But in order to finance the diverse project, permission would be needed to lower financial performance ratios established by the Montezuma County Hospital District board under pressure by the county commissioners.

"We may need to seek temporary relief from the ratios to allow for construction costs," said CEO Bob Peterson Thursday. "We are in the process of determining what our hospital can afford to do, and how the revenue stream would benefit."

The public hospital’s non-profit operating arm, Southwest Health System, is required to meet benchmark levels for cash flow and profitability that are comparable to similar-sized hospitals in the state. SHS has been doing so, but financial numbers would drop while SHS pays off improvement loans being considered for upgrades.

Specifically, the Return on Assets would drop below the 37th percentile for hospitals of similar size. The ratio gauges how much money the hospital is earning on its investment. The decrease would trigger lease language requiring correction of attributing problems and a date of return to appropriate levels in order to avoid default.

Peterson said the community, the county commission and the district board will know upfront if SHS plans will drop the ratios. A performa would be developed that shows when the ratios would be back up if that is the case.

Efforts now to streamline and improve operations will in the long run bring more patient volume and hospital stability, Peterson said. While newer than most hospitals, the 60-bed, acute-care hospital and 72-bed adjacent nursing home were constructed in 1974. A $1.3 million ER expansion, completed in 2000, is the only significant expansion since then.

The proposed investment would extend its lifetime at least another 15 years, Peterson said. More importantly, it would adjust services to a rapidly advancing industry that focuses on high-tech, outpatient care versus the long-term hospital stays of the past.

"We want the ground floor to be totally dedicated to outpatient services because that is 50 percent or more of our business," Peterson said. "Patients need readily accessible diagnostic testing in this age, so we need to organize the building to accommodate that in a more consumer-friendly way.

"Right now it seems that it costs us as much in labor and costs for an outpatient procedure as it does for an (overnight-stay) inpatient, so we are working to turn that around, as all hospitals are," he said.

To help make room, SHS is negotiating to buy the empty Heilig-Meyer building in downtown Cortez for home-health and physical-therapy services. Storage, accounting and administration offices would also move over.

A price is still being discussed for the 27,000-square-foot building, which is listed at around $500,000. Financing would be over 10 years at 5 percent interest. One hundred thousand dollars would be paid for upfront. Remodeling the building to suit needs would cost an estimated $270,000.

Currently, rehab is located at a Cortez Shopping Center rental, but Southwest is better off to build equity in property than pay rent every month, Peterson said.

"We will save $150,000 on physical-therapy rent and modulars that we would not have to purchase for administration during the remodel process," he said.

Exact costs and needs are still to be discussed by hospital staff and management.

"A lot of it is infrastructure needs like boilers and remodeling in order to improve patient flow. It is a matter of efficiency for us and it will translate to a better service for community needs," Peterson said.

Money-makers like radiology will likely see expansion to the west. Upstairs, the birthing center is looking for more room so additional staff can be hired to handle local demand.

The hospital will expand non-medical services into the current Vista Grande nursing home once its management, Greeley-based Continuum, constructs a new one on campus as planned.

At the request of the district board, SHS developed a master site plan for the Southwest campus. A 12-acre development zone for medical office buildings was set aside. Already the district board has had requests from doctors to either buy or lease the land for their offices.

The site plan will be submitted to the city for approval.