Tulare Regional Medical Center: The Story of a Hospital’s Turnaround

TRMC has come under increasing scrutiny as of late, in these pages and by the Tulare County Grand Jury. The Valley Voice took this opportunity to allow TRMC to rebut this at length. —ed

History

With the passage of two bonds and help from the federal government, the Tulare Local Health Care District was formed in 1946. Three years later, construction began on the 86-bed hospital. In 1951, the $1.1 million hospital was dedicated and opened to the public.

In 1993, as the city of Tulare grew, a major renovation and expansion project added a new pediatric unit to the hospital. Over the next 20 years, the District continued to add needed services including medical imaging, rehabilitation, home care and the state-of-the-art Evolutions Fitness & Wellness Center.

Many groups ensured the continuing success of the hospital, including the Tulare District Hospital Auxiliary which contributes tens of thousands of dollars toward the purchase of life-saving equipment every year. In 1987, the Tulare Hospital Foundation was established to raise much-needed funds for hospital services and expansion projects as well as educate the public about the many excellent hospital programs.

In 2014, the TRMC board agreed to affiliate with HealthCare Conglomerate Associates to manage the hospital – a decision that came as the hospital was on the verge of bankruptcy, and losing more than $1 million a month.

Under the management of HCCA, the hospital has had positive cash flow for 24 consecutive months and is positioned to provide high-quality medical care to our community for years to come.

Today, licensed for 112 acute-care beds, and employing more than 500 trained medical professionals and support staff, the hospital celebrates its 65th year of providing healthcare to the community and is positioned to meet the future health-care needs of the region.

Past governance

The hospital district enjoyed years of growth and support, but spent the better part of the last two decades in turmoil. In the past 10 years alone, there have been at least seven Chief Executive Officers and as many Chief Financial Officers. The health-care district’s Board of Directors has had an equally tumultuous history. The relationship between the Board, Administration, and doctors was continually strained. All this led to chronic instability that predictably resulted in financial losses, operational disarray, and loss of physicians.

Compare this with the leadership at other hospitals including our neighbors to the north where the CEO and CFO have been virtual fixtures for decades. At TRMC, even though there have been countless changes in Board members and CEOs, a core instability nonetheless persisted that illustrated a systemic flaw in the hospital’s governance structure. Recently, the Tulare County Grand Jury came to the same conclusion.

Community’s responsibility

In addition to the tumult within the hospital, a very small group of community and non-community players continued to “stir the pot” to ensure that the turmoil continued as it served their personal agendas. In some cases, that personal agenda was for self-aggrandizement, in others it was economically driven, and yet in others it was driven by outside competitive elements that saw our hospital’s extinction as serving their economic interests. Unfortunately, despite our hospital’s near miraculous turnaround over the past two years, some of these same elements are continuing with their old ways by misinforming the public and the press – a strategy that brought nothing but failure and shame to our community. The most recent examples are the purported claims that the “doctors were fired,” that HCCA is “buying the hospital,” and that HCCA is receiving a “30% bonus over and above the employee payroll.” Just for the record, all three are patently false. Here are the facts:

– The hospital board did reach agreement with a new medical staff organization, but not a single doctor was fired. All doctors have exactly the same clinical privileges they had before the change, the only difference is new physician leadership, which is dedicated to improving the quality of care. In fact, 95% of the doctors treating patients at the hospital have signed a letter supporting the change.

– HCCA is not buying the hospital nor is it contemplating such a purchase. By law, the District’s assists cannot be sold by a Board decision or any other mechanism. The only way the hospital could be sold would be by a vote of the public. Even then, it would have to be at the fair market value, with 100% of the proceeds being paid to the publicly owned district.

– The 30% “bonus” funds employee benefits, including health insurance, and most certainly is not being kept by HCCA.

Seismic requirements for hospitals

The state of California has suffered numerous earthquakes throughout its history resulting in loss of life and often complete destruction of the hospitals, which no longer can provide care following these types of events. For that reason, a law was enacted to ensure the survivability and continued operation of hospitals to provide services following earthquakes. Senate Bill 1953 mandates that all California hospitals be rebuilt to meet these new seismic guidelines. There are no exceptions.

The Tulare Regional Medical Center complex is now 65 years old, out of compliance with the state requirements and must be replaced. There is no option and we cannot negotiate our way out of compliance; neither can other hospitals in California. We must comply and we must begin immediately.

In order to complete the tower, we must ask voters for $55 million to finish job. That’s an amount previous administrations and multiple boards (including the one serving in 2005 when the first GO bond was introduced) knew it needed but failed to ask for.

The original official 2005 bond documents (which are public and can be viewed by anyone) show that the tower required $120 million to complete, but voters were instead asked to approve only $85 million and led to believe that additional funds would mysteriously appear.

Looking at the audited financial statements for the past 12 years, it is inconceivable to me that anyone on the board or administration at the time or since genuinely believed that they could make up the difference. In fact, even the official 2005 bond documents very specifically state that additional GO bonds will be needed to build the tower.

Why didn’t they request it then? Because the board and administration at that time believed $85 million was all voters would support. So, instead of coming to the public and laying the facts as they were, they instead spun fantastical tales of how they were going to fund the difference. When we are speaking today of another GO bond, it is not something new. We are simply bringing to the surface what was known and true 10 years ago. Had HCCA been involved in 2005, we would have simply stated the true need right up front and worked with the community to address it. This is yet another of the messes that the inexperience, chronic infighting, misdirected agendas and the multiple poor decisions of the past have left for us to fix.

Building project

Our new tower will bring us into compliance with the state’s rigid seismic requirements, and will enable TRMC to provide modern-day care to patients for years to come. Our current 65-year-old building will not be allowed to continue to serve patients. Period.

All California hospitals wishing to survive are doing what we are doing, and most communities understand they will benefit from the required upgrades. Here in Tulare County, our neighbors in Visalia are facing the same requirements. While their cost to upgrade will be far greater than ours, there is no option.

Let’s consider the alternative. What if we decided that we really aren’t willing to fight to keep our hospital in Tulare? What if we just allowed all of the ineptitude and anger of the past decade to permit our hospital to fade away? The health and economic consequences would be catastrophic. As our region is already short of acute care beds and short of doctors, the quality of general health care would rapidly degrade. When emergency medical conditions such as trauma, stroke and heart attacks strike, every minute counts. If patients were forced to to travel to out of town hospitals, very bad outcomes would occur.

Economically, the loss of our hospital would be devastating. More than 500 jobs would be lost. The businesses those workers support would suffer, and property values would decline. People would choose other places to live because Tulare would lack access to quality health care. The exodus from Tulare of the health-care professionals alone would be almost immediate, and we would lose the ability to attract the very people we need to make Tulare prosper. That’s a gamble with our future that we should not be willing to make. To choose that path would be beyond reckless.

What’s changed

Stability. The private-public partnership that HCCA has with the Tulare Local Health Care District is unique and likely the first of its kind. In this innovative arrangement, the district’s mission remains intact and its assets remain fully owned by the public, yet its operations are run like a private business. Thus, this unique arrangement ensures that it is to both parties’ mutual advantage to be good stewards of the District.

HCCA has succeeded beyond what anyone had dared to hope on January 10, 2014 when it embarked on this mission. The turnaround has been dramatic and instantaneous. Every month of the last two years has seen a positive net profit. All employees received pay raises on their first day with HCCA, and they’ve had additional pay raises since. More jobs have been added. Compare this with past years of multi-million dollar losses, layoffs, and no raises. The hospital’s financial returns from 2015 alone were three times the national average and were greater than they have been in the previous 12 years. The hospital valuation has increased by $28 million in these last two years.

Confirmation of the change

Fitch Ratings is a national credit rating agency that rates virtually all hospitals in the United States, and many other businesses. Their valuations are used by banks and bond holders – just like a credit score is used in assessing how credit worthy an individual is. In the past two years, Fitch changed its outlook prediction for our hospital from “negative” to “stable” and followed that with another upgrade to our creditworthiness. It called TRMC’s turnaround “dramatic.”

In addition, we have now had two annual financial audits by an outside firm and both have unequivocally affirmed our progress, removing the “going concern” qualification and, confirmed the positive financial transformation. All these documents are available to the public for review.

Community enhancements

Since HCCA partnered with TRMC, the county has benefited from numerous enhancements to health care:

1. Three Medical Offices were opened or expanded to full-time availability in Tulare, Lindsay and Earlimart, improving access to care in rural and underserved communities.

2. Within the hospital, HCCA has launched technologically-advanced services including stroke tele-neurology, making diagnosis and treatment faster when time counts, and a precision dual-energy x-ray absorptiometry, or DXA, a bone-density scanner that uses 1/10th the dose of radiation of a standard x-ray.

3. Our Evolutions Fitness & Wellness Center has added two infrared saunas for members that provide the benefits of a sauna at lower, more comfortable temperatures.

4. A momentous partnership with Cerner, supplier of health-information technology and provider of Community Works, will allow us to integrate all departments into a logical, easy-to-use IT system that protects our patient records and information at the highest level possible.

The strides made by HCCA in just two years are nothing short of extraordinary, but the situation will improve with stable governance and an experienced team at the helm. Together, HCCA and Tulare Regional Medical Center have the expertise, the experience and the determination to move the hospital from a tangled past to a high-quality, sustainable future that our community deserves.

Kathleen Johnson is vice president of marketing for HCCA/Tulare Regional Medical Center.

18 thoughts on “Tulare Regional Medical Center: The Story of a Hospital’s Turnaround

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  1. As HCCA would say “you have a right to your own opinion but not a right to your own facts.” There are definitely a lot of misstated facts in this article.

    First, the hospital board wasn’t in turmoil for two decades. It began in 2006 after an $85 million dollar bond was passed. Prior to that time we had a very distinct plan, we had money in the bank and we were investing into the facility with cash from operations. If records existed they would show that. We also had almost double the census of what it is currently and we were increasing private insurance patients, which is very low today. We had strong collections which is critical for the revenue cycle. We finally had began some healthy recruitment, which was a struggle since recruitment had been controlled by a board member. To this day the town of Tulare is far underserved by certain specialties based on population numbers. Which is a reason why people leave the community for care, competition is healthy.

    I would agree that there has been a controlling board member that has created issues for two decades. It is funny how multiple past board members (6) that actually served and were in the front row for all the action see things a little different than HCCA that didn’t even exist prior to December 6th, 2013. Throughout the years the only common thread is the spinning of the past that can only be being done by the one constant for the past two decades. Who really is stirring the “pot?”

    In 2007 the board stopped receiving financial performance data. Interim people were in place and they took their marching orders from one board member only and it wasn’t me. For almost 1 1/2 years as an elected official this data was not being provided. I read statements into the record on more than one occasion about my fiduciary responsibility to the District and my inability to fulfill it. If we are going to really get to factual data then it needs to start with the 2007.

    Let’s not misinform the public with this type of opinion piece. On July 3rd, 2014 an option agreement was filed with the County of Tulare to allow HCCA the option to purchase all District facilities. Yes, it will require voter approval but are we are going to have the same threat of closure if we don’t allow them to purchase it?

    Just because 95% of the Doctors that “treat” patients at the hospital signed a letter that does not imply that 95% of Tulare physicians support this unprecedented move to impact the self-governance process of the medical staff. It is really disappointing, but not surprising, that the denial of a temporary restraining order is being touted as a victory on the merits of the case. The merits have not been addressed. Why I find this not surprising is that this was the same build-up during other failed lawsuits of the District.

    In regards to the 30% of payroll, if that is truly the case then I and others would like to request that there is a change to the first amendment to the management service agreement to reflect that it is for benefits. Why are they allowed to defer those payments towards the purchase of the hospital?

    In regards to the bond request of another $55 million, this is so confusing. Harris Construction indicated it was $19 million to complete. Then in the audited financials management letter of 2014 it indicates it was $35 million and then 2015 it jumps to $55 million and there has been no explanation as to why.

    For transparency can you please post on the website the actual document from 2005 that showed that the Tower project was $120 million. Not a document that was after the fact. In 2005 the project was $105 million and there was a plan for the East Campus which was going to be physician offices and outpatient procedures next to Evolutions. Once that plan was killed in 2006 and everything else went south the project had to grow in cost since part of the plan included that in relation to the Tower. We had been making capital purchases for quite some and we had a plan to complete the build. We never, ever intended to go out for another bond and anyone that states that we did is completely false.

    I agree there has been “multiple poor decisions” but why are we are being asked to give more money to the board that has made some extremely poor decisions. Including stonewalling record requests from citizens that were trying to get answers on the bond, filing lawsuits and threats from District/HCCA attorneys to others for speaking out, including myself. These costs are a financial burden to the District and do nothing but waste money that could be used towards the Tower.

    Why are you threatening immediate hospital closure if this bond is not passed and yet it is being represented that the hospital is extremely profitable? That makes no business sense.

    These are facts not opinions! The “very small group of community and non-community players” would simply like some transparency and no more opinions.

    • As owner/publisher/editor I immediately decided to offer them a chance to pen their side of the story–in part for balance, and in part because I knew informed people like you would weigh in. I believe that as one reads the media and the Grand Jury reporting, shaded by opinions from those allied with the hospital and those who seek transparency, the facts will out.

  2. Citizens of Tulare, if your hospital refuse to turn over documents and is putting up such a fight to make it hard to obtain, there must be something to hide. Then they spend millions on a robotic piece of equipment for a Urology group from USC that has long left the scene. Can you say more wasted money! Please people don’t turn a blinded eye to this issue get involved or just educate yourself with facts on paper not what you are being fed verbally by HCCA

    • The old board with Mrs. Martin-Soares made extremely poor decisions, new board is trying to clean up the mess. This new board brought in HCCA and they’ve got the hospital in the right direction. The old board almost bankrupt them, now they have one of the highest profit margins in California. They should know better than anyone that the current hospital building does not meet earthquake safety laws and the hospital will have to close if they cant build a new one.

      • HCCA is only Dr Benzeevi…..and now everyone is an HCCA employee. TDH is just the figure head now.
        Let me explain something.
        When Obamacare started the payout was so low that no hospital would be able to survive. Now they have some kinks worked out and everyone is being paid better especially in CA under our system. You forget that Oregon was almost going to be added with us….don’t know what happened to that.
        The MCO tax rebate (of sorts) also will be helping to pay benefits better also. Inyo Hospital under this HCCA will get 1.4 million in help that they were going to get whether or not HCCA came in or not. But all their board quit and they fell into bankruptcy before it got signed.
        So this miraculous come to the rescue they are claiming was going to occur anyway. They are now the benefactors.
        And you didn’t read where Deanne Martin Soares stated that when they started the project and the money was out, there was no accounting as she continually asked for documents and received nothing. She resigned because she didn’t want to be associated with it any longer.
        And who’s been on the Board since he came to town? You talk about almost bankrupting……would that be Dr Kumar and his 4 million lawsuit that the Stanley family received?

      • I guess if you can’t beat them then you try to smear them. Deanna Martin-Soares is a respected and trusted community leader and she has earned that title. Keep your smear tactics to yourself. We are lucky to have her keeping everyone in the loop on what is going on….of course the same goes for Valley Voice too.

  3. I am quite sure than many of you recall the commercial with the woman saying “Where’s the Beef?”. As a taxpayer my question is where’s my money?, 50 million dollars to be exact. I gladly voted for the 85 million dollar bond Now the Tulare Local Health Care Dist. board can’t or won’t account for the missing 50 million dollars. According to Ms. Johnson “a very small group of community and non community players continue to stir the pot.” If as a tax payer asking what happened to the 50 million dollars, “Stirs the Pot” so be it someone has to do it. As to the the issue of who brought “failure and shame to the community.” I thought the Tulare County Grand Jury report was titled TOWER OF SHAME. Not shame on people who ask questions.

  4. Okay, I have just one little piece to add. I was there when the clinics were opened in 2008. We opened one on Cherry Street for primary care, one on Gem Street for specialty care and one in Lindsay. We obtained more patients from the County when the County closed its clinics. When this happened Pete Vander Poele swung a deal with Shawn Boluki to have the patients send to our clinics. There was a lot of wheeling and dealing going on at the time. We opened the Hillman Clinic and closed the Cherry and Gem clinics and moved the patients to Hillman. The Lindsay clinic stayed open and we then obtained the Kingsburg clinic through more improper wheeling and dealing. I left the hospital in 2011. Our first fiscal year we had 32,000 patients visits. After I left, the visits declined rapidly. The Woodville clinic came into play against my opinion. They lost a lot of money. That building was not fit so see patients.
    Then was being contacted every month by a vendor because the clinics were not paying there bills. I did everything I could to work with the hospital and Board member to get these bills paid. This carried on for three years. Then I find that the Lindsay and Kingsburg clinics closed and a grant was given to the clinics to open the Westside and Earlimart clinics. Then the next thing I was told was that Lindsay was going to open again when HCCA came on board. Look folks, they did not save the day by opening three clinics as stated in the article.They were already in progress. The only thing that changed is that HCCA closed Lindsay and reopened it again.
    And they closed Woodville and Kingsburg,laying people off work. I get very upset every time I here what saviors HCCA is when they forget to mention closing of clinics and laying off of staff. They also laid off many, many staff members when HCCA came on board. Many, many qualified and long time employees left to find better jobs. It’s time to start telling the truth about certain issues by the people who were there.

  5. As a tulare resident I feel that many people in our area have totally lost trust and respect for those so called persons in charge at the Hospital,,,,,so much money not accounted for,,,,sad situation,,,,especially for the employees who are trying to earn an honest living

  6. Since the new management started, things have finally started to improve. They were about to close the hospital when they came over, now everybody has jobs and their making more money because of pay raises. This hospital is profitable because its finally being run like a business and its good for the city.

  7. Management got a raise for sure, to the tune of $250,000 PER MONTH! Contributions to employee retirement plans drop from $1,300,000 in 2014 to $434,000 in 2015. I would call that a whopping CUT.

  8. That hospital is one of the most important businesses in Tulare, if not the most important. Why do all you critics want to drive it into the ground? If the hospital closes your property value will sink to nothing. Where would you go after a heart attack? or an accident. Be careful what you wish for.

    • I guess I would go where I go now…. Kaweah Delta. That is by choice. That said, I do not wish for Tulare Hospital to close… I just wish we had a new hospital board that is trustworthy. Its not the care received at Tulare, which is good….. it is my way of protesting this board and what they do and stand for.

  9. I don’t think anyone is wanting our hospital to close. We just want some answers to what’s happened to our money and equipment. Also since we don’t have a board we can trust I think our board should do the right thing and respectfully step down.

  10. Kathleen Johnson has stated that the financial returns of TRMC are now 3 times the national average. She further states that for 24 consecutive months they have had a positive cash flow. Or, put another way, she states that every month for 2 years they have had a net profit resulting in a 28 million dollar increase in the hospitals’ valuation. Interesting. If true, they should be able to float revenue bonds for the needed cash and not ask the public to approve an additional $55 million in general obligation bonds. The CEO of TRMC has spent $38,000 to try and defeat the general obligation bond in Visalia for Kaweah Delta, which is augmenting its’ G.O. bonds with revenue bonds for their project, yet he is asking the good people of Tulare to ignore the “profitability” of TRMC and use only general obligation bonds for their project. Perhaps the profitability of TRMC is not what it seems.

  11. 1.Tulare needs a hospital. 2. Tulare needs physicians who will be held accountable for quality patient care. There are so many things the public is not in tune with when it comes to how a Medical Staff works. 1. It would devastate the city of Tulare should this hospital fold. I have not seen one bit of support for just having a hospital and having some answers on how to keep this hospital alive. Just a lot of back and forth and gossip. 2. Yes all the doctors are all about how there was a supposed illegal ousting of the MEC. No one knows the full details you can’t even speak to what has happened at Tulare Hospital. Hold those opinions and wherever you have privileges be a positive integral part of that hospital or leave if you don’t want to be there don’t just stand there and fight unless you’re fighting to make things better. Too many opinions about the wrong issues. Tulare’s Hospital can be better than any neighbor or big city hospital we as Tulare Citizens need to support the move for a better hospital. All you naysayers get the heck out of the WAY.

    • We will not get the heck out of the way. Explain the Bond money spent. Last time I checked all opinions have a right to be expressed. This is still America right.

  12. Deanne is absolutely correct. Either those stating otherwise are misinformed or simply trying to distort the facts in favor of the current hospital administration. It was a $105 million as presented to voters in Sept. of 2005. Again, at $85 million dollars, the bond consultants were very clear we may not be successful at that amount and any higher would be very difficult to pass. Dr. Kumar was a member of the board and voted for the $85 million bond measure, knowing full well the risk that was at the time. Still, at $120 million does not explain the need now for $140 million and with the mistrust of the hospital and those running it today, I wonder where the extra $20 million is going to end up. The hospital needs to completely detail where the $85 million went and why the need now for $140 million. That responsibility is on HCCA. Until that is done, no one should support a new bond effort.

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