UMC audit show serious financial problems

ABC-7 is getting a closer look at the serious financial issues at the El Paso County Hospital District. UMC staff presented a quarterly report and audit to county commissioners Monday, including details on the $66 million they say have been lost over the past fiscal year. UMC says that’s due in large part to the debt owed from El Paso Children’s Hospital.

“The financial statements for UMC indicated a $66 million loss this year,” said UMC board chair William Hanson. “Most of that is a result of the Children’s (Hospital) inability to make payment on their contractual obligations to UMC.”

But the problems don’t stop there. On top of the Children’s Hospital debt, UMC saw a general downward financial trend beginning in 2011. Both cash on hand for operations and cash reserves and investments have been declining steadily since then. As a result of these factors and the ongoing problems with El Paso Children’s, UMC’s bond rating was reduced by Fitch in August and Standard and Poors in December of last year.

A UMC spokesman said the ratings could be reduced again if a resolution isn’t reached before the next bond ratings round in 2016.

Hanson said he’s hopeful that the Children’s Hospital’s ever-growing debt to the county can be resolved in the next few months.

County commissioners are also ready to resolve the issue and said it will take work from both sides to get there.

“Neither party is off the hook,” said County Judge Veronica Escobar. “The negotiations are so important to look at what the actual costs were going backward. Once that is negotiated down, it’s going to be important because of next year’s audit.”

Hanson said that it has not received a payment from the Children’s Hospital for sharing its resources and providing services since February of last year. Currently, UMC is expecting the loss for this current fiscal year to be about $16 million, with $25 million in new debt from El Paso Children’s and $8 million to $9 million in money coming in.