In Kingsburg the Board of Directors is considering tearing down the 35 bed district hospital that has been shuttered for several years.
ER Shut Down
In Corcoran last month they laid off 19 workers as the CEO Jonathan Brenn noted a “recent severe decline in cash collections resulting from fewer patients than normal.” Late this month their ER shut down and surgical services were suspended by state order. The hospital that gets most of its revenue from government health payments has 32 beds. Its staff of 80 is now down to 50. The hospital has a seen a decline of surgical prison business as fewer inmates are housed in state prisons.
In Porterville the 167 bed Sierra View hospital abruptly fired their CEO in January after a decline in profitability.
But nowhere has the financial pain more in the public eye than at Tulare Regional Medical Center where the board recently brought back fired CEO Shawn Bolouki to do a “turnaround” of the financially strapped district.
The need is clear after March 11 when Fitch agency announced that Tulare bond ratings had been downgraded from to ‘B+’ from ‘BB+’ and its Rating Outlook revised to Negative from Stable.
Fitch cited “CONTINUED FINANCIAL WEAKENING – a multi-notch downgrade that is driven by a rapid decline in Tulare’s overall financial profile in fiscal year ended June 30, 2012 (unaudited interim financials), with continued deterioration through the six-month interim period ended Dec. 31, 2012.
LARGE OPERATING LOSSES: Impacted by challenged patient utilization and increased bad debt, profitability took a sharp turn as the district posted large operating losses of $7.3 million in fiscal 2012 and $3.8 million through the interim period, respectively.
WEAK BALANCE SHEET: Unrestricted cash and investments declined sharply to $10.5 million at Dec. 31, 2012 from $24.5 million at fiscal year-end (FYE) 2010 due to increased capital investments and negative operating cash flow. Additionally, debt load increased in December 2011 due to a $6 million loan to finance certain equipment. Expected further demand on liquidity for the construction project presents significant concerns.
CONSTRUCTION PROJECT DELAYED: The completion of the new bed tower that was initially scheduled for October 2012 has been delayed due to structural problems related to the concrete used on certain floors. Tulare is currently developing a recovery schedule and evaluating the amount of additional funding necessary to complete the project.
RECENT MANAGEMENT TURNOVER – that it called “considerable”. All in all a tough assessment of the Tulare hospital district.
Looking For A Partner?
This bombshell announcement got Bolouki out in the community attending several public meetings announcing that Tulare might need a stronger financial partner going forward.
“Our best partner will be another not for profit or academic hospital” he said. “The days of stand-alone hospitals are over.” he told a chamber meeting according to reports in Tulare Voice newspaper.
Who would that partner be?
The largest Tulare County player might be Kaweah Delta Healthcare District who is financially strong.
But Kaweah’s CEO Lindsay Mann says they have not been contacted by anyone from Tulare and says the idea never came up.
In Kings County, nonprofit Adventists Healthcare might be a logical partner having expanded in recent years in both Fresno and Tulare counties including buying up several hospitals.But “we have not been approached by Tulare” says Christine Pickering of Adventist Health.
Now A Recall
This week the Tulare board of directors had a new problem.Three of its members have been noticed for recall confirms the Tulare County clerk on March 26. One of the recall notices needs to be refiled to add a signature says the clerk but looks like an election to recall a majority of the board including the healthcare district’s chair Sherri Ball – will take place.
Putting the pressure on Tulare and Visalia are state seismic requirements that push these districts to make big capital expenditures.
Kaweah Delta who already has built a new tower and plans several more at $150 million a pop says it will try to make the case to the state that its existing Mineral King wing “should be preserved beyond 2030 because the seismic risks in Visalia are very low and the structure,being remodeled now, is sound” says Mann. “We will work through legislation if need be” adds Mann, in a move to postpone the need to add another tower in the short term. Otherwise, Kaweah could need to build a new tower in as little as 7 years says a letter to the Visalia council sent last month.The board and council agreed on a expansion master-plan at a recent meeting.
In Tulare their half built $85 million tower is on hold because of concrete quality issues.