SPECIAL REPORT: The state of El Paso Children’s Hospital a year after filing for bankruptcy

A year after it filed for bankruptcy, El Paso Children’s Hospital is back in the black and as secretive as ever.

The county hospital, University Medical Center, said Children’s owed it more than $100 million in unpaid rent.

The bitter fight ended when the bankruptcy judge approved a reorganization plan that called for Children’s to become a subsidiary of the county hospital.

The judge ordered UMC to forgive $58 million in rent and pay Children’s creditors, and for Children’s to pay back $48 million owed to UMC once it can afford to do so.

County Judge Veronica Escobar says the relationship is far better because now she sees teamwork.

“UMC and Children’s recently collaborated on drawing down more of the medicaid supplement dollars, which is something that frustrated many of us. The former board left $20 million on the table because it meant collaborating with UMC,” said Escobar.

Federal and state dollars are now flowing into Children’s, helping the bottom line. The hospital finished January $152,000 in the black.

In February it had $594,000 more in revenue versus expenses and in March expenses outdistanced revenue by $116,000.

While the collaboration between Children’s and UMC marks a change from the past, one thing remains the same: the work of the Children’s board is happening behind closed doors, just as it has since it opened in 2012.

“The Children’s Hospital is not a public entity, we’re a separately licensed, non-taxing, 501c3, not for profit Children’s Hospital,” Children’s Spokeswoman, Georgina Panahi said, “Meetings are not open to the public.”

Judge Escobar says she’s not concerned. “I don’t think taxpayers should be concerned about the closed meetings because they have access to the financials, which is the fundamental issue,” the county judge said.

The Children’s Hospital’s financials are on the UMC consent agenda, meaning they don’t have to be discussed, and they are not.

During an April UMC board meeting, the board jumped right over the items pertaining to Children’s financials. The attachments are not online, requiring the public to ask if they want to see the hospital’s financial records.

Judge Escobar told ABC-7 the decision not to make the meetings open is part of the bankruptcy settlement. “During the negotiations something that was really important to the board, to the doctors, to Commissioners Court, was that Children’s remain as autonomous as possible and an independent entity while still being required to engage in some transparency, as well as accountability,” she said.

Escobar told ABC-7 that decision was also made to protect the Children’s Hospital’s competitive advantage. “The decisions they make about which doctors to hire, or how to deal with a personnel issue with nurses, or operational changes they want to make, that is something that as 501c3, they are in a competitive environment and we wanted to honor that and respect that.”

What happens if something sets off a red flag?

“Commissioners Court is one step removed from the UMC board,” Escobar said, “The UMC board is the governing body that has the greatest ability to do something and step in, so I think the number one priority is that the UMC and the Children’s boards have a great relationship, which they do.”

Escobar said she has faith the relationship between the two hospital will not sour again. “Knowing who’s in charge and knowing the board members the way I do, I have tremendous optimism,” she said. “It’s not going to be easy, but I am far more optimistic today than I was a year ago.”

Escobar did say she expects this year to be the hardest because both boards are new and both hospitals will be getting new CEOs.

Following our request to see Children’s financials, a spokesman told us UMC is working on making sure those financials can be accessed on the internet by anyone.

We asked for an interview with Children’s interim CEO George Caralis three weeks ago, and UMC’s CEO Jim Valenti nearly two weeks ago, but both declined the offer.

The clause posted below is from the UMC-Children’s Bankruptcy settlement. It details the “reserved powers” the UMC Board has over Children’s.