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ABC-7 Xtra: Children’s Finances

>>> live, where news comes first, this is “abc-7 xtra. >> welcome to “abc-7 xtra. good evening, i’m maria garcia. glad you’re with us tonight. about a year ago, abc-7 broke a story about financial troubles at the el paso children’s hospital and what appeared to be becoming a strained relationship between it and university medical center. the children’s hospital’s board has opted to file for bankruptcy instead of accepting the final offer to settle $90 million in debt. that move caused disillusionment and outrage in several county leaders and also, the children’s opt board, the current hospital board has refused to answer questions about it publicly. this news doesn’t just affect patients, taxpayers are also on the hook. if you own property in el paso county, you’ve been paying each month for the debt incurred to build the children’s hospital. it’s no secret this has gotten bitter. county commissioners say umc, and thus taxpayers, are owed an explanation from children’s, because they’ve been essentially subsidizing the children’s hospital for the last year. children’s leadership says umc has been oppressive, practically a bully, whose endgame is to take over children’s. joing us tonight, dr. carlos gutierrez, he was one of the first members of the el paso children’s hospital board, who fought several years for it to be built. once even called the father of the children’s hospital. and county commissioner david stout, one of the commissioners chosen by the county to oversee the relationship between umc and children’s. you can e-mail us your comments and your questions now to call us at 915-496-1775. or tweet me @mariagabc7. we reached out to the current children’s hospital board, the hospital administrative leadership, and even children’s doctors. all of them declined to be on the program tonight. umc officials said they’d be out of town or unavailable. but as we’ve told you before, we cannot allow the refusal of officials to be on this show to prevent us from asking the questions. taxpayers, this community deserves an honest discussion. before we get to it, let’s get a recap of the eventful week. >> they have harmed the taxpayer, they have harmed umc, they have harmed texas tech, they have harmed this community. >> strong words from county leaders after learning through the media that children’s was filing for bankruptcy. >> i think what’s sad is that we’ve been negotiating in good faith until just a few days ago. >> umc board president steve de groat says that knowing el paso children’s had voted to approve bankruptcy back in february, none of what’s happened since seems sincere. but children’s ceo mark herbers says they had every intention of working things out, but it was umc that couldn’t be worked with. >> the unwillingness to commit to the deal that we had mediated, and not take into account the seriousness of our concerns, that we were willing to live with that deal as mediated, and with changed terms it just wasn’t acceptable. >> children’s claims a prior study said children’s was supposed to be reimbursed by umc for care it provided to people who couldn’t afford it. but children’s says instead umc kept the money for itself. >> the feasibility study had many assumptions, but the feasibility conclusions were the basis by which the hospital was promoted and the bond issue ultimately passed, some of those assumptions never came to fruition. >> and this week, four children’s board members resigning in a few days, including dr. john guggedahl, attorney sam legate, judge tom spieczny and chris kleberg. children’s says they all resigned for personal reasons or because they no longer had time to serve. five board members remain, including chairwoman rosemary castillo. we’ve tried repeatedly to reach her by phone and at her office, but she has refused to make herself available. county commissioners are upset umc will probably have to spend hundreds of thousands of dollars in attorney fees in the bankruptcy case. >> and as you see board members dropping off their board, to me that’s a sign that there wasn’t full agreement and that they still went ahead with it, even though there might have been a split board, that a handful that a small group of people made the decision to take us down this route and they’re not even talking to the public, they’re not even explaing themselves. it’s a travesty. >> abc-7 learned from children’s bankruptcy filings the hospital admits it owes more than $4 for every one it has. it reports $23 million in assets, and $99 million in liabilities as of its last audit. the bankruptcy judge has said another mediation with umc is likely. >> in the worst case scenario, it could be liquidated or it could be sold off. >> joining us now are dr. carlos gutierrez, a founding member of the el paso children’s hospital and county commissioner david stout, one of the commissioners chosen by the county to oversee the relationship between umc and children’s. thank you for joining us. we really appreciate it. >> you’re welcome. >> thank you. >> thank you. so dr. gutierrez, i want to ask you, you served on the children’s hospital board. i think surely you can see why umc thinks it’s deceiving that the children’s hospital authorized bankruptcy in february and this whole time has given the impression that they were coming to an agreement with umc and were negotiating in good faith. >> well, my understanding is that a number of times they had agreed to mediation and every time that the decision was going to be made as to what the final things that were going to be agreed upon, there were last-minute changes. and even as of about a couple of months ago, the board, the children’s hospital board wrote — met with the majority of us doctors, doctors in private practice, some specialists, texas tech doctors and said we’re coming to an agreement with umc and this is what it is, and we weren’t happy with it. the physicians, but we trusted our leadership, our board, and our ceo and said you know what, if this is the best that can happen, we’ll go with it. but we are in agreement. >> but if that was going on, if they were still negotiating, why authorize bankruptcy in february then? and not notify umc, not notify the public and continue in negotiations? >> you know i wasn’t been a member of the board for — for a couple of years. so i can’t answer you that. i’m here because you all asked me to be kind of the voice for the physicians. and i wasn’t privy to what happened in february, i wish i could tell you but i don’t have an answer for you. >> david, i want to ask you, if you have an entire organization, a board essentially saying over and over umc has been unfair, umc has essentially set us up to fail financially, umc is going to take us over, and i know the county keeps on saying those are irrational fears, that’s not going to happen, but people genuinely believe that, clearly, that’s the main component of why this has fallen apart. trust, trust is a major issue here and if you have an entire organization that does not trust the umc, then don’t you have to question if umc’s leadership at least fostered an oppressive relationship that soured these negotiations? i mean, we know jim valenti has been criticized by this own board for not being collaborative enough with other organizations. >> i think it’s unfortunate that the trust has broken down, but, you know, it’s hard for me to believe that there’s a conspiracy theory that this was set up to fail by jim valenti or the umc board. we have a new umc board to put in place a vehicle to make sure that the hospital would continue on with the service levels where they are at this point. much beyond the four years that they asked for within the terms. i’m not sure if there’s a lack of communication or a purposeful lack of communication between children’s board or even between the board members and the physicians at the hospital. you know, it’s really unfortunate that we’re at this point. >> speaking of lack of communication, dr. gutierrez, you’ve always been really accessible with us and when you were trying to convince the community to build the children’s hospital, also you were accessible to the public, questions, they had concerns they had. as a former member of the children’s hospital, i have to ask, if you’re going to make such a consequential decision, doesn’t the children’s board owe it to the public to explain their decision to the taxpayers who umc says have essentially been subsidizing the children’s hospital, don’t they owe it to them to answer questions? why aren’t they talking to the public? >> i agree. they need to be straightforward and give us what’s going on so we can be — you know what’s going on, but the same with umc. and i think you’re getting the run-around from both parties and we as physicians are very frustrated with this. our morale is very low but despite our morale, we’re still taking care of those kids to the best of our abilities. but yes, i agree, not only the children’s hospital board, i wish they would come out with more information to the public as well as the umc board and they’ve got to be honest with the public because right now, the doctors, and i’m sure the community, doesn’t know who to believe in. it’s a blame game, you did this, you did this. and we just want things to be worked out to the best, so that the kids can get the best care possible where they are now. >> i think that’s the common denominator now. everyone involved says that’s the goal. children’s leadership has described umc almost like a bully, saying, you know, they were essentially coerced to sign these contracts in the 11th hour before opening the children’s hospital and that these contracts didn’t benefit the children’s hospital but benefited umc. but really wasn’t it the responsibility of the children’s hospital board when the children’s hospital board opened to vet these contracts, to analyze these contracts, to make sure that they weren’t signing anything that was detrimental to the children’s hospital? >> i was on the board. i was on the board and i remember that meeting at loretto, mr. valenti was there, our first ceo that we had, and the whole board of children’s hospital and we were told, if we don’t get this thing signed, this hospital will not open next week. it’s going to happen in one, two, three months and we had said we can’t wait so long and i can honestly tell you we were convinced by umc and i was on the board for children’s, we’ll take care of all the petty things and we’ll take care of those and both CEOs will handle it and as a board member i trusted our ceo, i trusted mr. valenti, i trusted the umc board, i was a member of the umc board before. so we placed a lot of trust in both our CEOs. but we were given that alternative, that if you don’t sign these things, if these things don’t get signed, this hospital’s not going to happen. and we wanted that hospital to hope, you know, sooner rather than later. >> looking back, i have to ask you, do you regret signing those contracts and essentially four days before the hospital — >> i regret giving the authority for our administration to do it in retrospect but hindsight is 20/20. >> let’s go to our phone lines. we have a caller from west el paso. what’s your comment or question? >> i think the news media needs to understand that the big losers are parents who have rare condition children, that have autoimmune disorders and i find it appalling that both parties couldn’t come to an agreement because the big losers now are the parents with children like these. >> thank you so much. so she’s saying the losers here are parents whose children are ill. >> the big losers are not going to be the children, i guarantee you that. our doctors are there, no matter what. they have through all this mess that has been going on through thick and thin and despite their morale being low, our performance has been at a top notch level to the point that they had an inspection recently, jaco, something that all hospitals have to pass. during the worst crisis that was going on between both parties, we passed that inspection. the children’s hospital, with flying colors. it got one of the highest ratings of all the country. and i wish that would be publicized. so whoever called right now, i feel for you, but let me tell you, the physicians, my colleagues are not going to let you down. they’re going to let our kids down. we will be there for you through thick and thin and we will make sure the right thing is done, whether it be through working for children’s hospital board and fighting them or working for them or fighting commissioner’s court, fighting the county judge, making sure they go through with their promises, umc, we will make sure that those kids are going to get the top-notch care that they deserve. >> now, dr. gutierrez, we know there are very qualified pediatric subspecialists at the children’s hospital and one of the contentions that the children’s hospital physicians say over and over again is if we become a subsidiary of umc or if we become just an organization under the umbrella of umc, it will be really hard for us to recruit good doctors because everybody wants to work in an independent children’s hospital. now, i’m not a doctor or an economist or an expert in these things but we do some research and many hospitals who file for bankruptcy close. and so if i’m a doctor and i’m considering which hospital to go to, chances are the one that just filed for bankruptcy is probably not going to be the one that i’m going to choose. and so the question is if it’s about recruiting doctors, what was the worse then of maybe what children calls these two evils? accepting the umc offer or filing for bankruptcy? >> you know, when we accepted the mediation, the terms, we were presented the mediation terms by the children’s hospital board, we did not like them but we said you know what, the children’s hospital board, we’ll work with that. we don’t like it. we would rather have you go for bankruptcy and i’ll tell you that unanimously almost to a doctor. they preferred bankruptcy and that’s why i wish commissioner’s court, the media, the public would maybe ask the doctors what they feel because we know what’s going on in that hospital. and if a person is going to make a decision that well i’m going to send my child to this hospital because it’s not gone bankrupt, you’re comparing hospitals that went bankrupt in 2014, i think there were 10 of them, they were all adult hospitals. phoenix children’s when they opened their children’s hospital, went bankrupt. and now, they are one of the top children’s hospitals in the country. we can do that. and we will do that. >> okay. we have to take a break. when we come back, we’re going to take more of your phone calls and e-mails. you can call us at 915-496-1775, tweet me at @mariagabc7 or we’ll be right back. >>> welcome back to “abc- xtra.” we’re talking about the future of the children’s hospital and its relationship with umc. let’s take deborah on the east side. she’s on the phone. what’s your comment or your question? >> hi, i would like to make the comment that it takes two to negotiate and umc always comes out on the tv and always explains themselves and children’s doesn’t and if that’s the way they’re going to show us, that’s how they’re close minded to umc. so children’s, it takes two to negotiate, okay? thank you. >> okay. thank you very much, deborah. what do you think about that perception, that children’s is just not accessible, not as we said answering questions? >> as a physician, i wish they would be more outgoing to the media, to the public. not being on the board, i can’t answer but i really wish, because it makes them look like they’re — like what we’re reading in the paper but actually i know those people and they’re great people. on both board. they’re fantastic people. they give their heart, their soul, their passion in doing the job they’re doing and they’re both doing the best job they can. but i agree. i wish they would come out and explain some of those things. keep the public informed. >> okay. commissioner, i want to ask you about this. children’s says umc in the complaint filed in the bankruptcy case, umc basically kept money that was supposed to go to children’s hospital, that umc kept $12 million that children’s should have received for caring for people who couldn’t afford it, the indigent. that’s a pretty serious allegation. >> yeah, it is a serious allegation. it’s hard for us to know because children’s is a private entity or institution. they don’t share their financial information with us so they can tell us that but i haven’t seen anything to actually prove that at this point. it may or may not be true. you know, there’s so many different, you know, allegations and, you know, throwing around of the blame. but i go back to the argument that like the lady said on the phone, it takes two. umc and children’s signed those contracts both. i don’t know if anybody had any guns to anybody’s head so to speak but, you know, if you had to delay the opening of the hospital for three months and not have to deal with all of this that’s going on right now, i think that would have been the best choice back then and i also think when you talk about negotiating, there’s been a lot of misinformation put out there by children’s when it comes to, you know, what umc was offering. i did a comparison of the final proposal that umc gave to children’s and the original terms and there are about four major differences. three of those major differences are concessions that umc gave to children’s. one having to do with the insurance coverage that board members would receive if they were sued to protect them, if they were sued for mishandling or mismanaging. one had to do with the lien, which, by the way, the lien was never in any of the terms and that was one of the big sticking points for children’s starting two or three weeks ago, it was the first time i had ever heard of the lien. >> umc took the lien out last summer, about a year ago. >> right, right. but as one of the sticking points for children’s, they wanted them to retire the lien or remove the lien. >> so umc took out the lien a year ago and then just about two weeks ago, that’s when umc started hearing that children’s wanted that lien lifted? >> that’s when we started hearing about that. and umc actually included in their final proposal an offer to subordinate the lien, to allow other creditors to come in ahead of them. and the other sticking point that children’s is talking about is the fiduciary duty language. there wasn’t something added in there. it was more of a drilled down definition of what that actually means. what umc’s fiduciary duty is or would have been if they would have taken a hold of children’s. and so, you know, i think — i think that they’re misleading the public. umc gave many concessions and the commissioners court was working on an interlocal with umc to provide other protections, not just to children’s but also to the taxpayer so that umc if there was to be a consolidation or anything to combine or reduce any major service lines, that it would have to come to the commissioners court first. i didn’t believe that umc or jim valenti should have that unilateral decision because that has to do with getting rid of the hospital and there should have been some accountability to taxpayers with that issue but it also provided some very deep protections to the children’s hospital going into the future. and i don’t think that they even let the whole board know about that. i had a meeting with mr. herbers and rosemary a week ago and they hadn’t even seen it. i had been working for the last eight weeks going back and forth, gave her everything that she asked for, okay. and i don’t even know if the doctors know about that, i don’t know if the rest of the board knew about that but mr. herbers, the ceo, hadn’t even seen it until three weeks ago. >> so you’re saying the board chair of the children’s hospital was not even communicating with the ceo of umc. >> that’s what was apparent to me. i don’t know how he hadn’t seen the interlocal. i mean, you know, there was different editions passed back and forth and even though she may not have had the written interlocal, at least she could have communicated that we were working on something. >> dr. gutierrez, what do you think when you hear the county saying we were bending over backwards to try to satisfy the children’s hospital, to try to quell the fears that umc was going to gobble them up? if umc wanted to make any changes with the children’s hospital, they would have to go to the commissioner’s court first. what do you think when you hear that? for the doctors? >> as a doctor, talking to the doctors also, no trust. no trust. and so i know several of the commissioners, including our judge, they’re wonderful people. they’re honest people but i can’t change the feelings of us pediatricians, physicians in the community. they were here with a situation that are we going to trust umc and if umc does something wrong, are we going to trust the commissioners court? we gave into those mediation terms and i rember i was quoted in the media saying okay, you know what? we’ll go with it but we’re going to keep an eye on umc and we’re going to keep an eye on commissioners court to make sure they fulfill their promises, that they do now because commissioners court can change and umc board can change. all of a sudden, new board comes on and, all of a sudden, everybody feels differently. i’ll tell you as a physician, we just want this thing settled and we want what’s best for the kids. >> we have a phone call. lydia from the west side, what’s your comment or your question? >> i’ve been a nurse in the medical county for a long time. i apologize but it is the fault of umc that has pushed the children’s hospital into the corner. so children’s hospital has a right to declare bankruptcy and protection against umc. thank you. >> okay. so lydia from the west side saying it’s the fault of umc, it pushed children’s into the corner. and one of the examples that people give for essentially umc pushing children’s into the corner is the rent issue. it comes up over and over again and the question is why is umc charging children’s nearly $1 million, $800,000 a month in rent when taxpayers paid to bill that building? >> that’s a good question. i wasn’t here when that decision was made but there were contracts signed by both parties. like i said, i’m not sure what power umc had over or jim valenti had over the board back when these contracts were signed but they were signed by the children’s board. and these are not uneducated, unintelligent people. these are people that are doctors, that are lawyers, they run businesses, and it’s really hard for me to swallow a group telling me oh, you know, we were duped. well, if you were duped then you were not doing your job as a board member. >> and i have to ask you to respond? >> i was on the board and there were clauses in there that said if things did not work out after two years, we would go back to the table and renegotiate. i don’t see any renegotiation for the table. the reimbursement rates, we discovered we were going to get the reimbursement from the government, that we had planned on. and that’s where i think — i big to differ. umc i have a feeling did not — was willing to renegotiate those terms. i agree, we should not be paying 1 cent for rent. this is a hospital from the people. >> why did you all agree to it? surely there must have been some question when it came up, when you saw the contract. even if there was a clause in there to renegotiate two years later, why agree to even pay rent in the beginning? >> in retrospect, a wrong decision, wrong decision on my part personally, i’ll admit to that. but, you know, one thing that i wanted to state, one of the questions you asked about the $3 million a year that umc is supposed to be paying children’s for indigent care that they haven’t received. apparently, we don’t know if that’s for real or not. well, that’s where perhaps bankruptcy, the judge can determine what is really real and what is really not? and i think that that’s a positive for the communities to find out you know what? umc is telling the truth. umc is not telling the truth. children-size giving us the run-around. the truth will come out, by a third party, a non-biased individual. >> i see you nodding your head. i’m going to get to your response but i have to take a quick break. we’re going to be right back. we’re going to get the commissioner’s response to that. you can call us at 915-496-1775, e-mail >>> welcome back to “abc- xtra.” commissioner, we just have a couple of minutes left in the program but i saw you nodding your head. >> i heard something that the doctor said that i thought was interesting and it has to do with the reason why i think that this board is going to bankruptcy is because they want to prove to the public that they weren’t at fault. and that’s what this bankruptcy is. you know what umc duped us, it wasn’t our fault, it’s our reputation on the line. i don’t think it’s about the hospital. i don’t think it’s about the children. i think it’s about their reputations. i think that going into this uncertain future, it’s really, really a bad decision. umc had offered them to, you know, forgive $40 million. a children’s hospital into the future. and now, this is chapter 11, what if a judge decides you know what you can’t pay off your debts, you can’t restructure or reorganize? then you’re going to have to chapter seven and that means liquidation and bye-bye children’s hospital. that is an uncertain future that we don’t really need in this community. i think that it’s gotten to the point where, you know, people, the relationships have deteriorated so much that it’s clouded people’s judgment, in my opinion. >> we have an e-mail. it seems to me that this can be resolved by county commissioners court to make sure jim valenti does the right thing. you’re taking umc’s side without calling them out on everything they did wrong, as well. please county commissioners be neutral and respect both sides. jim valenti did have a gun to people’s heads and obviously, she doesn’t mean that literally but what do you think about that? >> well, i know that the commissioner’s court in the past has definitely taken mr. valenti to task for issues that they’ve seen with him and i don’t think that that will cease to continue. if, in fact, there were some things that he did that were not correct or his place to blame, we need to look at that. i definitely agree. >> elizabeth says i did not vote for the hospital because i knew this would happen. providence already had children’s facilities and they are a tax-paying entity. taxpayers cannot afford any more taxes and this will be huge. and that’s from elizabeth. so some people apparently seemingly already disillusioned with the children’s hospital. what do you say? >> those arguments hold no ground because as much as i respect providence, it’s not a children’s hospital. it is a floor. el paso children’s hospital is the mecca of pediatric care in el paso. whenever any patient is admitted there, they see the care they receive, they will not go anywhere else. it is just an amazing facility with a top notch specialist. you cannot compare el paso children’s to providence. providence is a wonderful place and it takes care of kids, it takes care of them well but the subspecialty care that is available at el paso children’s is second to none. >> i agree. and i think that’s why at least myself and my colleagues on the commissioners court are fighting so hard to make sure that this hospital continues recognized the services at the level that it is at this point. >> okay. an e-mail from victor, why do people desire to be on boards? status, perks, political power, sometimes being in the spotlight, what a shame, these are mostly true. why can’t board members be humble and sincere and genuine about serving the public, serving the organization, getting considered and selected for a board has its responsibilities, each and every day one of these board members should be held accountable. one more phone call, what’s your comment or question? >> i would like to know why umc let this debt get so out of control. they knew about it a year ago. why did they not try to resolve the issue then? where was the umc leadership at that point? >> do you want to take that question? >> i think that we definitely should have jumped on this as quickly as possible, as well. i don’t think umc is free of guilt here. i think that there was a perfect storm. and both parties had some issues and nobody is free of blame. but the point is going forward, we need to work together and figure this out. >> okay. all right. well, thank you so much approach we’re out of time. thank you very much dr. gutierrez and thank you so much commissioner. thank you for being with us here on “abc-7 xtra. we

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