CEO says UMC wants to take over El Paso Children’s Hospital

June 21--The University Medical Center board's secret proposal to save financially strapped El Paso Children's Hospital is to take control of the 2 1/2-year-old facility, the new Children's Hospital chief executive officer said Friday.

What will put the hospital back on strong financial footing, CEO Ray Dziesinski said, is for both sides to stop fighting and renegotiate a complex web of agreements to allow it to pay UMC a lower, at-cost rate for services, stop paying $14 million a year in rent and equipment already paid by ax-supported bonds, and to improve the hospital's billing and insurance collection system.

"Their (UMC) proposal did not include any financial specifics. It was merely a proposal which would change the (board) governance structure (in such a way) that UMC had a predominant role in our governance structure. That was really the only nature of the proposal," Dziesinski told the El Paso Times prior to holding a press conference to outline the hospital's own proposals to reduce the hospital's growing debt to UMC.

It's fair, he said, to characterize UMC's proposal as a takeover.

UMC's Chief Executive Officer Jim Valenti and Board Chairman William Hanson were not available on Friday to respond to Dziesinski's comments and financial proposals.

Lorena Navedo, Valenti's chief of staff, said Valenti and the board would study the proposals and talk to Children's Hospital officials about them.

UMC officials have said that Children's Hospital owes the county hospital $71 million for services and rent, and have portrayed the hospital as "insolvent."

The Children's Hospital has stopped making payments to UMC, and the bill continues to grow.

But Dziesinski told the El Paso Times the 122-bed hospital, which has annual revenues of $70 million, is not failing. And, he said, the hospital owes UMC no more than half that $71 million bill.

Dziesinski said part of what has crippled the hospital financially is that it re-paid UMC $32.4 million in start-up and other costs over the last two years.

The UMC board this week sent a confidential proposal to the Children's Hospital board to save the hospital from financial failure, and gave it until Monday to respond.

The Children's Hospital board will soon send a notice to UMC's board that it wants to begin a dispute resolution process spelled out in agreements between the hospitals, Dziesinski said.

That triggers a 60-day period in which neither side could discuss the dispute publicly, he said.

Dziesinski, who became CEO in April, revealed the Children's Hospital's proposals to stop its financial bleeding at press conference Friday in which a line of doctors and hospital staff members stood behind him in a show of support.

Three doctors said media reports have mistakenly portrayed the hospital as failing and has hurt staff morale among the 609 employees.

Dr. Lisa Ayoub-Rodriguez, an El Paso native who returned to El Paso to work at the Children's Hospital, said news reports about the hospital's debt to UMC has made doctors, nurses, and patients' families "worried about the future of this place."

"We stand here today to fight and are behind our leadership 100 percent," she said.

Dr. Chetan Moorthy, medical director for the hospital's pediatric radiology program, said, "What we witnessed over the last month and a half is a barrage of incredible propaganda. To which we have responded in silence. But I don't want that silence to be mistaken as weakness. In fact, it is our strength."

He added that "what he (Dziesinski) has presented to us is a sober, competent and comprehensive plan" to revive the hospital's financial health.

The hospital is proposing that service agreements with UMC be renegotiated to reflect the "real costs of services."

After hundreds of meetings over three months with UMC officials, Children's Hospital officials have determined that it should be paying UMC $7.5 million a year for services, not the $15 million it is now paying, according to a hospital statement.

Dziesinski is proposing that the hospital's rental agreements be changed so it no longer has to pay $14 million a year for the hospital building and equipment, which, he said, has been paid for through a $120-million bond issue approved by voters in 2007 now being repaid through property taxes.

The hospital has hired MedAssets, an Atlanta health-care performance improvement company, to improve its system for filing and collecting insurance claims. That will help the hospital bring in several more million dollars a year, he told the El Paso Times.

The hospital also will make $10 million in unspecified cuts in costs, but those won't include any reduction in staff or services, Dziesinski said.

The hospital can be self-sufficient within two years, Dziesinski said at the press conference.

He also revealed Friday that UMC officials in late May made a federal Uniform Commercial Code filing against Children's Hospital.

That essentially puts the world on notice that UMC is seeking payment of its multimillion-dollar debt, Dziesinski said. That filing has further strained relations between them, he said.

Vic Kolenc may be reached at 915-546-6421.

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