UMC gives El Paso Children’s Hospital its ‘final offer’

University Medical Center’s board Monday approved what it said was its final offer for the troubled El Paso Children’s Hospital (EPCH).

The UMC board voted 6-0 to formally approve new proposed terms to address the financial turmoil at both UMC and Children’s. The proposal must still be approved by the Children’s hospital board. UMC gave them until Friday to accept or reject the offer.

Monday’s meeting went directly behind closed doors. A week and a half ago, El Paso County Judge Veronica Escobar told ABC-7 UMC’s “due diligence” process of Children’s financial records was about 90 percent complete, but there was an issue that still needed to be resolved.

ABC-7 was first to raise questions about El Paso Children’s financial status last spring after we found out the hospital had stopped paying the county hospital for rent and services. By the end of 2014, UMC said Children’s owed it nearly $90 million.

After bitter debate, both hospitals approved a term sheet last March which stated Children’s would come under the UMC umbrella while remaining a separate hospital, but still owe UMC almost $50 million. UMC would write off the other $40 million as “capital investment.” UMC would have the power to appoint a new Children’s board and oversee investments and operations.

That agreement dictated the “closing of the transaction shall be no later than April 30;” however, that deadline, and other benchmarks, have come and gone.

The hospitals have continued to negotiate details in private.

The Children’s Hospital sent a counter-offer which UMC board members reviewed May 12, then returned with further changes.

Since March, UMC has conducted an “industry-standard financial, market, and legal/regulatory compliance due diligence of EPCH operations and activities,” according to a UMC statement. “Issues have been identified during the due diligence process that must be resolved by EPCH before UMC will be able to close this transaction. It is not clear how long it will take to resolve these issues.”

UMC administrators said the latest proposal released Monday “fairly addresses Children’s concerns and yet provides essential flexibility to UMC and the eventual new Children’s board to take actions necessary to preserve Children’s.”

Asked by ABC-7 reporter Darren Hunt if Children’s will accept the most recent agreement, UMC Board Chair Steve DeGroat said, “I certainly hope so. We want this thing to move forward for the strength and the future of the Children’s hospital to serve our community.”

A spokeswoman from Children’s was at the UMC meeting but declined to comment.

El Paso County Commissioner David Stout, who represents the area, said, “I do think this is a positive step forward. I think now the ball is in Children’s court. From what I understand what was approved today is something that I would be happy with … I think this is the only way to go.”