El Paso Children’s Hospital: UMC has secret salvation plan

By Aileen Flores
El Paso Times
Originally published June 17, 2014

University Medical Center is proposing a secret plan to save El Paso Children’s Hospital before it is forced to close because of its financial problems.

On Tuesday, the UMC Board of Managers sent a letter to children’s hospital’s Board Chairman Sam Legate stating that the children’s hospital is not able to maintain itself financially and it’s unable to meet its current obligations to UMC and other providers.

“This situation creates an immediate risk that one or more of these service providers may cancel existing agreements and possibly trigger an immediate and unplanned closure of the Children’s Hospital,” the letter states. It did not elaborate on the other providers.

The letter continues by saying: “UMC cannot continue to provide (El Paso Children’s Hospital) with the hospital facility, equipment and services at not cost without seriously endangering the financial stability of UMC in the very near future.”

The children’s hospital’s debt to the UMC for rent and services has reached $71 million, according to the three-page letter. The children’s hospital, an independently licensed medical facility, stopped paying to UMC earlier this year.

Even though UMC has continued to provide the services to the children’s hospital in hope that its financial condition will improve, the reality is that the hospital is “insolvent,” the letter says.

“In light of all of the above, the UMC Board has authorized our legal counsel to submit a confidential proposal we believe presents a fair and equitable framework to find a solution for both parties,” the letter states.

El Paso Children’s Hospital has until Monday to respond.

Susie Byrd, a former city representative and new spokeswoman for children’s hospital, said the hospital’s board was to meet Tuesday night and was expected to finalize a separate plan. She said the plan will be presented shortly to UMC and to the public.

“UMC’s Board sincerely hopes that our counterparts at El Paso Children’s Hospital will work in good faith with us to preserve and protect the highly regarded and sorely needed clinical programs at El Paso Children’s. Those programs have had a profoundly positive impact on the children of our community. UMC’s aim is to avoid any disruption of those services. UMC also seeks to protect its own financial viability,” William Hanson, chairman for the UMC Board of Managers, said in a statement.

Hanson encouraged children’s hospital officials to agree to the UMC plan since it’s the best solution for both parties, he said.

The decision to keep the proposal secret comes a week after the UMC Board of Managers did not take action on a request by children’s hospital to approve a confidentiality agreement between the hospital and UMC CEO Jim Valenti.

At the time, El Paso Press Club and Channel 7-KVIA opposed the proposed confidentiality agreement, asking the UMC to maintain discussion related to the Children’s Hospital financial situation public.

UMC board members then said they agreed with the media statements and that it was the reason they did not vote on the item.

The UMC Board of Managers decided to have the attorneys deal with the debt issue.

The UMC Board of Managers hired Rose Norton Fulbright, an international firm, to address the problem. The expected range of rates for attorneys working on this matter will be $300 to $600 an hour, said Margaret Altohff-Olivas, a spokeswoman for UMC.

On Tuesday, Altohff-Olivas said in an email that UMC officials cannot discuss the specifics of the plan because the proposal is “an attorney-client privileged communication to the lawyers for EP Children’s.”

“UMC’s Board believes that negotiations between the lawyers have the best chance for success as opposed to negotiating a potential resolutions to the issues in the media,” she said.

Kelley Shannon, executive director of the Freedom of Information Foundation of Texas, said, “Anytime they are talking about taxpayer money and how it’s used, that is of high interest to the public. A governmental body needs to be very transparent and open with the taxpayers.

“If there is no litigation or anticipated litigation at this point, it’s hard to imagine why the attorney-client privilege would be cited on information kept secret. It’s a very basic concept that the spending of taxpayers’s money is of public interest,” she said.

In 2007, voters approved a $120 million bond issuance to build and equip the children’s hospital with the understanding that it was going to be financially solvent. The hospital opened in 2012.

If it is forced to close, the building will remain the property of UMC, County Judge Veronica Escobar said last week.

“If children’s fails, the failure, the impact of that will be more of a community and regional impact, not necessarily a taxpayer problem, but a family problem. That means we go back to not having the specialists and sub-specialists that our families need and deserve,” she said.