BANGOR, Maine — Eastern Maine Medical Center is selling nearly $150 million in bonds to finance the first phase of an expansion that will add 65 beds to its campus.
The bonds will be sold this week through the Maine Health and Higher Educational Facilities Authority.
The bonds will be sold at a premium, so Derrick Hollings, chief financial officer for Eastern Maine Healthcare Systems, EMMC’s parent organization, estimates the total proceeds will be closer to $160 million.
The proceeds of the sale, coupled with roughly $41 million in cash, will fund Phase One of an expansion that will include the construction of a seven-story patient tower and the fit-out of four of those stories with 32 more beds, additional operating rooms, a new entrance, lobby and an eight-bed emergency department observation area, Hollings said.
Phase One is expected to begin in April with the razing of the Stetson building and is scheduled to be complete by the end of 2015, Hollings said.
Phase Two, which will complete the interior build-out of the seven-story tower, is scheduled to begin immediately afterward and be complete by the fall of 2017, Hollings said. The second phase will cost $90 million and be funded through a $20 million fundraising campaign, $30 million in cash and the issuance of another $40 million in bonds, he said.
EMHS’ board authorized the project in November, nearly five years after it was was approved through the state’s Certificate of Need process in 2008. The hospital currently has about 350 beds.
“We believe the additional 65 beds puts us about where we need to be,” Hollings said. “Patients are having to go elsewhere for in-patient care because we have no beds for them.”
Moody’s gave the bonds a Baa1 rating, its eighth-highest, while Standard & Poor’s gave them a BBB, its ninth-highest. Both ratings are investment-grade.
Moody’s said its positive rating was based on EMHS having a dominant market share within Maine, where it’s the second-largest health care system; the state’s strict Certificate of Need regulations that will limit future competition; and consistently improving operating margins. It said the hospital’s challenges include delayed payments from the state’s MaineCare program, slow revenue growth and moderate operating margins.
Moody’s said its rating did not take into account EMHS’ proposed acquisition of Mercy Health System of Maine in Portland. The rating agency said the bond rating could fall if the acquisition is made.
EMHS consists of seven hospitals that serve more than 40 percent of the state’s residents, according to Suzanne Spruce, director of community relations at EMHS. The seven member hospitals are Eastern Maine Medical Center, its flagship hospital in Bangor; Acadia Hospital, a psychiatric hospital in Bangor; The Aroostook Medical Center in Presque Isle; Blue Hill Memorial Hospital in Blue Hill; Charles A. Dean Memorial Hospital in Greenville; Inland Hospital in Waterville; and Sebasticook Valley Health in Pittsfield.