Health

Monday, Aug 12 2013 08:45 PM

Supervisors chide KMC leaders, call for greater scrutiny of hospital's finances

  1. 1 of 2

    By Casey Christie / The Californian

    Kern Medical Center.

    click to expand click to collapse
  2. 2 of 2

    By Casey Christie / The Californian

    Kern Medical Center CEO Paul Hensler.

    click to expand click to collapse
BY RACHEL COOK Californian staff writer rcook@bakersfield.com

Kern Medical Center administrators received tongue lashings from each member of the Board of Supervisors at a three-hour meeting at the hospital Monday afternoon.

Fed up with the hospital's ever expanding loan from the county's general fund and what supervisors described as unclear financial figures from administrators, the board nevertheless opted to raise the loan cap to $97 million to cover immediate expenses through August. The loan cap allows the hospital to borrow up to that level.

The hospital had requested a loan cap of $154 million limit to cover costs into the fall months.

KMC CEO Paul Hensler said that $97 million should be sufficient to sustain the hospital through August. Supervisors unanimously approved the new loan maximum.

The hospital can continue to receive temporary increases to the loan's maximum balance and has been granted at least half dozen hikes in the past year varying from $4 million to $32 million. That last increase by the board brought the loan's maximum balance to $102 million. But when that increase expired July 31, the loan maximum dropped to $70 million. As of Thursday, the loan balance was $93 million.

Supervisor Mike Maggard called for specific restrictions on how the hospital can spend the money, suggesting the board approve loan increases in smaller increments with more detailed justifications. He stressed his desire to see the hospital pay its employees and vendors promptly, and submit payments to the state in time to cash in on federal matching money. Last year, the hospital was thrown into crisis mode when it appeared supervisors would not raise the loan.

"I don't think it's negligent for us to ask questions about (the loan)," Maggard said. "I'm confident we'll figure out how to get out of this but dad-gum-it, we have to have good numbers, we have to have stuff we can rely upon."

County Administrative Officer John Nilon said if the county extended a $154 million loan to the hospital, the municipality would have to borrow money to make its own payroll and meet the needs of other jurisdictions.

Maggard said he'd rather grant increases to the loan one step at a time than all at once.

Supervisor Zack Scrivner made the motion to set the loan cap at $97 million and incorporated Nilon's suggestion that the hospital submit a weekly financial report. Board members unanimously approved the motion.

Hensler said asking for an increase to cover the next four months all at once "was simply an effort to alert (supervisors) to everything that's coming up" such as three pay dates in October and $31 million state payments needed get federal matches.

"We certainly can come back more often, monthly or weekly if necessary, to let you know exactly which amounts of money are due, what they're due for and go week by week," he said.

But Hensler also cautioned that he didn't want to create the impression that supervisors' decision would be the end of the hospital's request for loan increases.

Supervisors simultaneously thanked administrators for their work while harping on their unhappiness with the numbers and answers they received.

"I have lost a lot of confidence in our ability to control costs," Supervisor Mick Gleason said.

Supervisor David Couch said he is concerned there is an unsolved problem within the hospital where bills are not getting sent or reimbursement isn't being sought.

"Things are going have to be different," he warned.

Following a nearly hour-long discussion about the loan, the supervisors grilled hospital leaders about the remaining items on the agenda. Supervisors' ire rose again when a contract for fertility services with Acacio Fertility Center, Inc. came up. Supervisors were poised to vote on the $360,000 agreement retroactive to October 2012 through September 2015, when Kern County Counsel Theresa Goldner stopped them.

"I don't think you are getting the entire story about this contract and I think that you are entitled to get the entire story," Goldner said.

Hospital administrators and county counsel explained that unknown to administrators, the doctor contracted under the agreement at times sent another physician not covered under the contract, to fulfill services at the hospital. Lisa Ohlfest, KMC's administrator of clinics and physicians, said the doctor had been given permission by the then-chair of the department.

Supervisor Leticia Perez called the situation "disconcerting."

"How is it that we have a circumstance where this kind of extension of one's agency can be handed out so easily and without proper oversight?" Perez said.

The supervisors eventually approved the contract in a 3-to-2 vote, with Couch and Gleason voting against it.

In the midst of the arduous meeting, Maggard stressed to hospital staff their duty to the board and taxpayers to provide detailed information.

"This is a difficult day and it's awkward and it's uncomfortable because we're asking questions that there aren't clear answers to and we're asking questions about everything," Maggard said. "You didn't know going into today what level of scrutiny we want to apply, but now I think you do."

After the meeting, the board met in closed session for an employee performance evaluation regarding Hensler's job.

Have something to share? Comment on this story

Bakersfield.com Daily Deal!

Bakersfield Athletic Supply/Equipment

Daily Deal

$40 of Sports Merchandise for $20

Value
$40
% Off
50%
You Save
$20
5 Bought
Buy Now! See more deals
What do you think?