UPDATED: HCCA Says They Won’t Continue Funding TRMC, Will Consider Closure If Loans Not Approved

This story has been updated with a statement from a Crotholl and Morrison spokesperson.

Alan Germany, CFO of HCCA, speaks at the Tulare Local Healthcare District’s September 27 meeting. Tony Maldonado/Valley Voice

The end of legal wrangling over Senovia Gutierrez’ status on the Tulare Local Healthcare District’s (TLHCD) Board of Directors — she has officially been recognized as a board member — was overshadowed by a new threat: Healthcare Conglomerate Associates (HCCA) could consider shutting the hospital down if the board doesn’t allow the company to seek a loan.

The hospital management company won’t keep footing Tulare Regional Medical Center’s (TRMC) bills, the board was told Wednesday at the September regular board meeting.

That’s important, because the hospital’s cash position is at a new low of $2,089,000 while its accounts payable is at $26,690,000.

Dr. Benny Benzeevi, CEO of the hospital management company, claims that HCCA has extended $14 million to the hospital district so far — and that a “cash infusion” is needed, because they won’t be footing the bill anymore.

“HCCA provided substantial revolving funding to the hospital over the years, to a cumulative total of $14m, not to mention that HCCA has not been paid its fees for several months,” he stated. “But in light of the light of the current destructive political environment, HCCA will not continue to do so.”

He stated that there were two financing companies that could provide a loan to the hospital, and stated that if the board took away the company’s authority to seek and execute a loan, the company might start looking into closing the hospital.

“The rescission of our ability to borrow money will mean immediate consideration of plans to close the hospital,” Benzeevi said. “The choice is yours.”

Benzeevi didn’t provide any further information on the loan sought or the two companies in the running, and TLHCD Board President Kevin Northcraft stated that he didn’t receive any information from Benzeevi, either.

By the point Benzeevi made his remarks, the board had already rescinded the company’s authority to seek loans by voting to affirm the decision made at a July 27 board meeting.

 

“Dire Financial Situation”

“The deterioration of the hospital over the past year can be objectively and directly attributed to the destructive opposition since last year by the very group now supporting the board majority under the guise of saving the hospital,” Benzeevi stated. “The results speak for themselves.”

The hospital’s numbers have been trending lower and lower, the hospital’s CFO, Alan Germany, told the board. As of the fourth quarter of 2017:

  • The hospital’s average daily census has dropped to 33.8, from 40.3 the prior year and 38.9 in 2015.
  • The hospital has had an average of eight admissions per day, compared to the same number from the last year and nine a day in 2015,
  • Deliveries have dropped to 1.3 per day, compared to the same in 2016 and 2.1 per day in 2015,
  • Surgeries have dropped to 379, compared to 551 in 2016 and 593 in 2015,
  • Emergency department visits dropped to 73 per day, compared to 87 per day in 2016 and 98 per day in 2015.

Germany stated that part of the problem was the “political instability” surrounding the hospital, stating that patients may choose to go to other facilities due to concerns over the hospital’s viability.

The hospital’s operating revenue in Fiscal Year 2017 was $78,640,000, while its expenses totaled $76,672,000.

An email from Marc Levinson, an attorney with Orrick specializing in “insolvency planning, bankruptcy cases, out-of-court reorganizations and workouts,” reveals that the district has had “liquidity problems” since June.

Vendor Disputes

During his report to the board, Germany confirmed some reports in the Voice and other outlets that the district was in disputes with vendors over payment.

Officials with HCCA had not previously commented on those reports.

Germany stated that dietary and housekeeping services were contracted out to The Compass Group, a company which bills itself as a leading “foodservice and support services company.”

The Compass Group is the parent company of Crothall Healthcare and Morrison Healthcare, companies which provided those services to the hospital.

“Crothall and Morrison made the decision on September 8, on a Friday morning at 8:30 — they brought all their employees in and said ‘okay, we’re terminating you,’” Germany told the public. “That really put patient care very much in jeopardy.”

Germany stated that although officials had made a $600,000 payment to the company in August to “get them to try to stop these sort of actions,” and he claims the company is demanding an additional $1.1 million.

A statement from a spokesperson with Crothall and Morrison states that negotiations went on for nearly a year.

“We had been working in good faith with Tulare and its management firm for more than a year so they could make past due payments current. After a third Past-Due notice last week, Tulare made it clear they no longer intended to make us whole, so we regrettably removed all of our services from the hospital, which was in accordance with our agreement,” the spokesperson stated. “The impacted associates were informed of the change, and we are relocating several of them and working to place others in similar roles at company accounts in nearby locations.”

He stated that HCCA had hired on the housekeeping staff that was previously employed by Compass.

Germany also stated that the hospital’s dispute with Southern California Edison comes down to a misunderstanding between TLHCD, HCCA, Edison and Harris Construction.

He claims that the hospital received a monthly bill from Harris Construction of roughly $3,000 for “temporary power for the tower,” before Edison contacted them to seek payment.

“We, assuming that Harris [Construction] had an ongoing arrangement with them for the tower, for payment, and lo and behold they said it hadn’t,” Germany said, claiming that the hospital never received power bills for the tower.

Germany also discussed the Hillman Clinic, operated by the district in a building owned by Tulare County.

Though speaking positively on the services provided at the clinic, Germany was dour on the actual building.

“There’s been cases of homeless people sleeping in the attic out there,” Germany said. “This is going to sound terrible, but it’s the truth — there’s mice and rats out there.”

“I’ve met with the county and talked about this, and lo and behold — now they’re suing the district for back rent, in the amount of $148,000,” he continued.

 

More Attorneys

During the meeting, Cynthia Larsen of Orrick, Herrington & Sutcliffe LLP, was introduced to the board after objecting to the board’s ratification of actions taken at the board’s special meetings in July and August.

In legal filings, Levinson was introduced as another attorney from the Orrick firm working with HCCA in dealing with the healthcare district.

Larsen’s page on the Orrick website states that she “has more than 25 years of experience in business and governmental litigation and appeals,” and that she “focuses on the representation of public agency and private clients in complex disputes involving public agency and governmental law, insurance and insurance insolvency, government contracts and procurement, business torts, health care, environmental and employment law.”

Levinson’s page states that he “concentrates on insolvency planning, bankruptcy cases, out-of-court reorganizations and workouts. He represents secured and unsecured creditors, acquirers of assets from insolvent companies, debtors, indenture trustees, committees, public entities and bankruptcy trustees.”

In Depth: Tulare Regional Medical Center

43 thoughts on “UPDATED: HCCA Says They Won’t Continue Funding TRMC, Will Consider Closure If Loans Not Approved

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  1. Great job by the board. Well done. Thank you.
    Please not one penny more to the criminal trio of Benzeevi, Ostrom and Germany. NO loans.
    Just a few months ago, Kumar and Benzeevi were telling us what a turn around the hospital had made. Now we are about to close down. Please look up what happened with Enron.
    Benzeevi is the most criminal incompetent atrocious CEO in this hospital’s history.
    Keep up the great work Board members. You are making us all proud.

    • If the new tower is completed, there will be potential for having a good community hospital – but it will never happen with HCCA.
      I believe the Adventist Health Care can undoubtedly do it.

  2. Harris Construction has been off the site for at least 3 years. Harris sued district for monies owed to them. Why would Harris still be responsible for the electricity. HCCA is bringing in mobile food trucks to feed employees, wonder who is cooking patient meals. HCCA blamed everyone(citizens group,politics,doctors)for all monies lost, they don’t think their management had anything to do with the demise of hospital.

  3. What if Benzeevi is trying to make it seem like TRMC has no money $$$ on purpose. 1.) He is trying to buy the hospital for pennies on the dollar (if it goes bankrupt). 2.) He is trying to get the loan approved by any means possible. Pressuring the board to approve the loan by threatening closure. Both scenarios work out great for him. He either gets a cheap hospital or he gets the loan. Board if you are listening, do not give this man one more dime. It will never end. I say no to the loan. Tulare can rebuild.

  4. I believe that once the Board demonstrates that it is in charge, the “political environment” will change for the better. We in Tulare will resume support of the hospital when it is clear that Tulare Citizens run the hospital , not some immoral thug. Let us call this bullies bluff. “No” to his sources of funding. The hospital wont close. Benny has been making these threats since the elections

  5. Thank you to the board for taking control last night and not letting the “dog and pony” show throw you off. Whatever you do, do not approve more loans. The community and staff will never support a hospital with HCCA. Bankruptcy might be inevitable as HCCA has run the organization into the ground, but Tulare can rebuild and make it better.

  6. When someone makes millions of dollars to manage a business, he does not get to make excuses. If the patient volume is down, it is Benzeevi’s fault. It is his job to make the hospital more attractive in order to bring more patients in. He also blames the implementation of Cerner, the electronic medical record, for their financial woes. Guess what? Hundreds of facilities use Cerner, it has nothing to do with the hospital running out of money.
    Benzeevi, Ostrom and Germany: no one in Tulare believes a single word you say. It’s time for you 3 amigos to resign.

  7. Cerner has a lot to do with the problem. When billing is severely delayed or not going out cleanly, money does not come in!

    • I have been to other hospitals, more than one, that use Cerner. They pay their employees on time, they pay their electric bill, and they don’t close down their cafeteria. If Benzeevi can not efficiently bill for services, and you are saying that he can not, then he has no business running a healthcare facility.

    • Are you posting as TRMCemployee2 or are you posting as Sandra Stidham? Either way your use of using Cerner as a scape- goat is so obvious! The Board members who signed the management contract that HCCA drew up signed away our hospital to a con artist who is running the biggest shell game Tulare County has seen in decades. No one, other than the group of citizens who are now being blamed for all of TRMC woes, has stood up to Benzeevi. This man and his corporation is a cancer that is killing our hospital. Time to get rid of both.

      • Barbara… Hear! Hear! Lately I’ve been reminding folks who the five people were who signed that heinous contract. They are Parmod Kumar, Sherrie Bell, Richard Torrez, Rosalinfa Avitia, and Laura Gadke.

  8. The board did a fantastic job yesterday at taking charge of the meeting. I’m very impressed at how well it was handled and Kevin was superb at communicating to everyone, especially the attorney for HCCA, that we won’t be railroaded by Benzeevi or his cronies any longer. This is what the city needs for our hospital: Good leadership!!! I’m also very surprised at Torrez’s demeanor. He didn’t oppose anything from what I could hear on the live feed.He didn’t speak much, which was likely in his best interest as a board member. As a concerned citizen, in regard to the new direction the hospital is heading, I’m hopeful that in time it will turn around to be a good choice & reliable choice for healthcare in the future however I’m absolutely certain that HCCA should NOT be given any more money by the district for anything. Let him close it down! File bankruptcy! Do whatever it takes to get him, Germany, Ostrom, Kumar, and whoever else far, far, FAR away from our hospital. Those people alone (with the help of Gadke, Wilbourn, Avitia) are solely responsible for the demise of the hospital and should be held accountable in a court of law.

  9. They are correct, Cerner had every bit to do with revenue cycle issues. If you can’t bill for 3 months then it still is at 30%, a year later, very few institutions could manage that, as noted in the lawsuit Cerner settled with Trinity Health in North Dakota for 102M and a suit filed just Sept 15 against Cerner from Agnesian HC in Wisconsin claiming the very same issues experienced at TRMC. So maybe the expensive attorneys for the Board and HCCA could collaboratively take Cerner on. Wouldn’t that be a novel idea? Working collaboratively.

  10. Here are the problems I see

    1. HCCA-Self explanitory. While we could blame Cerner, HCCA bought a cheap model version that did not have the bridge piece for billing. That cost additional money the Benzeevi did not want to pay. So again, Benzeevi went on the cheap.

    2. Money coming in to the Hospital. Even with those issues with Cerner, money has to still be coming in from other accounts to generate funds. So the question is, why does HCCA not provide ALL THE FINANCIALS? Because they are hiding something they dont want the public to know about.

    3. Continuation of Staff leaving- 2 more ER MDs are leaving for lack of payments. To date, they are 28 days behind in paying. Again Benzeevi to fault.

    4. Medical supplies in short supply AGAIN We continue to operate with short supply of medical equipment. This is of great concern. If we continue this way, it will be potentially harmful to patients.

    Problems exsist because of Benzeevi and HCCA not being forthcoming and soon will be caught up in major legal issues. This Board needs to hang on and get it done.

    I have sent in a proposal to the Board to assist with restructure of Hospital. I believe we can get this Hosptial back on its feet. I hope we can work out something soon.

    As of today, we the employees have been notified that are checks are going to be late. Very sad to see.

    Lastly, we are in debt more than what is posted. And this is because of Benzeevi and his lack of keeping the books balanced. And while he drives his Jaguar around, living very comfortably, and has security of money, the employees are left finding other jobs and being late on bills. Benzeevi, I persoally have never seen anything like this in any form of business. It is disgusting and unacceptable. I hope that the God you worship can forgive you, because we as employees cant.

    • This is true, we got a cheap version of Cerner because benzeevi and germany’s “IT” company breached a contract with cerner for 1.5m dollars. Benzeevi is too cheap to pay, so instead they made a deal to use Cerner without the necessary upgrades so that way Cerner could stick it to them if they wanted to upgrade. But of course HCCA didnt want to pay for that, thus the really bad Cerner issues. Thats why KDDH’s Cerner was implemented and working with no issues because guess what, they paid.

      • This is completely false – TRMC Employee 69 you have literally no idea what you are talking about. Also – KDDH has not implemented Cerner at this time – their implementation has been delayed. The level of disinformation and inaccurate speculation here is ridiculous.

  11. The axis of pure greed at TRMC/HCCA: Kumar-Benzeevi-Ostrum-Mackaluso. They all prop each other up. They are all still there and the money still flowing to them all. Close the hospital, get rid of them all ASAP, start anew.

  12. White collar criminals, thats what they all are. Benny is not a hospital administrator, he is a sham. We been had, folks. The able employees should leave now if there are any left.

    • BUT – only yesterday they said they have 2.08 million cash on hand.
      Why are they not paying?
      Just to make a political statement by punishing the local employees?

  13. We as a community need to come together. Today 400 employees did not get paid. there isn’t going to be food for children tonight, rent is not going to get paid, as some employees live paycheck to paycheck.It not fair that we have to paid for this political fight that it’s only going to get 500 people unemployed. Kevin you are the people’s chairman and president what are you going to do.

    • I’m sorry that 400 people didn’t get paid today. It is criminal what HCCA has done to its employees. But some of you are culpable for this disaster. You chose to stand by a company with no experience and who had his gang of thugs former board members included to control your lives. You thought they cared. I guarantee that HCCA kumar ostrom germany and those who already make millions and have no problem feeding their families and stealing right out from underneath you got their paychecks.
      What did many of you do??? Trash the community of voters which is not a small group of people you accuse of hccas failures. You’ve insulted us and refused to listen to reason. So many of you need to except you were part of the problem not the solution. You signed the dotted lines for hcca to control your lives. Now you are reaping not only for yourselves but for the innocent cnas and lvns that do live pay check to pay check. Now you are the victims and you ask Kevin to fix it? This is a 4 year problem, the new board was boycotted even when they were looking out for the employees best interests. i.e.,your pensions and paychecks. Maybe if your boss wouldn’t have been playing games and Senovia would have been seated 2 months ago, the board could have been ahead of the curve. But you chose silence.

    • Better yet hccaemployee….What are you willing to do on your part to help this brand new Board of Directors save your job and this hospital? You made your decision to stay onboard with Benzeevi, so don’t blame anyone but Benzeevi and/or yourself…..he is the one who you should be directing your question to.

  14. We pais 5 million dollar a year to Benny & team ….. to run our hospital into ground … AND …. blame us for their problems !!!

    How stupid of us !!

  15. Public forum supposedly set up at 4pm if they can get a hold of Benzeevi. Hah! Yeah right, like he would show up after today, what a coward.

  16. It’s just like Tulare to try and fight in the “name of justice.” It’s proven how selfish the people living here really are, its not about politics, its about business. I am so happy to have moved to Europe, away from these absolutely insane people. TRMC, who I worked for for 7 years, is a BUSINESS, HCCA came in to make MONEY. It’s Capitalism, get over it. I Obamacare was developed as intended, these problems would have been solved 5 years ago.

    We now have hundreds of incredible people out of pay, all because people want “change.” It’s utterly ridiculous, welcome to “Trumps” Tulare.

    • Hell NO
      Our hospital is our healthcare & our lifeline.
      No, we do not want anyone to make it their business.

      Can you please take Dr. bull%%it Kumar with you to Europe? I will pay the fare. You must promise you will not let him come back.

    • Your comment is flawed Mark. The board is majority Democrat and the group of thieves paid top dollar to every republic candidate that should have put a stop to their thievery years ago. They claim they vote republican. So rethink your statement before spewing nonsense. By the way, this is an on partisan issue. Both parties have cohesively have worked together to give our hospital back to the community that rightfully owns it.

  17. The Fix
    The Board Chairman should meet with the County CAO, County legal counsel and the Auditor Controller.
    Have the County take an immediate action by having the County auditor Controller take control of this Special District as he has the power to do so. Then he has the Board of Supervisors hold a special meeting and take an emergency action authorizing the Sheriff to seize all of the records of the District in possession of HCCA. Also the Board of Supervisors can order the Sheriff to freeze on all of the BANK accounts used on behalf of the District to preserve the assets util the Auditor Controller completes an audit of the District and determines if a bankruptcy is needed or if it can continue operating.
    The Auditor controller than then continue to work with the District Board to continue operations of the Hospital.

  18. Hey I like P. Merrill’s idea. Someone has to put their foot down and stop Benny. This con man and his made-up company has taken every dime he can from the tax payers of Tulare. He now says his HCCA can’t foot the bill for the Hospital anymore. What, spend the money this HCCA group has already taken? Someone’s wallet is already Fat and the Hospital with it’s staff are the one’s suffering.I applaud the new Board that is seated and hope they can fight back against the crook Benny. The City of Tulare deserves a great hospital. HCCA and all involved with it belong behind bars where their greedy little hands can’t waste anymore tax-payer money. Benzeevi and HCCA………GET OUT OF THE HOSPITAL BUSINESS cause you are a disgrace to the community for what your HCCA has done to this Hospital. Shame on you!!!

  19. I am shocked….not!
    I have Benzeevi’s Commentary from April 29, 2017 right in front of me…..
    Lets recap.
    It’s time to get serious about TRMC
    Claims Construction is Fixed.
    Claims that Finances are Fixed. 36 months of consecutive profits……TRMC has realized a $28 million incease in net position.
    Claims Physicians Fixed. Court to reconfirm on the MEC case Oct 2 in Judge Mathias court…..(don’t miss it)
    Claims Quality Fixed….
    Claims Service Lines Enhanced.
    Then he goes into his usual song and dance about the 5 yr boycott and blames the Citizens Committee for all the failings…..
    Benzeevi has fed us a load of dung from about 6 months into his service contract. Now the chickens have come home to roost.
    Kick him to the curb…..walk him out with his box of belongings.

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