Funding a capital project with the magnitude, scope, and complexity of the new University Medical Center of Princeton at Plainsboro (UMCPP) demands meticulous financial planning from concept through completion—and beyond. With the cost of the UMCPP project nearing $523 million, including land, design, engineering, construction, and equipment expenses, Princeton HealthCare System (PHCS) is fortunate to have a talented team handling the funding aspects of this tremendous undertaking. Thanks to prudent oversight, PHCS’s financial performance is consistently strong and well positioned for the future.
Don Hofmann, Chair of the PHCS Board of Trustees and principal of Crystal Ridge Partners, a private equity fund, and David Ertel, Chair of the PHCS Finance Committee and Managing Director at Morgan Stanley, have been indispensable in overseeing the development of the UMCPP financing plan. During regular meetings with Bruce Traub, CFO, PHCS, these three financial experts work with consultants Kaufman, Hall & Associates to set the course for the construction project’s fiscal health. Kaufman, Hall & Associates, one of the nation’s most respected healthcare capital and financial planning consultants, assisted with the comprehensive financing plan, including the 10-year financial projections.
“With an undertaking of this importance to the community, it was critical for PHCS to have all of its funding sources in place at the beginning of the project,” said Mr. Ertel. “The Board, PHCS administration, physicians, and the broader community all worked in tandem to ensure that was the case.”
The financing plan includes proceeds from a balanced array of funding sources, including long-term debt, capital campaign funds, investments, the sale of existing properties, and revenue generated from ongoing operations. “PHCS has been able to reduce long-term debt on the project through very generous community giving and by reinvesting operating income in the replacement hospital,” reported Mr. Traub. “The end result means we are spending less money on debt service or interest expense and can apply the savings to improving the health of our patients.”
Pictured above, left to right: David Ertel, Don Hofmann, and Bruce Traub, overlooking the Renee D. Punia Healing Garden.
Article as seen in Foundation News Winter 2011.