Chillicothe, Mo. - Medical Services

Faced with a deteriorating infrastructure in its only hospital, Chillicothe, Mo., officials had to find a way to build a badly needed, modern replacement without overburdening the city’s financial base and possibly hurting its access to the bond market. They were seeking to preserve the community’s medical, as well as its fiscal, health.

Through a private/public partnership and the help of local foundations (and despite a national recession), the small town of 9,500 residents opened the doors of a gleaming new $41 million facility in February 2014, on time and on budget, providing a 21st century medical center for the city and surrounding communities. For its foresight and innovative financial solution, Chillicothe is designated a Crown Community for Medical Services.

“This project stands out for its unique financing, the city council’s willingness to tackle this costly and complex issue during an economic recession and its great success,” says Ike Holland, the city administrator. “It’s not the usual thing in a rural community.”

The city’s financing program involved three components. First, the city created an Industrial Development Authority under state laws so that bonds were not issued as an obligation of the city. Second, the city created a partnership with St. Luke’s Health System, a large Kansas City-based health system to operate the hospital and pay the city sufficiently to cover the cost of the revenue bonds issued to fund the project. Finally, a group of private foundations donated sufficient funds to augment cash the city had on-hand to allow it to purchase the property for the project.

After two years of construction, the city has a modern, 80,000-square-foot outpatient-focused facility with two procedure rooms, two operating rooms and a trauma unit. With 25 patient rooms, residents no longer have to drive 90 minutes to Kansas City for tests and procedures. A 5,000-square-foot medical office building has also been built next door, and the city has received more than $1 million to landscape a healing garden on the property that will be a resource for the entire community. The city is working on plans to demolish the old hospital to develop the site for nonmedical uses.

“It was a bold move,” Holland says, “but it will really pay off in the next couple of years.”