This article has been updated to match the version in the March 2 edition of the Voice.
The only things missing from Wednesday’s Tulare Local Healthcare District meeting were an announcer, a bell, round cards, and popcorn.
The meeting started on a down note — officials with the district announced Fitch Ratings, a major credit ratings agency, had revised the district’s “rating watch” position from “positive” to “negative” on both its bonds and its “Issuer Default Rating.”
“I’m sure this is how Dr. [Parmod] Kumar feels, Dr. [Benny] Benzeevi felt when he practiced, when they lost a patient,” Alan Germany, the CFO of Healthcare Conglomerate Associates, said of the news.
After pointing out the hospital’s successes in quality and compliance, Benzeevi, the CEO of HCCA — the company which runs the Tulare Regional Medical Center — shifted gears to discussing the past, no holds barred, creating a raucous audience.
That atmosphere continued as the board voted to schedule a recall election for Kumar.
“Potential Death Knell”
The news from Fitch Ratings served as a reminder of the district’s difficult path forward in finding continued financing for its beleaguered tower construction project.
“This is something that potentially, certainly could hurt the hospital, death knell the hospital. Whatever you want to call it,” Germany said.
One of the key reasons for the downgrade stemmed from the voters’ rejection of Measure I, the $55m bond proposal that would have funded construction of the hospital’s unfinished tower.
“The Negative Watch is due to the failure of a ballot measure in August 2016 that would have authorized a $55 million general obligation (GO) bond issuance to finish its new building project,” a Fitch press release states. “TRMC is currently in the process of evaluating financing options and the Negative Watch reflects the sizeable amount of debt that will need to be supported from hospital operations.”
Since the exhaustion of the initial bond, the hospital has expended $7.3m to continue construction and prevent the expiration of construction permits — a drain on resources that is untenable in the long-term, Germany said.
That fact was key to a prior Fitch Rating Watch upgrade in August 2016: the agency placed the healthcare district on “Rating Watch Positive” due to optimism surrounding the ballot measure and its potential to stop the project’s drain on hospital resources.
“We felt really good that the community really wanted a hospital, they really wanted the future, they really wanted a future tower and were willing to fund it,” Germany said.
“The [August] Rating Watch Positive reflects Fitch’s expectation of upward rating movement if Measure I passes since funding will be secured to complete the new building project and Tulare Regional Medical Center’s strong operating performance has been sustained,” Fitch Ratings officials stated in an August 2016 press release. “However, if Measure I fails, Fitch will need an updated plan from management and will reassess the rating at that time.”
Wednesday’s press release from Fitch did not indicate whether HCCA or TLHCD officials had discussed any updated plans beyond stating that management officials expect “to finalize [their] financing plan by summer 2017 and will issue bonds through the FHA 242 program or Cal Mortgage.”
Germany also discussed declining patient volumes, a trend not left unnoticed by the ratings agency.
“TRMC’s financial profile has weakened through the six months ended Dec. 31, 2016 as a result of an information technology conversion and continued decline in volume. TRMC had 41.2 days cash on hand at Dec. 31, 2016 and 6.3% operating EBITDA margin through the interim period,” the agency noted in its recent release.
During the meeting, the board also approved less frequent financial reports.
Germany requested that financial reports be made quarterly, stating that monthly reports took time away from finance staff to focus on other matters and could provide an inaccurate picture.
“It allows time for finance staff to focus on financial analysis, and all sorts of other things,” Germany said. “The thing with monthly reporting is that you can have incredibly significant fluctuation, and it’s really misleading.”
On 3-2 lines, board members Parmod Kumar, Linda Wilbourn, and Richard Torrez voted to allow the less frequent reports, with Kevin Northcraft and Mike Jamaica dissenting.
Kumar made the motion to switch to quarterly reports, thanking Germany for his service along the way.
“First of all, Alan, thank you for being so damn good,” Kumar said. “In my 20+ years, we never had a CFO of the caliber as you are, Alan.”
Northcraft explained his dissenting vote by stating that he believed the switch would be a violation of the contracts that TLHCD has with HCCA.
“Our agreement with HCCA requires monthly financial reports to be made by the 20th of the month following. You are in breach of contract by not providing those,” Northcraft said, explaining his vote. “We cannot, by motion, change the agreement with HCCA.”
“That’s your opinion, and I appreciate that,” Benzeevi replied, “but it’s not accurate.”
“I’m not entitled to have independent legal counsel,” Northcraft retorted, “so I have to use my best judgement.”
“The Charlatans of the Past”
Benzeevi took the podium from Germany to discuss the hospital’s success in spite of some setbacks.
“We’re very, very proud of our team for taking a hospital from the brink of disaster, in spite of a 5 year physician boycott from the very physicians that have supported some of our people, unfortunately,” he said.
Across a wide swath of benchmarks, Benzeevi said, the hospital has proved its excellence.
“We look at every area and multiple variables within that area,” Benzeevi said.
Benzeevi presented statistics from those areas — including food and nutrition services, catheter-associated urinary tract infections, and ‘Code Blue’ cases.
“A ‘code’ is somebody who loses all heartrate and respiration, basically clinically dead,” Benzeevi said. “If you were to have a ‘Code Blue’ as a patient here, the likelihood of you living to discharge is one out of three. The national numbers are 17 to 20 percent. That speaks volumes to the care and the notice that the nurses and the staff pay to the patients here.”
Segueing from the Compliance and Quality section of the meeting and stepping clearly into the “Other” portion on the agenda, the HCCA CEO took aim at the hospital’s critics and past leadership, pointing out one member of the audience by name.
“Let’s talk about some of the things that HCCA did not do,” he said.
“HCCA wasn’t here in 2005 to tell a community that $85m would pay for a $120m building,” Benzeevi said. “I don’t know who was responsible for that, but I looked up who was on the board.”
“Deanne [Martin-Soares], you were on the board,” he said. “Victor [Gonzalez] was on the board.”
Multiple members of the audience decided to talk, too.
“I don’t think you can call out people in the audience,” one man said.
“We’re just talking about public officials, I’m not calling anybody out,” Benzeevi responded.
“2010, we started building a new tower before the plans are complete? Who the heck does that — start a new tower before the plans are complete,” he asked. “How about doctors that run the hospital and don’t come to the hospital — better yet, doctors supported by our taxpayer money that don’t come to the hospital?”
HCCA, he said, had over the last three years “brought the public hospital back to the public.”
“It belongs to the public. It doesn’t belong to the charlatans of the past,” he said , drawing more jeers from the crowd.
While the speech had clearly shifted the tone and mood of the audience, the point wasn’t to incite, he said, ending his portion of the meeting.
“A house divided against itself cannot stand,” Benzeevi said. “What gets us to the future is a coming together and recognizing that we all need to have an integrated healthcare system in this community.”
The board voted on 3-2 lines — Linda Wilbourn, Richard Torrez, and Kumar in the affirmative; Kevin Northcraft and Mike Jamaica in the negative — to schedule Kumar’s recall election.
The vote authorized Wilbourn to “issue and deliver to the registrar of voters within 14 days of the date of [the] meeting an order, stating that an election will be held on the date which is 125 days after the date of the order, to determine whether or not Dr. Kumar shall be recalled.”
However, Kumar’s participation in the vote didn’t please an already incensed segment of the audience.
“We checked with independent counsel on the issue of whether Dr. Kumar whether had to recuse himself,” Bruce Greene, the district’s attorney, said, responding to statements from the audience.
“You asked for an opinion, and I’m giving you the opinion. If you don’t like it, fine,” Greene said. “The opinion is he does not have to recuse himself from voting on whether there should be an election for his recall. He’s gonna vote on it. If you don’t like it, I’m sorry.”
Additionally, an official from the Tulare County Registrar of Voters’ office came to the meeting to request a different date.
“We would respectfully request that you order the election for June 6. That would coincide with another special election being held,” Michelle Baldwin, the Interim Tulare County Registrar of Voters, stated. That will save the district money in costs to run the special election separate from that election.”
The board did not choose to act on Baldwin’s recommendation, instead adopting the resolution that would see the election date, at a bare minimum — if the order were sent the day after the meeting — set on June 28.
Northcraft attempted to call a vote on a resolution to call the election for the sixth, prompting an apparently exasperated Greene to tell Wilbourn to “just run the meeting .”
At the end of the vote, Visalia lawyer Michael Lampe said he believed that Kumar’s participation in the discussion vote was a violation of the Brown Act.
“Mike, I would be more than happy to see you removed,” Greene said .
“Remove me,” Lampe responded.