- change ups
Hospital Namesake Family Donates $76M
GRAND RAPIDS — The new Helen DeVos Children’s Hospital is, in fact, Helen DeVos’ children’s hospital, based on the magnitude of the gifts made by the four adult children of Amway co-founder Rich DeVos and wife Helen.
With siblings Dan, Dick and Doug DeVos and Cherie Vander Weide providing a total of $50 million toward the $190 million hospital facility, Spectrum Health’s fundraising campaign is well under way. In addition to the gift from the DeVos children and their spouses, Spectrum’s foundation has collected an additional $26 million in pledged funds from approximately 120 local families, foundations and corporations.
Of the outstanding $114 million, $24 million will be raised in the community and $90 million will be collected in a bond offering, slated to occur by mid-2007.
And while the campaign has reached the three-quarter mark, Spectrum’s fundraising is far from over.
“We still have a long way to go,” said Paula MacKenzie, Spectrum’s director of public relations. “At this point you’re down to looking at every donation, whether it’s $50 or $100.”
MacKenzie said that the final quarter of the charitable donations will probably come in smaller increments than those made by the first several dozen donors. However, she said that the health system is just kicking off its appeals to staff members and others who work closely with Spectrum Health.
Spectrum is not waiting around to collect its funds before beginning its expansion. Anyone who has driven along Michigan Street can attest that the construction of the new hospital is underway, a few hundred yards from Spectrum’s other major project: the Lemmen-Holton Cancer Pavilion. Before construction begins on any project, Spectrum CFO Mike Freed has laid out a specific financial plan.
“As we put a shovel in the ground, we want to have as much of this lined up as possible,” he said.
Freed said that Spectrum has employed a multi-bank syndicated credit facility in order to fund the initial construction of the hospital. Once the full $100 million has been collected from donors, he will pay off the credit facility and move forward with the bond offering.
Freed said that the overall financing package, with its $100 million in charitable contributions and $90 million in bonds, was designed with the intent of maintaining the health system’s double-A credit rating. That is the second-highest available grade from credit-rating authorities Moody’s and Standard & Poor’s. The mix of charitable giving and borrowing in the children’s hospital construction help Spectrum’s debt-to-capitalization ratio stay at a healthy level, which in turn keeps its credit at a high level.
“That (ratio) will spike up when you borrow. And because we’ve had so many things, as you’ve seen around town, going on, we try to slow this (process). We can’t say, ‘Well we’re going to build a bunch of buildings,’ and throw a bunch of debt down on the balance sheet,” Freed said.
Instead, Spectrum spreads out its capital outlays over the course of multi-year expansion plans. That allows the system to grow without becoming over-leveraged and endangering its credit rating.
“We size things up with everything else that’s going on and say, ‘I don’t want to be out there with a $200 million, or $190 million project borrowing all of it. What can I borrow and still be comfortable doing all of the other things we need to be continuously doing here?’” he said. “That’s how the number came about.”
Although the fundraising campaign has not yet reached its mid-point, Freed said that the organization is excited about its progress.
“We feel very good about where we are. This is so exciting. This is really the kind of thing that happens once in a lifetime,” said Freed.
The Helen DeVos Children’s Hospital is scheduled to open in 2010. The $78 million Lemmen-Holton Cancer Pavilion will open in 2007.