UMC’s offer to help El Paso Children’s Hospital expires

El Paso Children’s Hospital board of directors did not accept University Medical Center’s proposal and let it expire on Friday.

UMC officials said the proposal was designed to help Children’s survive as a separately licensed nonprofit hospital with a separate board, medical staff and CEO. The offer also was designed to keep the Children’s Hospital open and operating in service to all El Paso.

The proposal called for UMC to take over management, by-laws and other major functions of the Children’s Hospital.

“We proposed a sustainable solution to the El Paso Children’s Hospital on Feb. 23,” William Hanson, UMC of El Paso Board Chairman, said in a statement. “Today, we know that our proposal was not accepted. The UMC Board of Managers will now explore its options on how to move forward after this disappointing turn of events.”

Children’s owes UMC nearly $90 million, according to UMC. It is a figure that Children’s disputes.

“UMC has provided services that the Children’s Hospital abruptly stopped paying for — but continued to utilize,” said Hanson.

The UMC Board of Managers had hoped that the Children’s Hospital Board would have accepted the UMC proposal and work with UMC towards a smooth transition, according to UMC’s statement.

“In light of the Children’s Hospital’s decision not to accept the UMC proposal, the notice of cessation of services remains in effect and as of March 25, UMC will cease providing certain non-clinical services,” added Hanson. “It is the responsibility of the Children’s Hospital to make alternative arrangements, should that occur. The decision of the UMC Board is that UMC will not continue to provide these services for which the Children’s Hospital has not made payment since early 2014.

Hanson added, “UMC has extended a hand to Children’s Hospital but Children’s Hospital has been unwilling to accept it. This is disappointing, but it is their prerogative since they are an independent, non-profit entity. I hope they have a plan on how to continue operations after UMC stops paying for the services they have been receiving for free.”

“Our proposal was a solution that would have allowed the Children’s Hospital to remain a separately licensed nonprofit hospital, with a separate board, medical staff and CEO,” he said. “The Children’s Hospital would continue to offer quality pediatric care and pediatric specialists desperately needed by our community.”

Hanson also called recent statements egarding agreements committed to by the Children’s Hospital Board shortsighted.

“It is important to note that the Children’s Hospital Board has been responsible for signing all major agreements with us and other institutions. At this late stage, after accepting services that they have not paid for, we are hearing claims in the media that the Children’s Hospital was somehow pressured into signing standard agreements years ago, for services and more. I have trouble believing that any credible board or board member of an institution, the size, importance and complexity of Children’s Hospital, would make such a claim.”

Rosemary Castillo, Children’s board chairwoman, said Children’s had an all day mediation session with UMC on Feb. 17 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. Castillo said the 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. A meeting had not been requested as of Thursday.

Commissioners Court and UMC officials 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 included Friday’s deadline from UMC to accept the offer or give 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.

Children’s announced Friday that a new CEO, Mark Herbers, had been hired.

Read more about Herbers’ hiring, and his recent work, here.