Providence Services, which oversees two of Spokanes major hospitals and others in the region, is asking state health-care facility authorities in Montana and Washington to issue about $241 million in bonds in its behalf.


Proceeds of the bond sales would be used to refinance debt and make capital improvements in the next two years at Sacred Heart Medical Center and Holy Family Hospital here and at seven other Providence hospitals, says Bill Fisher, Providence Services Spokane-based vice president of finance.


Providence Services has asked the Washington Health Care Facilities Authority to issue up to $165 million in bonds, and the Montana Health Facility Authority to issue about $76 million in bonds, Fisher says. The agencies are expected to decide within the next month whether to go ahead with the two bond issues.


Proceeds from the bonds issued by the two states would be used to refinance about $111 million in debt at seven of the hospitals and to fund $130 million in capital purchases at all nine hospitals over the next two years, he says. In Washington, about $93 million of the proceeds would be used for capital expenditures, and $72 million would be used to refinance debt.


In addition to Sacred Heart and Holy Family, in Washington debt would be refinanced for Deer Park Health Center & Hospital; St. Josephs Hospital of Chewelah; Mount Carmel Hospital, in Colville; and St. Mary Medical Center, in Walla Walla. In Montana, debt will be refinanced for St. Patrick Hospital, in Missoula.


The capital expenditures to be financed with the bond sales primarily would involve patient-care equipment purchases at Eastern Washington hospitals, Fisher says. He says the list of planned purchases runs nearly 100 pages long. The Montana issue would fund a new ambulatory services facility at the Missoula hospital and a reconstruction of St. Patrick Hospital, in Polson, Mont.


There are very attractive interest rates right now, and those low rates have spurred the requests for the large bond issues, Fisher says. Our hospitals have low debt, but we want to decrease it even more now, while rates are low.


By refinancing debt and taking on new debt to meet immediate capital needs while interest rates are low, Providence Services hopes to improve its cash position and investment-earning possibilities so its hospitals will be less dependent on patient fees, Fisher says.


Also, the large bond issues will provide nine Providence Services hospitals in two states the same access to capital at the same favorable rates, he says. Each hospital previously had borrowed at the best rates it could obtain by itself. The large diverse group, from tiny rural hospitals to major regional medical centers, should get better interest rates through the state issues and make the bonds more desirable to investors.