Following budgetary challenges, JPS Health Network leaders are working to stabilize the hospital district’s finances to ensure completion of its expansion projects.
JPS’s board of managers unanimously agreed to transfer $303.4 million from the hospital district’s operating cash to the JPS Future Fund Dec. 12. The future fund is money set aside for the purpose of major renovations identified and approved by the board.
Dr. Karen Duncan, CEO and president of JPS, said the transfer is needed to “mitigate the risk” around the completion of the hospital district’s master facility plan.
JPS’s master facility plan details new facilities including a medical home, psychiatric emergency center, medical outpatient building, parking garage and new hospital towers. The plan is supported by an $800 million bond package approved by voters in 2018.
Hospital leaders initially estimated the entire expansion project would cost $1.2 billion — funded by the bond package and the hospital’s own funds. In 2022, that estimate rose to $1.5 billion.
In August, board managers were informed the total cost of JPS’s master facility plan would jump about 40%, to a project budget of $2.1 billion. JPS will now have to find an additional $600 million to pay the bill.
Labor costs, the price of materials and inflation affecting the entire health care industry fueled the higher price tag, Cameron Geertsema, program manager with Broaddus & Associates, previously told the board during an Aug. 22 meeting. Progress also slowed due to the COVID-19 pandemic, Duncan previously told the Report.
Because of financial changes and reprioritization, JPS has since removed three planned medical homes that were included in the original proposal from its master facility plan.
During the Dec. 12 meeting, interim Chief Financial Officer Rory McCrady said there was roughly $200 million still needed for the remainder of the construction projects.
“Dr. Duncan and I did discuss this extensively about what the right strategy is and really feel it is a good opportunity to go ahead and boost that future fund given the construction needs and the targets there for the overall project,” McCrady told the JPS board of managers.
The transfer brings the JPS Future Fund to $1.12 billion. The approval also lowers the hospital district’s operating cash reserves from $1.136 billion to $833 million.
Duncan echoed McCrady’s points, adding the additional funds could also be used for strategic growth in the future.
“It does give us an opportunity, if we do have new initiatives, to look at where we’re at financially, and ask for board approval to redesignate for a future strategy,” she said.
For Roger Fisher, chair of the board of managers, the growth in the JPS Future Fund spurred confidence in the hospital district’s ability to finish what it started.
“Being able to move this much money and be so very close to the ultimate goal of the $2.1 billion, it should give our county commissioners and all residents of Tarrant County (relief) that we are fiscally responsible and we can deliver the promises that we made,” he said.
The first project in the JPS master facility plan, Medical Home Southwest Tarrant, is set to open in early 2025. A ribbon-cutting ceremony for the clinic will be held Dec. 18.
The hospital district’s next project, the psychiatric emergency center, is set to open in summer 2025. That project will increase the hospital district’s behavioral health capacity from 30 beds to roughly 90.
The master facility plan will conclude with new hospital towers in winter 2029 — more than a decade after the approval of the bond package.
David Moreno is the health reporter for the Fort Worth Report. His position is supported by a grant from Texas Health Resources. Contact him at david.moreno@fortworthreport.org or @davidmreports.
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