University Medical Center drops tax hike, seeks “effective tax rate”

ABC-7 is continuing coverage of the University Medical budget shortfall. El Paso Children’s Hospital is unable to pay what it owes UMC, a number the county hospital said is around $70 million. Just this summer UMC discovered Children’s won’t be able to pay it’s bills for the rest of the year.

UMC was considering raising the tax rate because their cash reserves are so low. They were also considering taking out a $60 million line of credit. But after Tuesday’s meeting, it appears things are looking up.

“It was about four months of intensive process,” said UMC CEO Jim Valenti.

UMC’s board approved it’s 2015 budget, a budget that’s been hit hard by El Paso Children’s inability to payback UMC’s past investments and future services.

“We all believe in the mission of the El Paso Children’s Hospital and that represents the continued investment,” Valenti said.

Not only that but UMC is still waiting on reimbursements from the state. So even though public perception of the county hospital has improved from it being last in the market in 2004 to first 10 years later , it’s clinics will attract 106,000 visits in 2015, up from 46,000 in 2011, and patient satisfaction and volume is up — UMC has had to cut back.

“We are making a lot of sacrifices,” Valenti said.

The 2015 budget includes 50 lines item reductions. One hundred positions have been cut, more than half of which were layoffs. Employees will not see merit raises, but they will see more costly benefits and five furlough days. New clinics can’t be built until 2017. And now Valenti is suggesting patients could feel the strain.

“We know that this will not impact quality, but it may impact convenience, so we are trying to mitigate any of that impact,” Valenti said.

While the hospital first believed it would have to raise it’s tax rate, the board approved an “effective rate” at $0.22 cents per $100 of home valuation. This keeps the tax rate the same for home owners, the average homeowner will pay around $237 per year. But because the county’s tax base has grown due to new construction, the hospital will get more money.

So now, what’s Children’s plan for the future?

“In talking with their board Chair Sam Legate and CEO Ray Dziesinski, they’re working on their own solutions to bring forth either improvements on their volume, improvements on their accounts receivable, billing, and expense reductions too, Valenti said.

The board approved seeking a loan up to $20 million to cover this year’s expenses. Valenti is confident property tax revenues and payments from the state will help them pay it off by early next year.

This will all go before Commissioners Court Wednesday at 1 p.m.