The Sound of Your Money Being Spent

El Paso Times is reporting that El Paso Children’s Hospital’s revenue jumped in December:  “After losing an average of $1.85 million in each of the first six months of the hospital’s controversial bankruptcy, Children’s reported to U.S. Bankruptcy Court that it had earned $650,000 in December. Revenue that month increased $3.9 million, or 62 percent, over November.”  That’s good news, right?  At least for the tax payers that is good news, the El Paso Children’s Hospital did well.  Granted, part of that was due to the fact that “Children’s received a $3.1 million payment under the disproportionate share program — which benefits hospitals with a high percentage of low-income patients.” But still, EPCH earned that money because it took care of low-income patients and, honestly, do we care where the money comes from as long as it doesn’t come from us?

HOWEVER, if you’re trying to paint a picture that the consulting company that was helping to run the hospital at that time was incompetent and that they shouldn’t be paid, then this is bad news.  If, for example, you are the El Paso County Commissioners and are using tax payer dollars on lawyers to fight these fees, this ruins the story you’ve been spreading:  “County Judge Veronica Escobar has said the firm did little to restructure the hospital’s operations and finances. She also has said that the hospital went through the expense of a bankruptcy only to end up with a settlement that was similar to one that was on the table in 2014.”

We’ve already spoken about how the two plans are WILDLY different (you can read our post here), assuming that they are talking about the plan that was being considered in early 2015, we’re not sure which plan they are talking about from 2014.  Now we’re hearing that the El Paso Children’s Hospital is doing better.  Yet, Veronica Escobar will continue to spend your money fighting against AlixPartners’ fees.  Is she being a good steward of our money or is she using our money to pursue her own personal vendetta?



UMC Spent $1.9 Million Of Your Money- So Far

The latest El Paso Times article states that $3.5 million has been spent in the El Paso Children’s Hospital bankruptcy case.  HOWEVER, that title is misleading as $3.5 million is what has been spent total by all sides.  Buried in the article is the fact that UMC spent $1.9 million of your money in the bankruptcy case through the end of November of last year.  That is A LOT of money. Add to that the $262,000 the County spent on their own lawyers (mostly to dispute the legal fees being billed by EPCH’s lawyers) and you have $2.162 MILLION  of your money that they spent on this action.  Compare that to the $1.3 million of non-tax payer money that EPCH spent on lawyers.  That means that UMC and the County spent at least 1.6 times as much money (your money) on the bankruptcy as the El Paso Children’s Hospital.  Of course, this number does not include the salary for UMC’s in-house council who was also involved in the case, so legal fees for UMC and the County are actually higher that $2.162 million.

Unfortunately, the bleeding won’t stop any time soon.  According to a KVIA article published on January 11th, Judge Escobar said: “There are hearings for example on the consultants fees and the attorney’s fees. Those final hearings have yet to take place.”  So, expect the legal fees to climb as the County continues to dispute the fees that EPCH lawyers charged for the case.  Again, we have to ask, what did the tax payers get for our $2.162 million?  Will the tax payers get an opportunity to dispute the legal fees that UMC and the County Commissioners built up?

So far we have found out that the new CEO of Children’s, the consultant chosen and approved by UMC and the County Commissioners, will cost $170,000 plus expenses (presumably $10,000 less than the consultant that EPCH had hired) and that the County and UMC have spent 1.6 times as much money on lawyers as EPCH.  Also, County Commissioners are willing to risk losing Medicaid/Medicare money just so that they can maintain control of the El Paso Children’s Hospital.  We have to ask ourselves, why is so much TAX PAYER money being thrown around?  What exactly did UMC and the County Commissioner gain in this fight?


County Commissioners Spend $262,000 of Your Money

Finally, we are starting to find out how much of OUR money was spent during the bankruptcy process.  As we pointed out in a previous post, El Paso County and UMC each had their own sets of lawyers.  Today, the El Paso Times has reported that the El Paso County Commissioners have spent $262,000 “so far, in part to fight professional fees in the Children’s Hospital bankruptcy.”

According to the Times article, the majority of the fees were for the work of Wiley F. James III, who charges $350 per hour.  What did he spend his time doing?  “spent much of his time attending court hearings in the case and challenging professional fees charged by Children’s Hospital’s consultants and its law firm.”

At $350 an hour, he spent approximately 748.6 hours challenging fees and attending court;  that seems like a productive use of tax payer dollars.  Here is what Veronica Escobar had to say about it:  “Our preference, of course, would’ve been to have never had this expense at all,” she said of the legal fees in an email. “However, because the former (El Paso Children’s Hospital) board decided to engage in a costly bankruptcy process, we agreed that the county had no choice but to do everything possible to protect and recoup the taxpayers’ investments.”

How, exactly, has spending a quarter of a million dollars of tax payer money helped to “protect and recoup taxpayers’ investments”? Especially since the County Commissioners’ desire for control will result in the El Paso Children’s Hospital LOSING $5 – $20 million in Medicaid/Medicare reimbursements.

The El Paso Times article states that legal fees for UMC will be available next week.  Stay tuned.


The Rest of the Story

In its January 4th article, the El Paso Times reported that El Paso Children’s lost more than $13 million while in bankruptcy (June 2015 – November 2015).  We thought it would be interesting to see  who was the major creditor in that $13.2 million bucket.

First of all, we’re not sure where the $13.2 million number came from.  We went and got a copy of the most recent filing (document 542) and this is what we found:

EPCH Income

According to EPCH’s filing with the court they calculate their operating loss at the highlighted number above:  $12,820,469, so $12.8 million dollars.  Now let’s look at the payments made to UMC, on page 12 of the document:


If you add up all of the payments made to UMC on line 2, the total is $10,312,076.   Then there are the payments that are still outstanding:

Accrued EPCH

That is another $2,420,503 that is recorded for the month of November.  If we add all of that together, we get $12,732,579 (that’s almost 13 million dollars).  Subtracting $12,732,589 from $12,820,469 we get $87,880.  What do all of these numbers mean?  That means that only $87,880 of the $12.8 million loss is attributable to other creditors.  $12,732,679 ($12.7 million or 99.3% of the loss) is attributable to UMC.  Should UMC be paid for the services it provides?  Absolutely!  Is it fair to blame the consultants that were running EPCH during the bankruptcy for the loses?  We’ll leave that for you to decide.  It just seems that UMC and the County Commissioners have complete control over MANY of these loses that they are blaming on the current EPCH consultants.

We can’t wait for the MIRACULOUS turn around that is about to occur at El Paso Children’s Hospital – UMC and the County Commissioners are going to find all of these amazing ways to cut costs!

Did We Get What We Paid For?

In its latest article, the El Paso Times once again criticizes the consulting company that is running El Paso Children’s Hospital and tells us that the County Commissioners will continue to use your money to dispute payment of AlixPartners’ fees.  According to information we found about Chapter 11 procedures: “The bankruptcy court can appoint a trustee to take over operations from the debtor if it finds sufficient cause. Cause for appointing a trustee includes fraud, dishonesty, incompetence, and gross mismanagement of the debtor’s affairs.”  (You can read more about it here).  If, as the County Commissioners claim, AlixPartners and the hospital’s law firm, Jackson Walker were mismanaging the hospital, why didn’t they petition the court to have them removed for cause?  Instead, they continue to spend tax payer dollars on legal fights over fees.  This implies that their discontent is not with who was running the hospital or how they did it, just with the fact that the people who helped the El Paso Children’s Hospital declare bankruptcy are getting paid for it.

Finally, when are the County Commissioners and UMC going to tell us how much of our money they spent in this fight?  While they are screaming over how much money the El Paso Children’s Hospital spent, they are eerily quiet on what the price tag actually was to tax payers for the lawyers that were hired for UMC and the County Commissioners.  Do we, the tax payers, get an opportunity to argue against payment of those fees?  Did we get what we paid for?

Control Is Better Than Money

We received this letter from a reader when they read our post yesterday on how the County Commissioners and UMC were indicating that they would keep EPCH separate:

VE Letter

We added the highlights.  According to Veronica Escobar, both the County Commissioners AND the UMC board are aware that the plan they put forward makes El Paso Children’s Hospital ineligible for the higher reimbursement rates (i.e. more money) from Medicare/Medicaid under the HwH model.  She thinks that ‘in the end it’ll be a wash’.  Ok, so some questions:

  1.  Would El Paso Children’s Hospitable be eligible for this new funding if it was a HwH?  Wouldn’t this be more money it could receive instead of just replacement money?
  2. We wonder if this knowledge was communicated to the EPCH Board and management or if they let the EPCH board think that they would be a HwH so that they would sign the plan.
  3. What about the projections that were jointly filed with the court?  We know that EPCH put those projections together and that they assumed a high reimbursement rate when they did so.  Did UMC and CCC adjust those projections to fit this new model or did they just lie to the bankruptcy judge?

Honestly, the only thing we’re interested in is that the El Paso Children’s Hospital does not become a tax burden.  But, it looks like UMC and the CCC are setting up a situation where the El Paso Children’s Hospital may be even less viable than it was before the bankruptcy process.  In a few years when our property taxes go up as a result of this, we GUARANTEE that UMC and the County Commissioners will conveniently forget that they had a chance to correct all of this now and they didn’t.

They Will Fight It

In our blog post, Less Than Pleased, we talked about how County Commissioners and UMC were upset that the new consultant for CEO that they insisted on and negotiated the contract for is going to charge El Paso Children’s Hospital $170,o0o a month plus expenses.   From the El Paso Times story : “If the interim CEO for El Paso Children’s Hospital is going to be paid $170,000 a month as stated in federal court documents, El Paso County and UMC officials will fight it, they said.”  However, according to the plan between UMC and EPCH, EPCH CANNOT approve contracts for over $200,000 without UMC approval.  So, if the contract for $170,000 per month plus expenses is approved, then UMC approved it and they cannot blame anyone but themselves.

The UMC Agenda for tonight’s board meeting has this item on it:

UMC Board Meeting

Looks like they are going to make a decision on the contract, it will be interesting to see what it is.  Is a fight going to break out as they “fight it”?

The Need to Insure Against Something

Switching from Medicare/Medicaid reimbursement to other health plan reimbursements.  In papers filed with the court, El Paso Children’s Hospital alleged that El Paso First, a UMC “wholly owned subsidiary” was underpaying EPCH for services to the tune of $15 million (you can read their filing here).  Just as a reminder, here is the board for El Paso First:

El Paso First Board

James Stephen DeGroat – Also current Chair of the UMC Board

Ron Acton – UMC appointee to the new EPCH Board

Michael Nunez – UMC CFO

Jim Valenti – Current UMC CEO

So, if El Paso First was underpaying the El Paso Children’s Hospital, UMC knew about it and was complicit in doing it.  As a recap of where we stand:

  1.  UMC has some control over El Paso first and its reimbursements and was underpaying El Paso Children’s so much that EPCH was losing money in providing services to these patients.
  2. UMC and the County Commissioners have setup a situation at EPCH which could result in El Paso Children’s losing $5- $20 million in Medicare/Medicaid reimbursement.  Not only that, if CMS determines that the Hospital within a Hospital rules have been broken, they can GO BACK AND ADJUST ALL OF THE REIMBURSEMENTS THAT EPCH HAS RECEIVED – This would be even more than the $5 – $20 million that El Paso Children’s could miss out on.
  3. El Paso Children’s Hospital is paying almost $6 million a year in rent for a building that was paid for by tax payers but that money is not going to pay down the tax payer funded bond.
  4. As we have stated in some of our other posts, UMC was over charging El Paso Children’s Hospital for services in addition to charging El Paso Children’s Hospital in various ways to pay down the bond, was this money actually used to pay down the bond or was it just added to UMC’s bank accounts?

Exactly how are all of these situations going to be resolved?  Because, make no mistake, they MUST be resolved if the El Paso Children’s Hospital is going to remain an independent hospital and off of the tax payer’s bill.



Less Than Pleased

So this is an odd story:  The Interim CEO that UMC and County Commissioners INSISTED be hired is now charging them too much.  In an El Paso Times story published TODAY they said: “If the interim CEO for El Paso Children’s Hospital is going to be paid $170,000 a month as stated in federal court documents, El Paso County and UMC officials will fight it, they said.”  That makes it sound like El Paso Children’s Hospital hired the new CEO and negotiated his fee.  However, El Paso Children’s Hospital hasn’t really had anything to do with either the hiring or the fee – that was all the County Commissioners and UMC.  So, just who are they going to fight?  The new CEO?  Themselves? In the article it says “Both DeGroat and Escobar agreed that while there was a consensus to hire Deloitte CRG because the company is already working with UMC…”  So, if they are already working with this consulting company, why wouldn’t they already know the fee that they were going to charge?  This sounds like they are just upset that the El Paso Children’s Hospital Lawyers, per the judge’s instructions, revealed how much the new CEO was actually going to cost and now they are trying to spin the story.

Finally, Veronica states that “with some share administrative services between the new EPCH board and UMC, they won’t need such as costly contract”.  The idea of shared administrative services that will reduce these fees is absurd.  Not only is this a FLAGRANT violation of the Medicare/Medicaid rules, it would result in a LOSS of $5 – $20 MILLION for the El Paso Children’s Hospital – probably not the reductions that they were looking for.

The Best-Laid Plans

Today is the day that the Judge approves the plan for El Paso Children’s Hospital.  We now know who the new interim CEO will be, George P. Caralis, a consultant with Deloitte CRG , and that he will be paid $170,000 PER MONTH PLUS EXPENSES (read the KVIA story here).  As we do not have the contract, we do not know if this is capped amount or an estimate and that they will pay him based on his billing.  Will the County Commissioners be watching his billing and expenses with the same diligence that they have used on the current CEO or was all of that just their lawyers trying to wrack up billable hours and SPEND YOUR MONEY?

Also, we noticed that an updated plan has been filed with the court and the language baring Andy Krafsur from serving has been removed (read the plan here, document page 25).  Why aren’t the El Paso Times, Bob Moore and Veronica Escobar shouting it from the rooftops?  Why aren’t they proclaiming this a win for truth, justice and the American Way?  It would appear that the honeymoon is now over.