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Our agreement with Blue Cross is simply that if the
vote is no that we have to drop our rates where we can
earn only an allowable 5% and renegotiate. Wo we can't
continue to earn money like this. In fact, would it be
justified if it were not going to improve the facilities that
you own?
Another thing that you've heard, and I'm sure that
you have heard it, is advocating the sale of your hospitals.
The people are talking about being concerned about the rates.
One of the most significant costs today in any business is
the amount of money you have to pay to borrow money, the
interest rate. We can borrow money through using the county's
credit more cheaply than any hospital can anywhere in this
country for this size project. One of the firms that it
has been suggested that the hospital be sold to is Hospital
Corporation of America. May 27th, Wall Street Journal,
$loo million in bonds at 15 5/8% interest, 15 5/8%,
that was the time we were counting on 12%. If you remember
our chart earlier, the difference between revenue bonds and
general obligation bonds was 2% interest. That amounted
in that project to $6 million difference. If we couldn't
borrow money cheaper and if we couldn't run the hospitals
as well, then there would be no justification for the hospital
to continue to serve you other than the fact, and this may be
important, that they are locally owned and locally controlled.
The bottom line, as Dr. Neiters correctly stated, is
called different things. I'll accept the term profit. What
droit 25 PAG, 995