County hospital losses

The 2014 financial statements are out for our county hospital.

The hospital’s revenues are about $299 million each year, $82 million of which comes from property taxes.

Massive losses

The results show the hospital losing $72 million last year.  They would almost have to double our property taxes to break even.

Of the $72 million loss $60 million was due to recognizing the inability of the children’s hospital to pay what the county hospital says they owe.

That still leaves a $12 million dollar loss from normal operations.

The problem with the children’s hospital is one of the county hospital’s own making and we are going to have to pay for it.  Even if someone finds a way to turn that situation around we are still faced with a county hospital that is running at a significant loss.

We deserve better

Brutus

18 Responses to County hospital losses

  1. Reality Checker says:

    One of Valenti’s apologists who comments here would have us believe that Valenti and UMC’s board have not had a hand in the the development, oversight, or management of Children’s Hospital.

    The following is excerpted from Valenti’s bio on the UMC website:

    “He is …. currently a member of the Board of the Medical Center of the Americas Foundation, El Paso Children’s Hospital and …. “

    So, either he considers himself part of CH board and management or his bio is padded. Which is it?

    These following two excerpts from UMC board committee minutes also provide some insight into how Valenti and UMC hand a hand in the development of the CH pro forma and the budgeting for CH, particularly the budgeting for reimbursements to UMC. The second excerpt shows that UMC’s investment committee actually chose to operate as a bank four years ago, lending operating funds to CH and charging interest on those funds. Since some of the monies loaned to CH would eventually flow back to UMC, I am scratching my head trying to figure out how this is different from a Ponzi scheme. Does UMC’s charter allow it to make loans?

    EXCERPT FROM MINUTES OF THE UMC BOARD OF MANAGERS FINANCE COMMITTEE MEETING, OCTOBER 26, 2010

    “Mr. Valenti explained that they have been working hard to get the Children’s Hospital Pro Forma updated and the impact this will have on UMC. Mr. Westfall has been here over the past week meeting with department managers to assess volumes and expenses.

    The goal is to put together a budget for 2012 while also working with Mr. Gjerset and Mr. Ramsey on the UPL and DSH models for the Children’s Hospital. Mr. Valenti added that there are things that are now known versus what was known in 2007 such as the current economy, the Health Reform and its implications, the Texas shortfalls. The DSH dollars for new Children’s Hospitals has a trailing 24 months period for reimbursement of the expenses. There is also the hematology/oncology package that was not included in the initial assessment done of the systems that would be required for the Children’s Hospital that would need coverage however it was not budgeted.

    There are more physician salaries than in the original Pro Forma and how to count that as cost based reimbursement. They are looking at individual physician specialties to be moved out further. This information has been provided to the Children’s Hospital. Mr. Nuñez added that once the Children’s Hospital Pro forma has been finalized he would be able to apply that information and update the District’s pro forma and present this at the December P&D meeting.

    EXCERPT FROM MINUTES OF THE UMC BOARD OF MANAGERS FINANCE COMMITTEE MEETING, APRIL 28, 2011

    “Mr. Valenti stated that Mr. Duncan and Mr. Mier of the Children’s Hospital have been preparing a chart for each of the major areas from regulations to medical staff, etc. with dates until the opening of the hospital. This provides a roadmap for his board to follow and assess of which Mr. Valenti is a member of a committee, set up as well as Ms. Mary Lou Camarena and Ms. Rosemary Castillo.

    A template of the 8 areas will be brought next month to this committee as it has a date and time for implementation of the different actions required. Mr. Valenti added that during discussion at the Investment Committee it was agreed to request that the Children’s Hospital pay 4.8% interest on the funds that are forwarded to them for operations. This is the current lending rate for the bond and it will be incorporated into the contract with that entity. Mr. Sosa added that they are working with Ms. Vogel on the different areas and there is no timetable available for when the contract will be drafted.

    There was additional discussion on the pro forma and Mr. Nuñez noted that as a result of discussion at the P&D Committee and the volume forecast will be amending the previous version of the pro forma. For FY 2012 they will be proposing flat volumes somewhat similar to what they have been for the past 11 months. They will begin to show growth in volumes in years 2013-2015.”

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  2. It is all simply overwhelming, isn’t it? Who the hell cares about our economic development, and why is that always the theme? When the hell are our local “leaders” going to realize that if we have a strong and viable, well-maintained infrastructure; if we take care of ensuring a decent quality of life, then growth can be natural and it can be handled. Instead, we have idiots clamoring for our tax dollars, so they can squander them on projects that they think is good (for their own already rich friends, yes), and ignore what is more important. Does anybody around here remember that UMC has even managed to piss off the Texas Tech Medical School folks to the point that they are involved in building a new hospital on the far West Side? Why do you suppose that has happened?

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  3. Xavier Miranda says:

    Aside from writing up the case for the Feds, how do we put a stop to this?

    Really!?

    Our spiritual, education, health, political, and economic systems have been co-opted. Our kids grow up accepting such abhorrent practices, and end up being exploited in some form or another.

    There are some good folks running for office, we need to reclaim our government, re-direct the outrage in a constructive manner, and sustain engagement.

    The blogs are a COMMONS that fill the void left by a co-opted media—continue to motivate.

    Xavier Miranda

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  4. Jerry Kurtyka says:

    The results show the hospital losing $72 million last year.
    ————————————————————
    They’ll probably give Valenti another raise and bonus 🙂

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  5. Haiduc says:

    To all concerned;
    The EP Children’s Hospital has an Independent Board who is responsible for its actions since it opened and sorry to tell you all Mr Valenti is not in control of this board. If Children’s paid it bills then UMC would NOT be in the RED.
    PS: Children’s is not a Public but non profit private hospital and is only talking “BANKRUPTCY” which is not good for El Paso kids!!

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    • Brutus says:

      The financials say that if children’s did pay the bill the county hospital would still be $12 million in the red.

      Brutus

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    • Jerry Kurtyka says:

      How is it that the $120MM bond issue for CH is on our public nickel but it’s a private hospital? No one seems to be able to answer that question. It appears to be set up as a slush fund that was to generate cash for UMC but avoid public scrutiny by way of an ORR, except it backfired on its designers.

      It makes me wonder how many other entities around town are or will be similarly structured? Stadium? Arena?

      It has become clear that the complexity and size of public institutions here overwhelm the ability of unsophisticated politicos and boards to manage them, especially when they are compromised by agendas of fraud and cronyism. We now have two school districts that have collapsed (EPISD & YISD) and a childrens hospital with maybe UMC to fall next.

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    • Reality Checker says:

      Sorry to tell you, but you’re so focused on defending Jimmy boy and UMC that you are conveniently leaving out some of the facts about the roles UMC and Valenti played in the development and structuring of CH and the ongoing incestuousness of the two organizations.

      You conveniently leave out the fact that UMC board chairman William Hansen served on both the UMC board and the CH board simultaneously until April of last year. You also conveniently leave out that the UMC Foundation is the so-called “charitable” foundation for CH. In other words, UMC takes in money from people wanting to donate to CH, a nice way of UMC raising “charitable” donations that it thought would flow back to UMC.

      Valenti was driving the CH train from the very beginning, especially as it related to pushing through the bonds to pay for the CH, which conveniently benefited UMC. He asked the taxpayers for the money, then used that money for UMC’s benefit to expand UMC’s facility, which UMC could then lease to CH.

      http://www.epcounty.com/judge/epincchildrenshosp.htm

      This article suggests that UMC strategy — i.e., Valenti’s strategy — to set CH up as separate entity with a Chinese wall of governance was to game the system to gain maximum reimbursements, which would enable UMC to charge CH maximum rent and fees.

      Here is an excerpt from the above article:

      …..

      “Why is it necessary that the children’s hospital have a separate board of directors, as well as separate administration and staff?

      In a word, money.

      When the children hospital’s governance becomes distinct from Thomason’s, it qualifies for preferential reimbursement from Medicare and the Texas Medicaid program.

      Hospital officials estimate that designation will allow the children’s hospital to bring in an estimated $7.5 million in additional money.

      The hospital will have to duplicate Thomason’s board, administrative officers and other services.

      “But that’s a small price to pay for bringing in another $7.5 million. That’s a lot of money that isn’t here today to support pediatric care,” said Thomason CFO Rivera.”

      ….

      One could argue that Valenti and UMC had a conflict of interest from the very beginning. I believe they structured the CH lease agreement and services agreement based on what they though they could suck out of CH.

      What UMC and Valenti didn’t anticipate was that they would be unable to control the CH management and board.

      Brutus’s numbers are straight out of UMC’s audited financials. I, too, have looked at them. If you’re telling us that those numbers are wrong, then UMC’s audited financial statement are misrepresented.

      UMC isn’t the first organization to use to structure a non-profit entity and relationship for the financial benefit of the parent entity, but that doesn’t mean that it is moral or ethical.

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      • Jerry Kurtyka says:

        Wall Street banks used off-balance sheet entities to play the mortgage casino game pre-2008. Citibank was the poster child for this vehicle that collapsed and forced a taxpayer bailout. Who’d of thought someone in El Paso was smart enough to do this for a public hospital?

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        • Reality Checker says:

          Jerry, I brought up SPEs and off-balance sheet financing a week or two when EPISD announced their plan to use that as an end-run to finance the new central Taj Mahal. As I mentioned then, Enron was actually the poster child for those scams much earlier than 2008 and that’s probably where our state legislators got the idea to pass legislation that made SPEs prrmissible for government entities. We know how things turned out for Enron.

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  6. Reality Checker says:

    Two of the quotes in the Times story are attributed to members of its own community advisory board, neither of whom have experience or knowledge relevant to this situation. What’s up with that?

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  7. Helen Marshall says:

    In the Times story today: “If the Children’s Hospital goes under, that is just another giant obstacle to economic development,” said retired Brig. Gen. Richard A. Behrenhausen, a member of community advisory board, said, “Where is the mayor and county judge? They are about to let a terrible thing happen on their watch. It will set our economic development back 10 years.

    “What a horrible thing for a city — a failed school district and a failed children’s hospital,” Behrenhausen said referring the scandals in the El Paso Independent School District.

    “You are three weeks away from disaster and the city is therefore three weeks away from disaster,” he said. “What a terrible morass we’re in.”

    Where are they indeed???

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  8. Reality Checker says:

    Valenti helped structure the Children’s Hospital deal. It was also on his watch that CH ran up all the debt they now allegedly owe to UMC. Yet the performance review which was the basis for Valenti’s big bonus last year, included this footnote:

    “If UMC financial performance is impacted negatively by CH (Children’s Hospital), CEO rating will not be affected.”

    They gave him a 96.9% score on strategic planning even though his CH strategy has proved to be flawed.

    This proves once again that the UMC board is serving Valenti personally, not the taxpayers. They structured and worded the review to justify the bonus. They knew full well there was a major problem with the CH debt and the impact of that debt on UMC’s own financial health, yet they paid him hundreds of thousands of dollars in bonus anyway and actually excused him from being accountability for those problem.

    They also scored Valenti 100% on Care Management and 100% on Patient Satisfaction. It’s nice to know that UMC is perfect in those areas and has zero room for improvement. (They must not have considered the woman who was subjected to dehumanizing body cavity searches and later sued UMC.)

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  9. Gambling County says:

    No surprise here. This is a perfect example of what happens when officials are allowed to run amuck with your money. Must be nice to spend other people’s money to build a personal legacy.

    This is just the beginning, a preview of what is or will be the legacy. I suppose one can state the never ending goal of looking like some other city will be accomplished. Detroit comes to mind.

    And the “officials” look surprised when they experience difficulties in attracting industry and families. This is just one reason to not relocate to El Paso. A quick review of what is in the news. Hospitals in a financial mess, multiple school systems-each with its own problems such as mismanagement and pedophiles. Renovation of the downtown thatincludes destruction of history, wasteful spending and the Plaza that leads to nowhere, refusal to speak English and rudeness towards non-spanish speakers, a city that insists on saving its neighboring city although it is in another country-so we have more expenditures than we have revenue, infrastructure that collapsing while the official buy plastic pink flamingos for decoration or discount Christmas lights. There’s a lot more, too many to list.

    The most visible is the number of officials doing time and officials receiving preferential treatment from the legal system.

    But, some of you will not bother to vote or vote “as told” which results in the same people being re-elected or simply changing chairs despite the mess left at the last position. So whose fault is it?

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    • Reality Checker says:

      All good points. I agree with pretty much everything you said. However, the hospital debacle is less a case of building personal legacy and more a matter of building someone’s personal bank account without any consequences for failure or poor performance.

      With regard to voting, I believe most of the readers of this blog are responsible individuals who care, thus they do vote and do not let others tell them how to vote. Undoubtedly, the city has a lot of non-voters and lemmings, but they couldn’t care less about the issues discussed in this forum.

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    • Jerry Kurtyka says:

      “It’s All Good”, remember?

      Like

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