Tulare’s hospital board is working toward finding a new management partner that could potentially enter into a long-term lease of the hospital. That process could get harder after news broke that the board may have lost its chance for $22m in emergency funding from the state — and as the state’s Department of Healthcare Services seeks repayment of $2.4m because of missing paperwork.
Additionally, the Tulare Local Healthcare District’s current interim management partner, Wipfli/HFS Consultants, is facing criticism from the community regarding the expense of keeping staff — including Wipfli itself — working at the hospital while its doors are closed.
Board members voted to begin the process of a “targeted” Request for Proposals (RFP) for a potential reopening by October 29 at the latest. After that date — one year from the hospital’s closure — reopening could become impossible.
Wipfli/HFS is recommending the board seek short-term financing and a long-term lease of the hospital, which would require voter approval under California law. The district could then use the lease proceeds to repay its debt and provide additional services to the community.
According to documents provided by the hospital’s interim management partner, Requests for Information would be distributed to healthcare groups as soon as this Friday, with a response deadline of June 5.
Interviews would be held during the weeks of June 10 and June 17 with an ad-hoc committee comprised of two board members and five community members. At the end of the process, the committee would make its recommendations to the board for final consideration and public presentation, with a final Letter of Intent to be signed by the first week of July.
Community Medical Centers and Adventist Health have previously stepped foot on the hospital grounds, Larry Blitz, the hospital’s interim CEO, said.
“We probably have 4 or 5 other firms that are interested, it’s just not public at this point, and we don’t have a formal process,” he said.
Potential partners would need to answer a number of questions, including how their mission would fit in with Tulare’s and whether they planned to invest in the hospital’s construction.
“What we’re trying to do is expedite the process so that those credible entities who are interested will be contacted,” Blitz said. “They will be vetted through a public process — an ad-hoc committee, first — the ad-hoc committee will then submit to the board their finalists. Those finalists will then come before the citizens.”
Wipfli Takes Heat
Dr. Patty Drilling and Deanne Martin-Soares, members of Citizens for Hospital Accountability, spoke during the meeting’s public comment section regarding Wipfli’s management of the hospital.
They stated the board should reconsider its agreement with Wipfli, and that paying for the company’s services wasn’t the best option anymore. Blitz, a consultant with Wipfli, called the comments “baseless.”
“I would like to encourage the board to consider and project the prospects of even a few more months of closure, or possibly more. It is time, and some may argue past time, for positions in the interim management team to be eliminated from the monthly expenses,” Drilling said.
She said she was thankful for the company’s turnaround efforts, but that the costs were becoming prohibitive given the hospital’s current status — and that “the only position worth keping at this time is the CFO position.”
Drilling stated that staff payroll totalled roughly $250,000 per month from a $1.4m per month budget — but that, when compared to collections over the last 75 days at $940,000, and payroll over the last 75 days totalling $625,000, the numbers become jarring.
“Decisions like these are never easy, but digging deeper into the black hole of debt is not feasible or responsible when considering how much we all hope for the future of our hospital,” she said.
She added that hospital administrators should consider extending out the hospital’s reopening to ensure the highest quality possible, encouraging them to reach out to the state directly about the possibility instead of having Wipfli do so.
“I would like to also remind the board that we who have fought so hard for over two years are not agreeable to opening for the sake of opening,” Phelps said, “and accepting the mediocrity of the facility or of the care which it will provide.”
Martin-Soares was much more blunt.
“The amount of efforts you are putting into this, while admirable, does not allow the ineptitude of Mr. Blitz to be seen by the board members. In my opinion, it is also creating a shotgun approach to managing the situation,” she said, speaking to Board Chair Kevin Northcraft.
Both speakers’ remarks were met with some applause from the crowd. Later in the meeting, another citizen spoke up — stating the board had the support of the community, but their management partner didn’t.
“I’m seeing people in this community that are doing things that Wipfli ought to be doing — I’m seeing things the board’s doing that Wipfli ought to be doing,” Bill Postlewaite, a former Bond Oversight Committee board member and retired school superintendent, said. “You’re a good bunch of people. I think you have the support of the community.”
Blitz says that he’s extended invites to both Drilling and Martin-Soares and received no reply. Drilling denied that she had been extended an invitation.
“I’ve extended invitations to them and other people to come to my office at any particular time,” he told the Voice. “They don’t do that. Their accusations are baseless; our 15 hour days that we’re working — Dan and I are paid the same amount of money, no matter how many hours.”
“I think it’s just sad that they’ve drawn conclusions without really giving me a chance. That being said, they have a right to their opinion, and I still extend any offer to anybody to come to our office and find out what we’re doing 15 hours a day when we’re here,” he added.
He said that the hospital was in the “deepest hole” he’d ever seen when his team came to Tulare after the ouster of the district’s former management partner, Healthcare Conglomerate Associates.
“If Wipfli was not here, you would be closed for the rest of your life. There’s not one person that could come in and do that — it’s a team,” he said. “Considering that we’re owed $2m, this firm has really stepped up because they believe in the mission of what’s going on.”
The firm has only been paid $125,000 of that to date, he said.
Blitz added that there was no indication that the state could extend out the hospital’s reopening.
“Those people who feel they can open a year from this summer — I think that’s very unrealistic, because I don’t believe we’ve got any indication at all from the state or OSHPD that they’re going to extend any license,” he said. “If they don’t extend the license, and we can’t open by October 29, the hospital will never reopen as it is right now. It would pretty much have to be razed and you’ll have to build a new hospital, and that would take five to seven years.”
Financial, Status Update
Blitz and his team have had conversations with California’s congressional delegation — including Senators Feinstein and Harris, and Congressman Devin Nunes — to connect them to resources and agencies, Blitz told the board.
“[Devin Nunes’] office basically communicates with us on a daily basis,” he said.
Blitz said he was “pretty amazed” at the response of the representatives.
“We’re very selective of when we contact them, because we try to negotiate on administrative means initially and not use the congressmen; but, if we get to a dead end, and we need pressure, or we need access, congresspeople have been very helpful in getting calls returned and getting access to the right people,” he said.
Blitz stated that the hospital was recently assisted by Roseville-based Adventist Health, which operates multiple hospitals in the Central Valley. The company paid the district $275,000 for its inventory of pharmaceuticals, which state officials said could no longer be kept by the district.
“If we didn’t get those drugs out of the pharmacy by that date, our license would have been in jeopardy,” he said.
In his financial report, Daniel Heckathorne, the hospital’s interim CFO and a Wipfli consultant, said that some payments are being withheld from the state due to a $2.4m debt.
The hospital has multiple payments coming in that he expects will still come through, he added.
“We literally rework the cash budget every single day, based on the latest information we receive,” he said.
He told the Voicethe state is demanding the amount after a Disproportionate Share Hospital program audit was ignored by the prior management company.
“We were told by our consultant that the state told them they were not going to send us this money because we owe this $2.4m for the 13-14 year. The money that was supposed to come to us from another program, AB13, they were going to hold because we owe $2.4m from the 13-14 year,” Heckathorne said.
Under the program, hospitals which serve a large number of low-income patients are eligible to receive payments for treating uninsured patients. Federal regulations require that states audit the hospitals that receive such payments, a declaration attached to the claim states.
A bankruptcy claim lodged by the Department of Healthcare Services states that because officials at the time did not comply with an audit of the hospital’s services between July 1, 2013, and June 30, 2014, the state wants all of the money paid under the program paid back.
“DHCS, Myers & Stauffer, and the District Hospital Leadership Forum reached out to Tulare several times asking for the data and Tulare finally sent a few support files to Myers & Stauffer on June 22, 2017. The data that was submitted was incomplete and insufficient for the DSH audit. We again reached out to Tulare asking for the proper data and there was never a response received,” Jillian Mongetta, with DHCS, writes in an attached declaration.
“Since Tulare did not respond to requests to submit Medicaid Cost Settlement support, the Uncompensated Care Costs (UCC) were adjusted to zero for inpatient Fee for Service due to lack of support,” Mongetta writes. “Similarly, since Tulare did not respond to requests to submit Rate Range payments support, their UCC were adjusted to zero for Managed Care due to lack of support. Due to Tulare having UCC well in excess of their DSH payment, Tulare must return the entire amount of DSH funds that they received for payment year 2013/14.”
The hospital’s leadership is hoping for a do-over. They’d like the chance to submit the reports that the prior management didn’t.
“We’re going to talk to our state senator to ask them to speak with the DHS to ask us to be given another opportunity to file the data that was requested for that 13-14 DSH audit,” Heckathorne said.
“We believe we can produce that data that the auditors have requested and if we can produce that and the state were to accept that information, we’re trusting that they would take away the claim for the $2.4m.
“We are hopeful that the state would consider these unusual circumstances and that they would give us an unusual exception,” he said.