TABLE OF CONTENTS
Page INTRODUCTION ... 1 GENERAL... 1 Licenses, Accreditation, Certifications and Membership... 3 Comanche County Memorial Hospital Foundation... 3 Affiliations... 4 GOVERNANCE AND ADMINISTRATION... 5 Governance ... 5 Administration ... 6 BED COMPLEMENT, SERVICES AND MEDICAL STAFF ... 8 Bed Complement ... 8 Services... 8 Medical Staff ... 9 PHYSICIAN RECRUITMENT AND PERSONNEL... 10 Physician Recruitment Plan... 10 Employed Physician Rationale ... 11 Personnel... 12 Nurse Recruitment Plan... 12 Pension Plan... 12 Insurance Coverage ... 13 SERVICE AREA ... 14 Primary and Secondary Service Areas ... 14 Overview of Comanche County ... 15 COMPETITION AND MARKET SHARE... 17 UTILIZATION ... 18 OUTSTANDING INDEBTEDNESS ... 19 FINANCIAL PERFORMANCE – REVENUES AND EXPENSES ... 20 Gross Patient Service Revenues and Contractual Discounts... 20 Revenue Payor Mix ... 20 Debt Service Coverage - Historical Revenues/Historical Debt Service Requirements... 22 Debt Service Coverage - Projected Revenues/Projected Debt Service Requirements ... 23 MANAGEMENT’S DISCUSSION OF OPERATING RESULTS ... 24 Revenues... 24 Expenses ... 25 Liquidity ... 26 Long-Term Debt ... 27 Pension Plan... 28
INTRODUCTION
Comanche County Memorial Hospital, an acute-care general hospital (the “Hospital”), is owned by Comanche County, Oklahoma (“Comanche County” or the “County”), and leased to and operated by the Comanche County Hospital Authority (the “Authority”). The Hospital, originally opened in 1951, with expansions and renovations since that time, has grown into a full-service regional referral 283-bed (licensed) hospital and integrated delivery system serving southwestern Oklahoma.
The Hospital is located in Lawton, Oklahoma, the third largest city in the state and the county seat of Comanche County. Lawton is located approximately 100 miles southwest of Oklahoma City. The Hospital functions as the regional hospital for southwestern Oklahoma, which is comprised of Comanche County and ten adjacent counties.
The population served by the Hospital totaled an estimated 306,843 in July 2005. The Hospital’s primary service area (“PSA”), which accounted for 66% of the Hospital’s admissions in FY 2006, consists of Comanche County. The population of the PSA was estimated at 112,429 in July 2005. An additional ten counties within the Hospital’s secondary service area (“SSA”), which had an estimated population of 194,414 in July 2005, accounted for 34% of the Hospital’s admissions in FY 2006.
GENERAL
The Authority is a public trust, created on January 13, 1971, by the Board of County Commissioners of Comanche County to operate, control and manage all matters concerning Comanche County Memorial Hospital and McMahon—Tomlinson Nursing Center. Pursuant to a Lease dated as of January 13, 1971 (the “Lease”), between the County and the Authority, the County leased to the Authority all hospital centers, hospital sites, equipment and facilities owned and subsequently constructed or acquired by the County or under its custody, management or control. The initial term of the Lease was for a period of 30 years and so long thereafter as any debt incurred by the Authority and secured by the revenues of any of the leased property remains unpaid. In July 2000, the Authority exercised an option to renew the term of the Lease for an additional 30-year period ending in January 2031.
Today, the Hospital is licensed for 283 beds (232 of which were staffed as of June 30, 2006) and is the largest county hospital in the State of Oklahoma. With 1,586 employees (1,227 FTE) and a network of 166 physicians as of June 30, 2006, the Hospital is one of the largest employers in Comanche County.
Authority Operating Entities. The Authority has three operating entities under its control:
• The Hospital is the largest operating entity of the Authority, representing 91.9% of its $171.9 million of assets and 93.4% of its $164.3 million of operating revenues as of June 30, 2005.
All the information in this presentation, unless expressly stated, is related only to the Hospital.
• McMahon—Tomlinson Nursing Center (the “Nursing Center”), a 135-bed nursing facility located adjacent to the Hospital in Lawton.
• Tillman County Memorial Hospital and Physician Group, a 48-bed, short-term hospital in Frederick, Oklahoma (the “Tillman County Memorial Hospital”), also operating a nursing center and home health agency (collectively, the “Tillman Facilities”).
A-2 The Nursing Center is licensed by the State of Oklahoma and is located in Lawton, adjacent to the Hospital. The Nursing Center currently has a one-month waiting list and an occupancy rate of 98% and has been profitable for each of the past 17 years.
Effective September 1, 1993, the Authority entered into a sublease agreement with the Tillman County–City of Frederick Hospital Authority (“Tillman”) to take over full use, operations, administration and management of the Tillman Facilities located in Frederick, Oklahoma, approximately 45 miles from Lawton. The term of the sublease is 20 years with a renewal option for an additional 20 years. The Authority’s consideration to Tillman under the sublease is the Authority’s guarantee of the Tillman Series 2003 Revenue Note. See “Outstanding Indebtedness” herein for additional discussion of the Tillman Series 2003 Revenue Note.
Each of the Hospital, the Nursing Center and Tillman issue financial statements as operating units or component units of the Authority. The Authority commenced issuing consolidated annual financial statements as of its fiscal year ended June 30, 2002.
History of Development of the Hospital. The Hospital is currently licensed as a 283-bed facility located on 35 acres of land at 3401 West Gore Boulevard in Lawton, Oklahoma. An Outpatient Service Center and the Nursing Center are located on such property as well.
The Hospital was first established as a 100-bed hospital in 1951 through the issuance of general obligation bonds by the County and receipt of Hill-Burton grants. The Hospital was increased to 140-beds in 1958 with proceeds of Federal aid and a general obligation bond issue by the County. A further addition to the Hospital of 24 beds, which was funded from Hospital moneys, was made in 1965.
Subsequent additions to the Hospital of 36 beds increased the bed complement to 200 beds.
In 1975 the Hospital added new space for offices, ancillary departments and 39 additional beds for a complement of 239 beds. Such project was financed with proceeds of the Authority’s Hospital Revenue Bonds, Series 1972 and 1973, together with other available moneys.
The proceeds of the Authority’s Hospital Revenue Bonds, Series 1983, together with other available moneys, financed the fourth expansion and renovation of the Hospital which resulted in the addition of 44 beds, bringing the total bed complement to 283. The renovated, expanded and upgraded departments included administration, diagnostic treatment, nursing and service facilities. In addition, proceeds of the Series 1983 Bonds were used to refund the Authority’s outstanding Series 1972 and Series 1973 Bonds. In November 1989, the Authority issued its Hospital Revenue Bonds, Series 1989 to refinance its Series 1983 Bonds.
In 1990, the Authority provided funds for the construction of a rehabilitation nursery unit and medical office building through its issuance of Certificates of Participation. Such Certificates of Participation, together with its Hospital Revenue Bonds, Series 1989, were refinanced through the Authority’s issuance of its Hospital Revenue Bonds, Series 1993A, which also provided funds for various capital improvement projects. Such projects included the substantial renovation of certain of the Hospital’s facilities, fixtures and equipment, the acquisition and installation of new equipment, the renovation of a portion of the Hospital for use as a surgicare facility, improvements to the Hospital’s existing parking facilities, the construction of a multi-level parking garage adjacent to the Hospital and leasehold improvements to a portion of the medical office building for use by physicians employed by the Hospital. The Series 1993A Bonds were refunded by the Authority’s Hospital Revenue Refunding Bonds, Series 2004 and Series 2005.
The Oklahoma Development Finance Authority (“ODFA”) issued its $28,010,000 Fixed Rate Revenue Bonds, 2000 Series B (the “ODFA Bonds”) and loaned the proceeds to the Authority in
A-3 January 2002. See “THE AUTHORITY—Existing Indebtedness” in the Official Statement. The proceeds derived from the issuance of the ODFA Bonds financed the construction and equipping of an outpatient service center adjacent to the Hospital which opened in April 2004. The Authority’s payment obligations with respect to the ODFA Bonds will be defeased and discharged upon the issuance of the Series 2006 Bonds. See “PLAN OF REFUNDING AND APPLICATION OF SERIES 2006 BOND PROCEEDS” in the Official Statement.
Clinics and Other Facilities Operated by the Hospital. The Hospital has developed a network of 10 primary care clinics, 14 specialist clinics and 10 rural clinics staffed by Hospital physicians to offer medical services throughout the Hospital’s primary and secondary service area. The rural health network of the Hospital is an important source of patient referrals, providing 23% of all patient referrals to the Hospital from outside of Lawton. The clinics are normally staffed with a physician, nurse and receptionist. Rural health clinics, as provided by law, are staffed by a physician assistant or nurse practitioner supervised by a physician. The physician assistant will have a nurse and receptionist as well.
Licenses, Accreditation, Certifications and Membership
The Hospital is accredited by the Joint Commission on Accreditation of Healthcare organizations (“JCAHO”). The Hospital was most recently surveyed in 2004, receiving a three-year accreditation.
The Hospital holds licenses from:
• The State Board of Health of the State of Oklahoma;
• The United States Department of Justice — Controlled Substances;
• The Oklahoma State Bureau of Narcotics and Dangerous Drug Control; and
• The Oklahoma State Department of Environmental Quality — Radiation Management.
The Hospital is accredited or certified by:
• The Joint Commission for Accreditation of Healthcare Organizations;
• The American College of Radiology;
• The American Association of Blood Banks;
• Commission on Accreditation of Rehabilitation Facilities;
• The National Association of Radiological Technologists — An X-Ray Technician school conducted by the Hospital in association with Cameron University; and
• The College of American Pathologists — A Medical Technologist School conducted by the Hospital in association with Cameron University.
The Hospital is also a member of the following organizations:
• Oklahoma Hospital Association
• American Hospital Association
• Voluntary Hospitals of America
• Oklahoma Community Healthcare Alliance Comanche County Memorial Hospital Foundation
The Comanche County Memorial Hospital Foundation (the “Foundation”) was established as a not-for-profit corporation in 1993 by the Board of Trustees of the Authority to advance the charitable, scientific and educational purposes of the Authority and to fund such advancements through the organization and solicitation of financial support for the Hospital through current and planned giving.
A-4 The Foundation also was established to create and manage programs to provide medicine, equipment and nutrition to patients in need, as well as funds to refurbish and replace items required for patient care.
The Foundation hired an Executive Director in September 2001 to identify and cultivate potential donors to support its mission. The funds raised by the Foundation cannot be used for any purpose other than to support the mission of the Comanche County Hospital Authority. Prior to the engagement of the Executive Director, the Foundation had not actively sought donations to support its mission. For the fiscal years ending June 30, 2006 and 2005, it received contributions of $392,206 and $283,283, respectively. Contributions funded the provision of health program services and the management and administrative costs of the Foundation. As of June 30, 2006, the Foundation has Net Assets of $757,027.
The Foundation is governed by a Board of Trustees currently consisting of thirty members. The current members of the Board of Trustees for the July 1, 2006 — June 30, 2007, fiscal year are as follows:
Board Member Occupation Effective Date
Term Expiration July
Current Term
Ed Dzialo, Chairman Attorney July 1996 2008 Fourth
Diane Denhan, Vice Chairperson Stock Broker April 1999 2008 Third
Larry Benson, Sec./Treasurer Banker April 1999 2008 Third
Martha Lou Lawson Former Hospital Board Member 1993 2008 Fifth
Richard Boatsman, MD Pathologist 1993 2008 Fifth
Pat Henry Business Woman/Board Member April 1999 2008 Third
Linda Bridges CPA April 1999 2008 Third
Hugh Payne Architectural Landscaper April 1999 2008 Third
Cliff Brady Business Owner July 2003 2009 Second
Wallace Coffee Chairman, Comanche Nation July 2003 2009 Second
Betty B. Graybill Retired Physician’s Wife July 2003 2009 Second Cassandra Johnson Business Woman/Physician’s Wife July 2003 2009 Second
Hossein Moini Business Owner July 2003 2009 Second
Faith Ofori Physician’s Wife July 2003 2009 Second
Wayne “Duty” Rowe Rancher/Retired Board Member July 2003 2009 Second
Steve Cothren Athletic Director, LPS July 2004 2007 First
Clayton Green Business Owner/Board Member July 2004 2007 First
Edward Legako, MD Pediatrician July 2004 2007 First
Colleen Longacre PR Person for Wal-Mart July 2004 2007 First
William Jolly, MD Retired Physician July 2004 2007 First
Vickie Campbell Homemaker July 2005 2008 First
Kim Dodds Radio Management July 2005 2008 First
Kitty Dutcher Homemaker July 2005 2008 First
Larry Patton Television Station Manager July 2005 2008 First
Nancy Pontikes Homemaker/Physician’s Wife July 2005 2008 First
Gerald Stadler Banker July 2005 2008 First
Terry Bell Business Owner July 2006 2009 First
Darrell Jones Business Owner July 2006 2009 First
Simone Schutz Homemaker/Physician’s Wife July 2006 2009 First
Liz Wyatt Homemaker July 2006 2009 First
The Foundation is not considered a component unit of the Comanche County Hospital Authority.
Consequently, its financial position is not included in the financial statements of the Authority, and it issues its own separate financial statements reporting financial position, revenues, expenses, changes in net assets and cash flows.
Affiliations
The Hospital has entered into a joint venture with Jackson County Memorial Hospital and Duncan Regional Hospital to form a limited liability company to build and operate a Radiation Oncology
A-5 Treatment Center. The hospitals have joined together in this venture as a means of coordinating the provision of such care and avoiding the duplication of such service in southwestern Oklahoma. The limited liability company is expected to acquire a linear accelerator and locate it in Lawton, with branch offices located in Altus and Duncan, Oklahoma within the next three years.
The Hospital, in association with Cameron University, operates a Medical Technician School on its campus. The school was created with the goal of training students to be medical technologists that, upon graduation, may be employed by the Hospital. Graduates number six to eight per annum.
Cameron University’s registered nurse training program is conducted in cooperation with the Hospital, using many of its facilities and, along with the Great Plains Area Vocational-Technical School practical nursing program, which also uses the Hospital for practical training, provides a source of registered and licensed practical nurses for employment by the Hospital. Other vocational programs in affiliation with Great Plains Area Vocational-Technical School are respiratory technologist, radiology techs and surgical techs.
The Hospital has developed programs with area schools to assist students in preparing for a career in the field of healthcare. The Hospital conducts a program with Caddo Kiowa Technology Center in Fort Cobb, Oklahoma, and Red River Vocational-Technical School in Duncan, Oklahoma, to train licensed practical nurses and with the University of Oklahoma, Norman, Oklahoma, for physical therapy and occupational therapy students. The Authority is also conducting programs in conjunction with Southwestern Oklahoma State University, Weatherford, Oklahoma, for medical records students and a training program for pharmacy students.
The Hospital has a family practice residency program affiliated with the University of Oklahoma School of Medicine.
The Hospital offers a diverse array of low cost or no-cost programs to the community as part of its charitable mission and to serve its community. Through the provision of these programs, the Hospital’s support within the community is enhanced and strengthened. Programs provided by the Hospital include, but are not limited to, the following:
• Prenatal Classes;
• Prostate Screenings;
• Sports Injury Clinic; and
• Depression Screenings.
In addition to providing services directly to the community, the Hospital also makes gifts-in-kind, food, and monetary contributions in support of community endeavors to prevent and treat medical conditions of all kinds in an effort to build a stronger, healthier community. Among the organizations and programs supported by the Hospital are the American Heart Association, American Cancer Society, Asthma Camp, Boy Scouts of America, American Diabetes Association, Lawton Food Bank, March of Dimes, MS Foundation, United Way Agencies and the YMCA.