It was requested by members of the community to seek the County District Attorney, or the County Grand Jury to investigate the fiscal operation of the hospital Monday evening.
On Monday, April 11, 2016, Colusa Regional Medical Center (CRMC) held its first in a series of community meetings to provide information regarding the closure of the hospital, as well as provide a forum for community concerns.
“It is wonderful to see a full house,” said Wayne Allen Chief Executive Officer and Chief Restructuring Officer of CRMC.
The meeting held at the Colusa Community Theater was packed with concerned community members, and employees of CRMC.
CRMC Board of Directors present were Larry Yeghoian, Bob Kessinger, Jan Gomes, Michael Goodman MD, David Zwald, and Elizabeth Yerxa.
In his opening statements, Allen reiterated reasons for the closure of the acute care hospital with the lack of reimbursements from MediCal, Medicaid, and the Affordable care act.
“When I first arrived, I went through the financial statements and discovered that the hospital was not financially solvent, and took a look at Chapter 11 Bankruptcy – but I would not be able to show a repayment plan because the hospital had no cash,” said Allen.
After Allen discovered that CRMC faced a loss of $3 Million at the end of the 2015 fiscal year, he presented his findings to the board, and the decision was made to close the hospital.
“The hospital had no safety net,” said Allen, “It is typical in rural communities to have a tax revenue to help cover hospital shortfalls. However, this was never put into place – and it’s too late now.”
CRMC Board of Director and Treasurer, Bob Kessinger commented that setting up a tax base would cost county property holders an estimated $350 annually on their property tax bills.
Pointing Fingers, finding who’s responsible
An employee of CRMC asked why the board didn’t do a background check on former, CEO, Walt Beck.
“How come no one Googled ‘Walt Beck’,” said the community member, “you would have discovered that he has put other hospitals in the same position several times.”
The community member referred to an article ‘Hospital’s ambitions soared while its fortunes faltered’ published in The Tribune, December 23, 2007, featuring the financial turmoil of Mee Memorial Hospital, of King City, California. During that time Mee Memorial Hospital was under the direction of Walt Beck and the hospital lost $1.8 million, overdrew its bank accounts by $2.6 million and increased its overall debt by 42 percent.
CRMC Board Director, Bob Kessinger commented that he was unaware of the history of Beck. However, CRMC Board President, Gary Teragawa said to the Williams Pioneer Review in an earlier statement that he was aware of Beck’s history when he did an extensive background check; however, Teragawa commented that Beck came with high praise from a third party.
Kessinger said that board was presented with financial information from Beck and that they were aware of some financial difficulties; however they were assured they would get through this.
“We made a lot of changes the last few months that would have changed the financial situation, but these things didn’t happen soon enough,” said Kessinger, “we didn’t truly know our situation until we hired Allen.”
Some community members asked the board why the employees were not notified well in advance about the debt so they could help identify problems.
“The board has nothing to do with the day to day operations, senior management is responsible for that,” commented Kessinger.
The comment came under fire when Maxwell community member, Andrew Pentecost asked, “Why did the check and balances fail? It seems there was a gap between the hospital board and operations.”
A community member asked when was the last time the hospital made a profit, and the Allen commented that was two and a half years ago.
“The hospital had about $3 million dollars in reserves at that time,” said Allen.
Allen also commented that the hospital underwent 28 extensive state reviews and was required to fix many problems costing the hospital millions of dollars.
Former CRMC Employee, Gayle Ulshafer commented that employees were bullied under the management of Walt Beck and made some questionable changes.
“The hospital has been modified to a Level 2 trauma center – there isn’t enough trauma here in Colusa County to support a Level 2 trauma center,” said Ulshafer who commented that the added cost of required staffing for a Level 2 Trauma Center imposed a burden on hospital finances, “that move alone cost the hospital an additional $2 million dollars annually.”
Other employee commented those items were bought to the CEO, but they were never presented to the Board of Directors and suspected that bank and financial statements were being falsified or ‘adjusted’ when given to the board.
“We need to quit blaming everybody and get the problem solved,” said Rob Moriconi, and Colusa County Supervisorial District 2 candidate.
The Williams Pioneer Review reached out to former CEO Walt Beck for comment; however, calls were not returned at the time of press.
Former CRMC Board of Director, Ray Krause stated that the hospital currently has $20 million dollars in uncollected receivables and with reimbursement rates the hospital could collect an estimate of $6 million dollars thereby leaving the hospital financially secure.
“Collections has been horrible if we were to get our collections underway we could be good,” said Krause.
Allen countered that if the hospital still made its current accounts current, the hospital would still have a monthly shortfall.
“We bring in about $3 million dollars a month, and expenses are about $3.2 million,” said Allen.
Krause commented that those shortfalls could still be corrected or supplemented with tax revenue.
Employees, the heart of a hospital
With the last patient discharged on Saturday, April 9; staffing has been steadily reduced, and by April 22, Allen commented that a small skeleton crew will remain to handle billing and collections, as well as purchasing negotiations.
Allen said that the hospital had an excellent set of employees.
“After we had made the announcement the workers remained very professional to fellow staff members and patients,” said Allen, “what a true group of employees.”
This statement came with criticism as employees questioned the method they were informed and that they have not received their paychecks. Allen commented during the hospital’s closure announcement that employees would be paid on time.
“We were not getting collections from Medicare and Medical that we anticipated,” said Allen, “we would not have enough money to pay employees.”
Allen also commented that payment for I.T. services also had to be paid before employees received their checks, or the hospital would have lost its I.T. backbone.
“We have no sources of credit, we can’t go to the bank and simply get a loan,” said Allen, “the hospital has been running off other people’s money.”
Allen explained that ‘other people’s money’ was extended credit with vendors to provide services and goods with good faith that they would be paid.
Though, this isn’t the first time the hospital was not able to make payroll.
“In November of 2015, just days before the Thanksgiving, the hospital was unable to make payroll,” said Krause, “I couldn’t leave our employees like this, and so I spoke with Walt and offered a private loan to cover payroll.”
Krause was a Board of Director of the CRMC who was recently asked to resign from his position on the board due to a “conflict of interest.”
“Walt told me to resign as it would be a tough situation when the hospital faced Chapter 11 Bankruptcy, and I was a participating creditor,” said Krause.
Colusa Mayor Greg Ponciano questioned that if the board would have filed Chapter 11 Bankruptcy years ago that they would be in the same situation.
A Positive Future?
Allen believes that Colusa County has a positive future for a hospital, but commented it won’t be the same.
“I am working quickly and aggressively to bring new life to the hospital,” said Allen, “I am working with five credible organizations who are interested in purchasing the hospital.”
He also commented that the board has already met with a few of the organizations and the process is underway.
“The buyers each have their perspective on the hospital and how it should be structured,” said Allen, “however, at the end of the day it is the people and access to medical care and a hospital that this community can support is that matters most.”
Allen commented that he was unable to announce who the interested parties are as the organization has signed a nondisclosure agreement with the interested parties.
“We will continue to host public forums as we move forward with this process,” said Allen.
Allen commented that the County was seeking the opportunity to set up a temporary urgent care type facility; however the details of that remains unclear.
Doctors: Who will leave, who will stay?
Community members are concerned about the future of their physicians who were connected to the hospital clinics and facilities. Many questioning will the doctors remain, how can they be seen, and what are their options.
“It is my intention and goal to remain in the community,” said Gregory Burt, MD, Chief Medical Officer and Physician, “I love this community and care for my patients.”
However, with optimism, Dr. Burt is unclear on how the hospital will continue its outpatient care.
“If the clinics close, I will still be in the community and available,” said Dr. Burt, “I just don’t know to what extent just yet.”
Michael Goodman MD, and Julian Delgado MD of North Valley Family Physicians commented that they are committed to the community, and they will remain. North Valley Family Physicians is a separate entity of CRMC.
Dr. Goodman commented, “We need more physicians to service our community,” and stressed that it’s hard to recruit and retain quality health care providers.
“We are very vested in the community, we have given a lot of blood, sweat and tears,” said Dr. Delgado, “We will look very closely at our options. This community needs a hospital.”
Dr. Delgado also commented that the effect of the hospital’s closure has far-reaching effects on the health of our community.
“As a community we will suffer financially; maybe not now, but in the future health care costs will rise, disability and workers compensation payments will increase to employers,” said Dr. Delgado.
CRMC Surgeon, Herbert Gladen MD, commented that he wants to stay in the community but needs an operating room.
Colusa Regional Medical Center will host a similar community meeting in Williams, on Thursday, April 14, 2016 at 5:30 PM at the CCOE Education Village, Multi-Purpose Room, 101 Marguerite Street, Williams; and again on Monday, April 18, 2016 at 5:30 PM at the Community Theatre for the Performing Arts, 745 10th Street, Colusa.