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UMC, El Paso Children’s Hospital reach deal; Commissioners Court needs to approve it next

It’s been a year of bitter negotiations and Tuesday a deal between University Medical Center and the El Paso Children’s Hospital was announced.

The two had been at odds over more than $90 million UMC says Children’s owes it for rent and services. Children’s says the debt was about half that amount.

Children’s will pay about $50 million and UMC is calling the other $40 million a capital investment.

Consummation and closing of the deal must be done by April 30, 2015. Commissioners Court needs to approve the deal.

Some highlights from the announced agreement between the two include:

EPCH would continue its mission and purpose as was intended when voters approved the hospital in 2007.
EPCH physicians and clinical staff can be assured the hospital will continue to operate as a separately licensed pediatric hospital offering the same level of clinical services it provides today. UMC will appoint members of the El Paso Children’s Hospital Board. EPCH’s CEO will report exclusively to the El Paso Children’s Hospital Board and will work closely with UMC.
UMC and EPCH will work together to ensure success.
UMC will not cease services currently being provided to EPCH.
Together with UMC, EPCH can continue to prioritize and deliver the quality pediatric services that El Paso’s children and their families deserve.

Other parts of the agreement includ UMC retaining the “unilateral right to take any action relating to EPCH either required by law and necessary for EPCH to maintain its tax-exempt status.”

UMC would agree that, post-closing, it would provide advance written notice to the County Commissioners if it should ever propose (i) to merge, consolidate, or combine EPCH into UMC, (ii) to terminate any major clinical service, or (iii) to make any material change to the EPCH governance structure set forth above.

View the full, proposed term sheet by clicking on the link under related content to the left of this article.

What’s Next

County Commissioner David Stout, who was present at Tuesday’s UMC meeting, said the deal is a step in the right direction.

“It’s definitely a step forward,” Stout told ABC-7. “This agreement is positive. Obviously the debt was huge. UMC is going to take that hit but this is the best for Children’s Hospital and the community.”

Stout said County Commissioners Court will receive the term sheet in its entirety Tuesday evening.

Commissioners Court will then have a work session Monday in executive session where they will be briefed on the term sheet.

“UMC now has to look at the feasibility of this going forward,” Stout said. “They are going to be looking at the financial books that Children’s is giving them now.”

Reaction From UMC, Children’s

J. Stephen DeGroat, a member of UMC’s board of managers, called the agreement a milestone for the hospitals and for El Paso.

“We found the common ground we needed to reach to give our community hope at realizing its vision of a successful Children’s Hospital,” DeGroat said in a statement. “If Children’s Hospital succeeds, all of El Paso succeeds – and the children and families of our region will continue to have the finest children’s medical care available.”

El Paso Children’s Hospital’s board chairwoman Rosemary Castillo also commented on the agreement.

“The final terms convey the vision that the El Paso Community had in 2007 to establish an independent Children’s Hospital dedicated to excellence in Pediatric Health Care for the children of El Paso. It is a testimonial to the dedication and commitment that the EPCH’s specialists and subspecialists made to this community when they chose to bring their skills and knowledge to our dedicated children’s hospital,” said Castillo.

“While today represents a new step forward for all of us at UMC, we still have a lot of work to do,” added DeGroat. “Our due diligence process is vital to the success of our agreement and must be accomplished as expeditiously as possible. This work will also run in tandem with our efforts to ready the processing of grant fundingrequests for Children’s Hospital. Some of these requests hinge on meeting upcoming deadlines for Medicaid supplemental reimbursement programs.”

The deal came on a day that was the last official meeting for two UMC board members. Cake was brought out for Laura Ponce, the vice chair, of the UMC board for her last official meeting. William Hanson, the chairman of the UMC board, did not attend his last official meeting.

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