Neillsville City Council Approves Subordination Request on Memorial Medical Center Loan
Thursday, December 24th, 2015 -- 9:13 AM
-The Neillsville City Council approved the subordination request by Memorial Medical Center at their meeting on Tuesday.At the council's previous meeting on December 8th, members of MMC came before the council to ask for subordination on the $1.5 million loan the city provided them back in 2014. At the time, certain members of the council felt they couldn't vote on the issue that night because they didn't have enough information on MMC's financials. After that information was provided, the request was brought back before the council on Tuesday. MMC will use this loan to transfer paper documents into a digital medium which will free up more rooms in the lower level of their clinic. They will use these rooms as exam rooms and office space for more doctors and specialists, which keep patients in Neillsville at MMC meaning more business and billing for the hospital which equals continued growth. MMC's CEO, Ryan Neville, stated that he has specialists that would like to come and practice at MMC now, but he doesn't have the space for them. It was also stated that, at times, patients are being transported to other facilities which puts them at risk because MMC doesn't have the specialist they need. If the city didn't approve the subordination it would have resulted in an additional $18,000-$20,000 fee for the hospital
On one side, two aldermen were opposed to the subordination due to the risk to the city's taxpayers. This subordination would cause the city to be in the secondary position giving them little leverage if something were to go wrong. The banks would get first dibs on any assets and collateral leaving the city with very little. The city attorney, remaining a neutral party, but nonetheless providing her thoughts stated that she would never recommend to a client that they become the subordinate on a loan. She stated that in many cases the subordinate gets nothing if the business fails or gets pennies on the dollar. However, she did state that she's seen the opposite as well with the subordinate getting paid in full. She also stated that the subordinate loses a lot of leverage unless they can buy out the primary on the loan. Based on those arguments the two aldermen stated they can't support this as it's too much of a risk to the taxpayers and the remodel should not be done now.
On the reverse side of that, there were two aldermen that were in favor of the subordination. They stated that the hospital has seen continued growth in the past 5 years. There losses are less and less each year and are expected to turn a profit. They stated there is opportunity present and they are continuing to follow their strategic plan which has brought them this far. They also stated that when the current regime at MMC took over, they inherited a mess and they've done an amazing job bringing MMC out of the hole.
In the end, a roll call vote was taken. With Alderman Jerry Quick abstaining, due to his involvement with the Memorial Medical Center Foundation, Aldermen Chuck Glassbrenner and Dan Clough voted yes and Aldermen Joe Neville and Julie Counsel voted no. Mayor Steve Mabie broke the tie and voted yes.
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