County urges Children’s to come up with counter-offer to UMC, Children’s says bankruptcy on the table

El Paso Children’s Hospital will ask University Medical Center to finish a mediation process that was never completed, said Children’s Board Chair Rosemary Castillo on Wednesday morning. “The mediation was never completed and that was not by our choice,” said Castillo over the phone.

UMC’s board has set a Friday deadline for Children’s to accept a proposal that calls for the county hospital to take over management, by-laws and other major functions of the Children’s Hospital. UMC has said it will stop providing several services that Children stopped paying about a year ago if Children’s does not accept UMC’s proposal.

Castillo said Children’s had an all day mediation session with UMC on February 17th and had come to agreement on several issues “except two or three.” Castillo added the two parties during mediation came up with a term sheet different than what UMC presented to Children’s this week. Children’s board plans to request a meeting directly with County Commissioners court to present Children’s case and the terms that were decided on during mediation and what was outstanding, said Castillo.

Commissioners Court and UMC officials also met on Wednesday to discuss UMC’s offer to Children’s. “In terms of the discussion, whether things changed along the way, that’s how negotiations work,” said Ryan Mielke, UMC Spokesman, when asked why UMC’s proposal, was different than what the two parties had initially agreed to during mediation.

Mielke and County Judge Veronica Escobar both said a solution was “close” but said the matter is urgent with Children’s approaching a year of receiving services from UMC without paying. “To UMC’s credit, they have given a lot of time to the El Paso Children’s Hospital board,” said Escobar. She said County officials approached the Children’s board last May asking it to draft a solution to the financial crisis. Children’s initially said it was trying to negotiate with a strategic partner but that never materialized, said Escobar. She said the Children’s board since November promised to come up with a solution but hasn’t.

“The El Paso Children’s Hospital board has been given a tremendous amount of latitude to find a solution. Everybody feels the urgency, I don’t know that they do. They need to feel the urgency… they need to explain to the community why they wouldn’t come back with their own term sheet, with their own offer,” said Escobar.

That urgency include what’s now being positioned as a Friday deadline from UMC for a counter-offer and a 30-day notice of termination of certain administrative and support services that would not theoretically impact patient care, such as data entry, IT and payroll.

When asked if Children’s was considering bankruptcy, Castillo would only say “We are looking at any and all options available to us to make sure this hospital’s integrity is preserved.”

If Children’s filed for bankruptcy, it would “have a ripple effect through the medical school, through this community, it would put a black eye on all of us,” said Escobar.

State law requires 3 days of public notice for government meetings so Children’s meeting would most likely have to be next week. “We want to give them the opportunity to hear our terms,” said Castillo of Commissioners Court. Castillo said she would not comment on the specific terms UMC and Children’s had agreed to during mediation until after she had presented them to Commissioners Court. “We want to make sure we don’t create any additional animosity with the people who are able to make a beneficial difference to us,” she said.

In a subsequent statement, Castillo wrote:
“The EPCH Board has received a loud and clear message from the medical staff, hospital management and staff, community physicians, and El Paso families that they are 100% in support of the path we are on, to ensure El Paso’s only free standing, separately licensed children’s hospital continues to provide the best pediatric subspecialty care available in the region. The EPCH Board is committed to fulfilling the mission and is actively working to restructure its financial condition to make this happen. The EPCH Board looks forward to continue where we left off with UMC and finish the negotiations. This can only be done if both sides honor the mediated Term Sheet.”