MEANWHILE, SMHD FLUSH
Originally uploaded in the September 27, 2025 edition.
Even as many rural healthcare districts struggle to keep doors open, the Southern Mono Healthcare District (SMHD) remains comparatively financially insulated as it moves forward with financing its $150 million North Wing Project.
Chief Financial Officer Melanie Van Winkle presented an update on the project’s finances to the hospital board in Mammoth last Thursday, outlining plans to raise approximately $50 million through a bond issuance.
The North Wing Project, already underway and slated for completion in 2028, will relocate inpatient and ancillary services, add 12 inpatient beds and four intensive care beds, and house a new Outpatient Services Center.
Financing for the new facility did not rely on the approval of a taxpayer-backed General Obligation bond in November, and is being paid largely through SMHD’s cash reserves.
And now, despite federal policy changes, including a sweeping federal budget package signed July 4 (the “Big Beautiful Bill”) that includes major Medicaid cuts, Van Winkle emphasized SMHD’s financial stability positions it well to absorb federal funding reductions.
The federal cuts, if imposed, would impact the district, but not nearly as severely as other healthcare providers in the region.
By 2027, when cash reserves are projected to be at their lowest point during construction, SMHD still expects to hold $95.5 million in unrestricted cash. This means the hospital could operate for 305 days without any new revenue.
“That’s our lowest point, which is really remarkable,” Van Winkle said. “And reserves begin to build back up in 2028 and 2029.”
That’s a conservative estimation. In the words of Board Vice Chair Ryan Wood, “Even if Trump does his thing and we lose a bunch of money, this is the worst-case scenario.”
The hospital currently relies on about $11.5 million a year from federal funding, and expects to lose up to 30% of those funds, or about $3.5 to $4 million.
To support rural healthcare districts, the megabill also introduced the Rural Health Transformation Program, a $50 billion federal initiative intended to support innovative care models in underserved, rural regions. But Van Winkle doesn’t think SMHD is going to get much from this fund, and expects most health care districts won’t either.
“Thousands of organizations are going to apply,” she said. “Even if California receives a sizable amount, it will be split among all rural providers. I’d be surprised if we even saw $200,000.”
So, she’s not relying on those funds.
Credit agencies remain confident in SMHD’s ability to absorb the impact without jeopardizing long-term stability, Van Winkle noted. Not every healthcare district is so lucky.
As Klusmire reports on page 1 and 6, Southern Inyo Healthcare District is at risk of declaring bankruptcy or imposing significant budget cuts.
Meanwhile, Northern Inyo Healthcare District’s bond rating was downgraded to a ‘B’ by S&P in May, partially due to its reliance on federal resources.
“NIHD’s concentration in governmental payers is […] contributing to its elevated social capital risk, as over 30% of net payers are attributable to Medicaid,” the report states.
In contrast, S&P reaffirmed SMHD’s A- rating with a stable outlook.
Keith Kleven of Piper Sandler, the hospital’s bond underwriter, underscored the significance of SMHD’s rating: “You are among the highest-rated rural access hospitals in the country.”
With this momentum, SMHD is preparing to market its bonds. Bond pricing is scheduled for the week of October 6. Pricing is a one-day event when investor orders are taken and interest rates are locked in, followed by final documentation and the transfer of funds.
Some board members questioned the timing of the issuance, as the Federal Reserve recently cut rates, and reports indicate there may be further reductions. Kleven explained that markets had already priced in the latest cut, and current conditions, including strong investor demand, make this a favorable window.
“I think it’s a great thing the government cut rates,” Kleven said.
Postponing could expose the hospital to political or market volatility. Alternatively, splitting the transaction into smaller sales would incur duplicative fees (approximately 2%, or $750,000 per issuance) and reduce investor appeal. Larger bond offerings, Kleven emphasized, are more attractive and therefore achieve lower interest rates.
The project budget did include one unexpected item: a $625,000 “capital improvement” fee imposed by the Town of Mammoth Lakes.
Chief Operating Officer Mark Lind explained that the charge is consistent with town policy adopted in 2018 to offset the infrastructure impacts of large developments, such as the new Limelight Hotel.
Even with the new fee, however, Board Vice Chair Wood remarked that the revised budget contained “nothing surprising, shocking, or weird.”
