UMC, Children’s officials say they must rebuild trust, make hospital break even

The pending agreement between University Medical Center and the El Paso Children’s Hospital requires both parties put their bitter past behind them, said Children’s CEO Mark Herbers on Wednesday .

“In order to move forward you have to stop worrying about the past. You can’t move forward until you have buried the past,” he said.

The agreement comes after months of often contentious negotiations and frayed relationships between the two organizations. In March, the two came to an agreement only or it to fall apart. “We have been here and been disappointed. But I have no reason to doubt this time will be the successful time,” said Herbers.

County Judge Veronica Escobar said rebuilding trust will require a multi-faceted approach that includes the current Children’s Hospital board explaining the agreement to physicians and for Texas Tech, who employs many of the doctors who treat patients at Children’s to “keep the momentum for Children’s and keep physicians on staff.”

“We really have to involve the physicians for strategic planning in the future so that they own the vision, where we’re headed,” said Escobar in an interview Wednesday .

“They will get some degree of comfort and satisfaction that their worst fears are not grounded,” said Herbers of Children’s doctors.

Physicans who work at the hospital have said they would like to work only for an independent, stand alone Children’s hospital who prioritizes pediatric care, rather than a pediatric wing of a general hospital. “Nothing is envisioned to change. The organization stays. The corporate entity stays intact. There’s no daily change. It’s just a change of control. That control (of UMC) is generally not onerous or felt on a day to day presence,” said Herbers, adding Children’s will keep its own provider number.

BREAKING EVEN

While the efforts to save the hospital have been difficult and taxing, now begins the work to fix the root of the problem: making Children’s profitable or at least break even. This spring, Children’s was losing between $2 million and $3 million every month. “We are marching closer and closer, month by month by month toward a break-even,” said Herbers who cited Children’s is now losing about $1 million a month. Herbers said Children’s renegotiated vendor contracts, cut operating costs and improved revenues by increasing patient volumes.

“The children’s hospital will not be a burden in any way shape or form to any of the taxpayers in El Paso County. It’s performing well,” Herbers added.

County Commissioners approved a “no new taxes” for the current fiscal year, meaning taxpayers will currently not be affected by the Children’s takeover. Some homeowners may even see tax relief this year. “I know people are concerned what impact will this have on the taxpayer. And I want people to understand we are doing everything possible to mitigate an impact on the taxpayer,” said Escobar.

However, after fiscal year 2016, it’s unclear what the financial impact to taxpayers will be. “I’m not guaranteeing it won’t ever (affect taxpayers). I’m saying we’re going to work really hard not to,” said Escobar. She said UMC is slated to file a financial plan with details of taking over Children’s on October 19th . That’s when the County will have a better sense of how much Children’s will affect UMC’s budget.

Of UMC’s nearly half a billion dollar budget, 15% of it comes from local property taxpayers. The other 85% comes from federal funds, medicaid and medicare reimbursements, The other 85% of the UMC budget comes from Medicaid, medicare, indigent patient care reimbursement from the federal government, private care costs, commercial care costs and other federal and state moneys.

Escobar said the priority right now is to execute a smooth transition and rebuild trust. She said at some point, UMC would have to have “delicate conversations” with Children’s leadership and staff about possibly renegotiating costs and further cutting costs. She said the ultimate goal is make Children’s sustainable. “We want the same thing that they want. Many of us are the same people who helped build the hospital to begin with and so we want it to be successful.”

Details of the agreement will not become public until Friday but county officials have released some information on the deal, including a pending $7 million deposit from UMC due Friday at 4pm. The agreement also calls for a separate and new Children’s board and a new CEO.

UMC also announced Tuesday its CEO Jim Valenti will not renew his contract next year. “The medical staff was relieved to hear that Mr. Valenti’s input going forward will be diminished and a new CEO will be coming into play. It provides some hope that things can be different,” said Herbers.