St. Charles Health System plans to issue $100 million in bonds for upcoming projects

(Update: Adding video)

Bend, Redmond hospitals to benefit; system's 5-year plans total $315 million

BEND, Ore. (KTVZ) -- St. Charles Health System confirmed Wednesday it is preparing to issue $100 million in bonds to help fund future Bend and Redmond hospital expansion projects and "maintain a high level of service for our Central Oregon communities."

Deschutes County commissioners, acting in their capacity as the Hospital Facility Authority, will hold a public hearing next Wednesday at 10 a.m. on St. Charles' plans for a bond issuance of $100 million, to benefit a number of projects for both the Bend and Redmond hospitals.

Officials said the bond issue will benefit outpatient services at St. Charles Redmond, with an expansion of their oncology services and a comprehensive cancer center. In addition, some clinics will also be consolidated, so that the space can be used for a medical office building in Redmond.

St. Charles Bend will undergo needed improvements to their operating rooms and catheter labs. In addition, the hospital will consolidate space, and is working to buy land so it no longer has to lease property.

A message sent last week to St. Charles caregivers said the system's five-year plans for routine, infrastructure and strategic capital total $315 million.

St. Charles Health System last issued bonds in 2016.

Jennifer Welander, chief financial officer for St. Charles, told NewsChannel 21 that bond issue was a combination of new debt and refinancing of older debt at lower interest rates.

The new debt of $75 million was used to construct the new patient tower on the St. Charles Bend campus, as well as refurbishments and expansion of its primary care clinic.

The new bonds St. Charles plans to issue by year's end will be all-new debt, and won't refinance any debt from the 2016 bond, she said.

Welander said, "2020 has been a challenging year... I certainly don't make any predictions. But where we are, our financial performance was impacted by COVID in March, April and May. We started to return to a little bit of normalcy in June, and then more in July and August."

Welander said the hospital system just started to break even again at the end of August, and officials are hopeful the stability they've seen the last two months continues through the balance of 2020.

Welander said St. Charles Health System had plans earlier in the year to access the debt markets for bonds, but the pandemic delayed some of their plans.

"This had been our plan, but we now feel we know how to manage COVID," Welander said. "We are now rebooting much of our normal operations."

With interest rates being at historic lows right now, Welander said this is a good time to enter the bond market, despite the volatility on various fronts.

Welander said they have another two to three weeks of planning to do before the issuance of the $100 million bond will be finalized, and the final decision depends on market conditions. The transaction is expected to be completed by October or November.

"If something were to become extremely volatile, in the next day or two or week or two, we can change our plans -- would change our plans and adapt," she said.