UMC CEO says charging Children’s Hospital $10 million a year for lease is ‘fair’

El Paso Children’s Hospital had a hearing in federal bankruptcy court Tuesday with several items on the agenda regarding the hospital’s finances.

Judge H. Christopher Mott continued until Aug. 31 a decision on the retention of investment bankers Miller Buckfire by Children’s. University Medical Center (UMC) and Children’s made the joint request to continue the decision.

Mott approved Children’s request to retain professionals in ordinary course of business with a cap set at $85,000 a month.

Children’s CEO Mark Herbers testified that the actual cost of services UMC provided to Children’s was about $406,000 a month but Children’s is being charged $1.228 million a month, paying $820,000 more a month than cost to UMC.

Dr. Carlos Gutierrez, one of Children’s founding board members, testified during the hearing on Tuesday about the potential impact of Children’s being taken over by UMC.

“I am so fearful a decision like this (UMC takeover) will set things back tremendously in pediatric care in El Paso,” Gutierrez said on the stand. “We are going to lose at a bare minimum half of those sub-specialists we have recruited over the past five years.”

UMC CEO Jim Valenti was asked to explain the comments he made under oath about having the support of 80 percent of the pediatricians in the community. ABC-7 reported in late July that more than 60 doctors affiliated with Children’s signed a public letter stating they do not trust Valenti or support a UMC takeover.

Valenti also admitted under the UMC rescue plan that Children’s would not be independent.

Asked about the takeover, Valenti said, “We never characterized it as a takeover, never once. We want to provide as close as possible what we promised the voters in 2007.”

Children’s attorney asked Valenti if he agreed that the lease is one of the more substantial obligations between UMC and Children’s.

“I would say administrative services and the lease,” Valenti said.

Valenti then answered “absolutely” when asked if he wanted Children’s to survive.

Children’s attorney asked Valenti if charging Children’s $10 million a year in lease payments was prudent to that goal.

“From a fair market perspective, absolutely,” Valenti said.