OVMC Moving Forward With $3 Million From City of Wheeling
Wheeling to Renovate Garage, Tear Down Building
WHEELING — City leaders plan to spend $3 million renovating a parking garage and demolishing a building in Center Wheeling to help Alecto Healthcare Services with its $36 million purchase of Ohio Valley Medical Center –a move some believe helped save about 1,000 jobs in the Friendly City.
“We have not been provided a firm number of jobs saved, but we know that it will be in the hundreds. Prior management of OVMC never indicated to us that closure was imminent, but we were well aware of the hospital’s financial situation and were deeply concerned about what bankruptcy or outright closure could have meant for our community,” Wheeling Mayor Glenn Elliott said of the hospital that had been in a financial crunch for several years.
Wheeling officials plan to use as much as $1.5 million worth of tax increment financing revenue to demolish the former demolish the former nurses’ residence at OVMC, along with as much as $2 million for upgrades and new elevators at the Center Wheeling parking garage. A public hearing on the TIF plan, in addition to establishing a business and occupation tax of 17 cents for every $100 of gross income at the hospital, is set for the next city council meeting at 5:30 p.m. Tuesday on the first floor of the City-County Building at 1500 Chapline St.
“Our hope is that this transaction will allow OVMC to provide continued quality health care, while preserving hundreds of critical jobs for the city and the region,” Elliott said.
In May, city council voted 6-0, with Elliott absent, to enter a memorandum of understanding with Alecto regarding the garage and the former nurses’ residence. Alecto then completed the acquisition of OVMC and its sister hospital, East Ohio Regional Hospital in Martins Ferry, on June 1.
Since acquiring OVMC, hospital personnel have moved forward with new equipment and some necessary maintenance. Just in the last two weeks, officials installed a new Pyxis SupplyStation to facilitate care in the emergency room, along with new vital signs machines and new electrocardiogram machines throughout the hospital.
Documents filed with the West Virginia Health Care Authority show Irvine, Calif.-based Alecto plans to spend at least an additional $20 million for capital improvements at both OVMC and at Martins Ferry’s East Ohio Regional Hospital during the next five years.
“Since the acquisition, Alecto has been working closely with OVMC’s and EORH’s dedicated employees and physicians to identify and begin much needed and long-awaited improvements,” hospital spokeswoman Karin Janiszewski said. “An infrastructure overhaul has also begun at OVMC and EORH, both internally and externally with the remodeling of the facilities — all for the improvement of the overall patient experience and to provide greater access to care for all members of the community.”
Janiszewski said Alecto’s purchase “saved more than 1,400 good-paying jobs” among the Wheeling and Martins Ferry facilities, with the majority of those in Wheeling. She said the hospitals provide work for physicians and nurses working in numerous fields, such as internal medicine, anesthesiology, pediatrics, gynecology, orthopedics, oncology, neurology and cardiology.
“Alecto’s goal is to work with local hospitals and surrounding academic medical centers to have affiliations to provide the highest quality of care to the community,” Janiszewski said. “Alecto is continuing to actively work with physician recruiting firms to bring primary care physicians and specialists to our hospitals.”
“During the period leading up to the purchase, one message was heard loud and clear: Those who live and are raising their families here desire a choice when it comes to their health care. Alecto listened to this message, rose to the challenge, and now is looking forward to the continued support of the community it is striving to serve,” she added.
City, TIF, Garage and Demolition
The memorandum city council approved in May states the city will create a new TIF district that includes OVMC and the garage which is connected to the hospital by a bridge spanning Chapline Street. TIF allows governments to perform improvements to a property by borrowing money against the increased revenue that will result from the property’s increase in value.
Once the TIF district is declared, the city plans to sell about $5 million in bonds, with $3 million to be spent in Center Wheeling. The remaining $2 million would be available for spending at the city’s discretion.
“My hope, however, is to dedicate all or most of these proceeds toward incentivizing future economic development projects in and around our existing and future TIF district,” Elliott said when asked how the additional revenue will be used.
The TIF is possible because Alecto is a for-profit company, while OVMC previously operated as a nonprofit entity. This also allows the city to impose business and occupation tax on Alecto.
“By putting OVMC revenues on the tax rolls, we will have created an additional tax base and funding source for overdue improvements to the Center Wheeling parking garage that the city was going to have to fund on its own, anyway,” Elliott said.
Plans tentatively call for the city to transfer ownership of the garage to the Area Development Corp., which is a nonprofit entity that Wheeling uses to facilitate property deals. The ADC will then lease the 830-space garage to Alecto for $1 per year.
Furthermore, the city will use funds toward the demolition of the former nurses’ residence at OVMC, as city leaders said Alecto plans to construct a new building on this site.
As for how much revenue city officials anticipate from the B&O tax on the hospital, Vice Mayor Chad Thalman said it will be “a significant amount.”
“They will be one of the top five business and occupation taxpayers in the city,” he said, adding the rate of 17 cents is “about double” what Alecto had proposed to pay.
“Until we start collecting the B&O tax revenues from the hospital, we won’t know for sure,” Elliott added regarding the anticipated haul from the new tax.
Wheeling Hospital Reaction
When contacted by the Sunday News-Register to comment on the city’s of Wheeling’s involvement with the OVMC/Alecto transaction, Wheeling Hospital spokesman Gregg Warren said, “Private health care businesses should not look to the city for taxpayer help.”
“The tax funds and TIF financing being provided are not available to Wheeling Hospital to aid its operations or employees. Wheeling Hospital has not and will not request such assistance,” he said.
As a nonprofit entity, Wheeling Hospital is exempt from many taxes, such as B&O.
Warren said if Wheeling Hospital would have been able to acquire OVMC and EORH, all facilities would have remained in operation.
“Wheeling Hospital would have operated OVMC and EORH as it operates its present facilities, consolidating some services, expanding others and would have updated the infrastructure at both facilities,” he said.
However, Thalman said the city could not take the chance on losing the Center Wheeling hospital.
“OVMC was in pretty significant financial trouble. It was very questionable that they were going to make it,” he said. “I feel we needed to do our part to keep it in operation.”