District enters agreement with for-profit company.
Perhaps seeking divine intervention through a higher power in its efforts to save the Southern Inyo Healthcare District (SIHD), the newly-appointed 3-member Board of Directors held their first special public meeting last Saturday at the RCA Church in Lone Pine. The meeting, which lasted for over 7 hours and was attended by more than 70 members of the public, resulted in a rescue plan.
On the Board’s agenda was a presentation of a rescue plan by Dr. Benny Benzeevi, Chairman of Healthcare Conglomerate Associates, LLC (HCCA), a privately-owned, for-profit healthcare management company based out of Tulare, Calif. The company has a proven track record of turning around the Tulare Local Health Care District, which in 2013 found itself in dire straits similar to those now facing SIHD—poor cash flow, large operating losses, low occupancy rates, debt, and on the verge of bankruptcy.
Time was critical as the deadline set by the California Department of Public Health to determine if the SIH license would be suspended or revoked was set for 5 p.m. on Monday. If either suspension or revocation happened, it would wreck the hospital’s rescue plan. Filing for Chapter 9 bankruptcy immediately gives SIHD time to reorganize and refinance its debt to place the hospital on a “sustainable” financial operation. The management company has said that it will use its own law firm and finance the costs of the bankruptcy proceedings. It will also take the lead in talking to state regulators at the California Department of Public Health.
At the follow-up special public meeting on Tuesday, the three board members voted unanimously to approve the 68-page agreement with HCCA. It will take over the day-to-day management and finances, including staffing and maintenance of the hospital. The company will fully fund (using its own money) staffing and operation of the hospital. It will only be repaid if the hospital begins “making a profit” and “operating in the black” in the future.
The three new SIHD Board members, President Richard Fedchenko, Vice-President Jaque Hickman, and Board member Mark Lacey, were appointed just last Tuesday at a special meeting by the Inyo County Board of Supervisors. The previous board’s members had all resigned at the end of a special public meeting held the previous week, feeling that there was little else they could do and hoping that others might be able to find a solution to save the hospital.
While the SIH Board members were not entirely comfortable in making the agreement with the HCCA last Saturday, they felt that they had little choice but to take the chance that it would turn out well, or else face the prospect of closing down the hospital.
Board President Richard Fedchenko said that “In 45 years of business, I have never faced this level of decision-making under this type of time pressure.” The other two Board members were equally conflicted and would have liked to have more time for “due diligence” but as Lacey pointed out, they were out of time and out of options.
While the Board would not have direct control of day-to-day operations, the Southern Inyo Healthcare District will continue to exist, as will the Board. It will retain its taxing authority and ownership of hospital public assets. The $800,000 in property taxes collected yearly will be given to HCCA to run the hospital. All SIHD revenues will be managed by HCCA. The five-year contract has a “30-day back-out clause” for both parties.
There are two other SIHD board vacancies which can be filled by the current Board members under the District’s bylaws, but it appears that there is some conflict between the bylaws and the regulations of the County that need to be clarified before new members are added.
The dire situation facing the Southern Inyo Hospital District is nothing new. It has faced financial disaster several times in the past, but it has always managed to “pull a rabbit out of the hat,” finding new sources of revenue ranging from tobacco settlement monies to the imposition of property taxes. But taxpayers, especially in rural areas, have become increasing unwilling or unable to shoulder the costs of providing the ever-increasing cost of health care. Rural hospitals across the country are facing many of the same challenges. Many have been forced to close, leaving whole communities without access to health care.
Given SIHD’s lead, maybe all rural health districts should hold a least one of their public meetings in a church. While it may or may not have helped, it certainly did not seem to hurt.