Tulare Regional Medical Center’s board of directors will consider a number of offers at its regular district board meeting on Wednesday, January 24, most geared toward moving the hospital to an eventual reopening.
Additionally, one company has made an offer to purchase property the Tulare Local Healthcare District owns at 906 N. Cherry Street, which currently houses the Tulare Hospital Foundation.
The board will consider contracts from Healthcare Resource Group to handle its accounts receivable needs, Alliant Insurance Services to handle employee benefits, and Southeast Personnel Leasing to handle certain legal employment aspects of the hospital’s operations.
The offer to purchase the property at 906 Cherry Street comes from Telnet-Rx, a company that, according to its website, provides “remote pharmacy solutions,” pharmacy management, staffing, and consultation.
The company’s website states that the company offers a “pharmacy remote medication order verification service that provides a cost-effective option to facilities that are unable to operate a 24-hour pharmacy.”
In its offer to the district, the company says that it has been searching for property adjacent to the hospital to operate a pharmacy for “the last couple of years,” and that the Cherry Street property provided an ideal location. Another pharmacy, the Cherry Street Pharmacy, is located down the road at 1028 N. Cherry.
Telnet-Rx would purchase the building for $70,000 and provide $35,000 as a down payment. It claims the district owes $57,010.58 in unpaid invoices, which the company would waive.
Larry Blitz, the hospital’s interim CEO, said the offer was unsolicited.
“We had an offer, that’s it — there wasn’t even appraisal,” he said.
Employment Support Services
Southeast Personnel Leasing would provide “Professional Employer Organization” services to the district, hiring the hospital’s employees as its own in order to provide payroll services, background checks, California employment law compliance services, and workers’ compensation insurance.
Although the hospital’s employees would work for Southeast on paper, the hospital’s management would be responsible for hiring, firing, and any personnel decisions — without the burden of handling payroll, maintaining separate workers’ compensation insurance, or handling background checks.
While Southeast offers benefits services, including health, dental, and life insurance, the hospital’s interim management group, Wipfli LLC, is recommending that a separate company be chosen to administer those services.
“[The coemployment arrangement] gives us a huge benefit in regards to workers’ compensation. It’s understandable why people would be really leery of a leasing situation. It’s a coinsurance situation. A leasing — and I think what they’re thinking back to is HCCA – but the agreement is nothing like that, and the district will have total control over the employees,” Blitz said.
“The company that is the coemployer has no control over management, no control over what’s going on, what they are is they’re providing payroll services, and they’re also providing employee benefits that are going to be much more advantageous for our employees in regards to price and the benefits. And that’s all that it is,” he added.
In-depth information regarding Alliant Insurance Services’ proposal was not available in the packet materials made available, but the related agenda item states that the quotes provided were “similar to the previous coverages provided to the employees,” with the caveat that the pricing did not exactly match the prior plans.
Blitz said that the co-employment agreement and insurance proposals were sought to get the hospital up and running quickly.
“We’re building a relationship with quality providers for longer-term coverages in the future. We do not want shady or shaky relationships, we want solid relationships so our employees can depend on excellent benefits and stable companies that will be able to supply that,” he said.
Passing Off Accounts Receivable
Healthcare Resource Group (HRG) has proposed taking over the hospital’s accounts receivable collections, according to the agenda item submitted by Wipfli.
Those services were previously handled by Navigant Cymetrix and terminated by mutual agreement after the company stated it had not been paid for its services since August 2016, claiming it was owed upwards of $1.7m.
If approved, HRG will provide “early out, self-pay” and accounts receivable services to the district, with HRG’s cut of payments ranging from 8% to 18% depending on the age of the account.
The company’s cut of accounts receivable would be 8.5% of any amount collected.
“We found [the accounts receivable] in a state of craziness, in a state of mess,” Blitz said. “This contract will help us secure cash very quickly and find out where we are in terms of old AR.”
Blitz stated that the arrangement was the best possible agreement, and that it was expected HRG would handle accounts receivable for a shorter-term basis. The district won’t be paying anything up front — just the percentages of payments described above.
He said the district doesn’t have the money to hire people locally at the moment and get up to speed — especially when a third party, like HRG, has employees, software, and processes already in place and working for other clients.
“They have an incentive to collect the money, they’ve already perfected the AR, and they have the systems to go out and collect the money in a quick fashion,” he said.
Blitz told the Voice that the hospital’s reopening is still contingent upon three factors: funding, approval of funding by the bankruptcy court and bondholders, and hiring more staff to gear up for a California Department of Public Health survey.
He said that the hospital’s forecasted financials, at the bottom of this article, indicate that the hospital could be profitable with a patient census of as low as 40.
“We’re all very excited about the possibilities,” he said.
Separately, the hospital’s interim management company provided a cash forecast and forecasted income statement, both available below. Representatives from Wipfli will discuss both in-depth at the meeting.