age of the facilities and the way the buildings are laid out are not conducive to bringing in the latest medical technology. The old buildings also do not meet current seismic standards, a big concern in one of the most seismically active regions of the country.

Any renovations, Franklin added, would require shutting down multiple other parts of the hospital complex.

“If you were to try to renovate… you would lose services,” he said. “All those things coupled make this ripe for replacement,” Franklin said.

Late last year, the commission did ask the state for money for the new hospital when it presented its legislative asks to the governor and General Assembly.

Commissioners have also promised $77 million to Memphis-shelby County Schools to build a new high school in Cordova. That is being funded through bonded indebtedness, according to the county.

Shelby County’s unassigned fund balance was at 18.6% of revenue as of Feb. 22. The county’s policy is to maintain an unassigned fund balance between 20% and 30%, in order to have enough money to cover ongoing costs before revenues come in.

The county has been facing financial issues for years and used an influx of federal funds during the COVID-19 pandemic to plug holes, county officials said on Saturday.

Reporter Katherine Burgess contributed to this report.

Corinne S Kennedy covers economic development, real estate and healthcare for The Commercial Appeal. She can be reached via email at Corinne.kennedy@commercialappeal.com