By Deb Murphy
Southern Inyo Hospital’s future may depend on the voters’ decision on a general obligation bond to pay off creditors as part of the district’s bankruptcy plan and possibly capital improvement projects.
But, before the district gets to that point, a lot of pieces need to fall into place. Those pieces include a finalized distribution plan to creditors as well as the scope of damages Healthcare Conglomerate Associates can level against the district for its contract termination, district lawyer Scott Nave reported at Tuesday’s board meeting.
While the amount of that bond has not been set, the lawyer handling the bankruptcy Ashley McDow estimated it could be around $4 million. “But that number is fluctuating,” she explained.
The district filed its brief to terminate the contract with the court Wednesday, board chairman Richard Fedchenko said in a phone interview. “Our basic argument was that it was the judgement of the board that our best course of action was to sever the relationship.” He’s optimistic the court will rule for the district; case precedents are in SIH’s favor.
While HCCA appeared to rescue the hospital from the brink of extinction, the financial relationship was sketchy. Example: when Leroy Kritz asked the board about costs and income from the hospital’s specific departments at Tuesday’s meeting, Fedchenko responded “we are aware of the problem. We have put these questions to HCCA and never got a satisfying answer.”
The board never got full financial statements through the year-long management contract with the Tulare firm.
The initial brief to terminate the contract outlined some major discrepancies in the flow of funds between SIH and HCCA. Given all that, SIH seems to have fared better than HCCA’s other management client, Tulare Regional Medical Center. The Center filed for bankruptcy and closed its doors in late October while it looks for another management group, according to a story in the Fresno Bee.
Other updates: The operation of the hospital is under associate administrator Brian Cotter who came on board in late September. Former SIH administrative assistant Mary Gonzalez came out of retirement to fill the Human Resources position and is working to beef up staffing, especially for the Skilled Nursing Facility. According to vice chair Jaque Hickman reported the board is doing the research to develop a solid management plan to put in place once the HCCA contract is officially terminated. The board is in the process of hiring a financial consultant who will work directly for the board since, technically, Alan Germany of HCCA is the CFO until the contract is dissolved.