By Deb Murphy
Following two hours of discussion and a recess to review the final agreement with Healthcare Conglomerate Associates, the four-day old Southern Inyo Healthcare District Board of Directors got down to the nuts and bolts Saturday. Would the three board members approve the contract, perhaps the only hope of keeping the State from revoking or suspending the district’s hospital license?
Board member Jaque Hickman wanted more time; Chair Dick Fedchenko wanted to sign a letter of intent to sign. But Mark Lacey made the convincing argument that the management agreement with HCCA was the “best we can hope for. Our constituents are the ones we have to answer to and they want us to save this district however possible.” Lacey noted that he’d never sign an agreement with this short a time frame in his own business.
Two issues appeared to tip the board in the direction of HCCA. The management company would present its plan to turn a struggling Southern Inyo Hospital around to Scott Vivona, assistant deputy director, Center for Healthcare Quality, at the California Department of Public Health to forestall license revocation and HCCA’s legal firm would handle the district Chapter 9 bankruptcy filing.
With between $2.5 and $3.5 million in district debt, HCCA’s Dr. Benny Benveezi is betting on his own ability to duplicate the turn-around his firm made at Tulare Regional Medical Center by fronting the money needed to get SIH open, running and eventually profitable. The funding is in the form of a loan to the money-less district. All district revenues will be managed by HCCA as part of a $65,000 monthly fee.
The signed contract is for five years with a 30-day back-out clause for both parties.
Benveezi outlined his approach. First, HCCA would hire a Chief Restructuring Officer to oversee and reorganize hospital operations. “We’ll change the driver to take this bus in a different direction,” he said. Then he went through a list of funding sources he said SIH had not taken advantage of, including Intergovernmental Transfers; 340B, a federal program allowing eligible hospitals to purchase drugs at a discount, Critical Care funding by accurately reporting the cost of keeping the facility running.
Re-opening the Skilled Nursing Facility was also a short-term priority. The last of the 15 patients transported to Bishop Care Center left the facility Wednesday, December 30. “SIH has not been working with patients,” he said, evidenced by the percentage of “self-pay” patients.
With the expansion of government-sponsored insurance, “everybody should be covered,” he said, noting that the hospital can sign self-pay patients up for Medicare or Medical. “All this represents several million dollars available to but not being taken by SIH,” he said.
“This is a team effort,” Benzeevi told the packed audience. “This will not happen by the management group or the Board but by the community coming together.”
Before Fedchenko adjourned the meeting at dusk, he advised employees to check the SIH Facebook page for notices on returning to work, dependent on Benzeevi’s ability to convince the CDPH to allow the hospital to re-open. The hospital’s IT system was shut down Thursday and Inyo County staff will be coming in today to get it back up. In addition, fire system water lines had frozen and burst. An employee caught the break in time to avoid serious damage. The heat was turned back on to avoid further issues.
The Rural Health Clinic remains open.
The first two hours of the open session started after 11 a.m. with a report from the Board’s closed session. Fedchenko reported no action was taken on two cases of anticipated litigation or on personnel discipline/dismissal/release. Then the board dove into a discussion of the contract with HCCA. Benzeevi e-mailed the contract to the board and district lawyer, Scott Nave, following last Wednesday’s extended Board meeting. Since Thursday morning, two new versions were forwarded representing negotiated changes.
According to Nave, other management firms had looked at SIH’s situation and “backed out.” What appeared to concern both Nave and the board was the Tuesday deadline. “The parties haven’t done their due diligence,” he said, commenting that nine months is the typical timeline to work on a contract similar to the one HCCA and SIHD were looking at.
Fedchenko had been made aware of possible grant funding. Lone Pine Chamber of Commerce Executive Director Kathleen New wanted the community to launch an e-mail campaign to get more time from the CDPH. But the consensus was nothing would change in the short-term and the only option available was the agreement with HCCA or suspend the hospital’s license.
Following the decision to sign the management agreement, the Board heard from Ashley McDow, a partner in the bankruptcy and restructuring division of Baker & Hostetler, LLP. McDow was also present at last Wednesday’s Board meeting, providing some of the technical legal details.
Chapter 9 is available to municipalities, McDow explained, allowing for a re-adjustment of debt. “You’ll likely get an automatic stay to give you breathing room,” she explained. The process involves working with creditors while allowing the agency to continue to operate. In terms of existing debt, McDow explained that adjustments such as stretching out the payment time-line to reduce payments and “cramming down” secured debt by assessing the current value of the equipment in question and paying off the debt based on that reduced value.
“This gives us more freedom in what we do with the available cash,” she said.
In essence, the Chapter 9 filing “is a bonus” of the management agreement, paid for by HCCA funds as part of the initial loan of operating capital for the hospital.
Lacey noted that some of the hospital’s vendors are local companies.”They will suffer under this path,” he said. “I apologize.”
In other action, Fedchenko explained that according to the district bylaws, the current three-member Board can appoint members for the two unrepresented areas, 3 and 5. The request for letters of interest will be posted on the Facebook page as will maps defining the two areas.