El Paso Children’s Hospital, UMC fail to reach deal by deadline

Update: El Paso County Judge Veronica Escobar told ABC-7 shortly before 5 p.m. Wednesday that no deal had been reached between El Paso Children’s Hospital and University Medical Center.

The deadline was 5 p.m. Wednesday with negotiations ceasing at that time.

“Each side is stuck at how far they believe each party can go,” Escobar said.

County Commissioners will look at Children’s counter-offer during a meeting on Thursday.

Escobar and Commissioner David Stout oppose the counter-offer but where the three other commissioners stand is not clear.

“I don’t think we should go that far, I don’t think it would be responsible to go that far,” Escobar said about EPCH’s counter offer. “But if there are other members of the court who think to the contrary, or if they can convince us as we deliberate, I’m not sure what will happen tomorrow.”

If commissioners do not accept the counter-offer, then the two hospitals will go back to bankruptcy court.

Original Story: The El Paso Children’s Hospital has until the end of business Wednesday, Sept. 23 to accept University Medical Center’s latest offer.

At the time of this writing — shortly after 3 p.m. — EPCH confirmed no deal has been made, but “conversations continue.”

If EPCH accepts the terms UMC puts forth, EPCH will be granted 45 additional days to find a strategic partner to help stabilize their finances.

If EPCH does not accept UMC’s terms, the two parties will be back in bankruptcy court next month.

The Children’s Hospital CEO Mark Herbers and Board Chair Rosemary Castillo sent out a joint statement writing, “We are optimistic that together, EPCH and UMC will find the common ground needed to settle our differences fairly, keeping the best interests and well-being of the children in the forefront. And, we are optimistic that our County leaders will unite with us to preserve El Paso Children’s Hospital – and its independence – for years to come.”

UMC has suggested taking EPCH under the county’s wing to stabilize its finances, which is a move Herbers has rejected, citing his desire EPCH remain an independent hospital.

UMC has grown more cautious of trying to save EPCH after learning it may owe the federal government anywhere between $22 million-$66 million in penalties. EPCH reported to the government it paid $27 million in rent to UMC when it really didn’t. Without a deal, UMC said it’s a real possibility it might let EPCH close down.

When asked to comment on Wednesday’s negotiations, UMC declined.

EPCH ended its statement writing, “We await the first day of a new beginning to move forward in a new light, in a clear and common direction with the El Paso County Hospital District and County Commissioners.”

EPCH responded Sunday to UMC’s latest offer.

County Judge Veronica Escobar and Commissioner David Stout confirmed the response to ABC-7 on Monday.

The County officials described the Children’s response as a counter offer, and not a rejection, which they see as progress.

Escobar and Stout attended UMC’s board meeting at 3 p.m. Monday. The board went into executive session to discuss Children’s response and UMC’s counter offer.

On Sept. 17, County officials said UMC may simply allow the cash-strapped Children’s Hospital to close.

County officials have said Children’s may owe the federal government between $22 million and $66 million, depending on potential penalties, for reporting it paid $27 million in rent to UMC when it really didn’t.

The federal government used those expense reports to determine how much money in medicaid reimbursements Children’s would receive.

“If you have money that you probably weren’t entitled to you probably have to pay that back to the federal government,” said Andy Krasfur, a former bankruptcy attorney and trustee who has been following the case closely.

Stout said last week that UMC would not be able to take on Children’s debt if it owes that kind of money to the government.

“It would be impossible for UMC to assess a $66 million debt. That’s a liability that UMC cannot assume.”

When asked why Children’s reported the unpaid rent as an expense, Children’s CEO Mark Herbers said last week that Children’s followed general accounting principles.

“Our cost reports are filed consistent with medicaid guidelines which matches our audit report. We’ve recognized the expense, we’ve accrued the expense so we reported it as such,” Herbers said in an interview Thursday.