Hospital officials are being told they should continue to wait before borrowing $22 million.

The Regional Medical Center's bond attorney says the hospital should wait until at least June, when the bond market should be more settled than it is now.

"We have a very volatile short-term market phenomenon going on right now," said Kathleen Crum McKinney, a bond attorney with Haynsworth Sinkler Boyd. She spoke to hospital trustees Tuesday.

"Be glad you are not issuing bonds right now. There are a lot of people not knowing what to do and where all this will fall out," she said.

RMC wants to borrow $22 million, with half the money going toward reimbursing the hospital for expenses it has already paid for with cash. The money was used for the hospital's breast center, vascular lab, medical imaging equipment and facility improvements.

The hospital wants to use the other $11 million for future projects, including new facilities, computer systems and medical equipment.

McKinney explained that the municipal bond market is currently experiencing "difficult times" after bond insurers decided to fund subprime derivatives, rather than the safer municipal bonds. Rating agencies in turn downgraded bond insurers.

"A lot of funds can only hold debt that is insured at certain levels," she said. "When you get a downgrade, you begin to have nonconforming debt. We have a lot of debt floating around and not many purchasers because several purchasers are not eligible.

"Certain funds can only have AAA-rated debt, so when the bond insurer got downgraded to double A ... they have to give up that debt."

McKinney said she expects the situation will begin to stabilize around May.

McKinney said when the hospital, which is owned by Orangeburg and Calhoun counties, eventually does enter the bond market, it will go through the South Carolina Jobs Economic Development Authority. The SCJEDA will ask the hospital about the amount it wants to borrow and what projects will be financed.

From there, the issue will go to the State Budget and Control Board, which will want to see the hospital's financial information.

Public hearings would then be held on the borrowing plan. Both Orangeburg and Calhoun county councils have to approve the borrowing.

Following councils' approval, the hospital would appear before the SCJEDA again for final approval.

The process takes about 90 days, McKinney said.

"The objective is to get you the lowest interest rate on your bond with a maturity schedule and annual debt service payment that will match your budget," McKinney said. "The counties don't have any financial liability with respect to these bonds."

After more than a year of withholding its blessing, Orangeburg County Council has given the hospital permission to enter the bond market if Community Health Systems and QHR sign paperwork stating they will not lease or buy the hospital for any less than the appraised value or the "unsolicited offer of 2003," whichever is greater.

In 2003, CHS offered to lease the hospital at $7 million a year, plus $2 million in taxes a year and other considerations. CHS purchased QHR, which manages the hospital under contract, in July 2007.

Calhoun County Council has approved the borrowing.

In other business:

* Dr. Bert Gue, chairman of the hospital's Institutional Review Board, presented trustees with an overview of the role of the IRB and its current studies. The IRB reviews all research that is carried out on patients in the hospital.

RMC, in collaboration with other medical institutions, is conducting research in a number of areas, including diabetes in youth, breast cancer in African Americans, the use of a device for patients with spinal fusion, drugs for women with breast disease who are post-menopausal and the effectiveness of ultrasound mist technology in the treatment of chronic leg ulcers.

* Trustee Danny Covington requested the board come up with a policy that would allow for public comment at monthly meetings. Board Chairman James Amaker said the matter will be examined further.

T&D Staff Writer Gene Zaleski can be reached by e-mail at gzaleski@timesanddemocrat.com or by phone at 803-533-5551. Discuss this and other stories at TheTandD.com.

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