childs_hospital_presentOn March 13, 2007, the Thomason Hospital Board of Managers voted six to one to ask County Commissioners Court to hold a special meeting to put a $120 million hospital district bond on the November 6, 2007 ballot. Dr. Jesus Arturo Castro Sandoval cast the sole vote against the bond proposal. Veronica Escobar told the El Paso Times “a stand-alone children’s hospital brings increased Medicaid reimbursement rates” whole-heartily supporting the proposal. [1] The hospital board was given a powerpoint presentation based on a feasibility study conducted by Kurt Salmon Associates. Sandoval, who voted against the request for the $120 million bond issue questioned the financials supporting the issuance of the bonds. Sandoval pointed out that four studies, out of five, did not support the financials as being feasible for a children’s hospital. [9]

The Kurt Salmon Associates feasibility study, commissioned by Thomason, pointed out that the children’s hospital was only feasible if four conditions were met. The first one was that the hospital must be separately licensed. In other words, the children’s hospital could not be part of Thomason. The second was that the hospital must participate in favorable Medicare and Texas Medicaid reimbursement programs. The Children’s Hospital needed to game the system in order for it to be economically feasible. It is also important to note that the programs they were gaming are taxpayer-funded programs. The third requirement was that community pediatric doctors needed to refer patients away from the existing hospitals to the new one. Part of the rhetoric emanating from the proponents of the hospital was that the children’s hospital would be an economic engine. What was ignored by the proponents was that for it to become an economic engine it would necessitate taking existing revenue generating patients away from existing hospitals to the proposed children’s hospital. Basically, it is a shifting of existing revenues to the taxpayer-supported hospital. [5]

It is also important to note that the Thomason commissioned study was the first of five studies that somewhat supported the notion of the Children’s Hospital. The previous four studies in 1993, 1995, 2003 and 2004 did not support the hospital’s economic viability. The 2007 study, the one commissioned by Thomason, states that the difference between this report and the previous ones was that the hospital supported feasibility report used a different business model, the one relying on gaming the federal and state reimbursement schemes. [7] In a press release issued by the Thomason Hospital District Foundation on March 13, 2007 specifically states, “Thomason’s study is under an economic business model not previously considered and utilizes financing available only through the Hospital District”. Ron Acton, Children’s Hospital founding and current board member is quoted in the press release as stating, “does not require any additional dollars from the taxpayers for operational expenses”. [10]

The final requirement for the economic sustainability of the proposed children’s hospital required that it meet projected patient admissions of 4,300. [5] Hospital administrators estimated that making the hospital stand-alone would generate “an estimated $7.5 million in additional money”. [5] The El Paso Inc. article goes on to quote hospital officials. “Even with the additional Medicare and Medicaid reimbursements, the children’s hospital’s [sic] net revenues will cover only 78 percent of the projected costs, according to the Salmon study. That will result in a $5.7 million operating loss.” [5] The article goes on to state “the only thing that saves the hospital from being a perpetual money loser are ‘non-operating’ revenues like distributions of property taxes and other taxpayer allocations that pay for indigent care”. [5]

Consider this in relation to Jim Valenti’s latest public statements about how the need for a tax increase and layoffs are necessitated because of the Children’s Hospital’s lack of payments to UMC. Taxpayer monies were expected and pointed out by UMC’s own commissioned study that was the basis of the whole scheme.

In July 2007, the Greater El Paso Chamber of Commerce passed a resolution in support of the $120 million hospital district bond for the Children’s Hospital. [2] During that same period, Jim Valenti, president and chief executive for Thomason, is quoted by the local paper as stating that the children’s hospital “was projected to generate enough revenue to maintain profitability through the first five year of its operations”. [2]

On August 5, 2007, Jim Valenti is quoted by the El Paso Times as stating, “If the public helps us build it, we will operate it without tax dollars”. [3] Valenti added that the “hospital district would provide $30 million to help the children’s hospital get off the ground”. [3]

Phil Rivera, Thomason’s chief financial officer, is quoted by the local paper as saying that the hospital “would be operating in the black soon after it opens”. Valenti is also quoted as stating that for that reason the hospital “would not be a burden on the citizens”. [3] Valenti added, “state and federal governments provide special reimbursements such as the one proposed”. [3]

Veronica Escobar, then a county commissioner, is quoted by the paper as stating, “What we’ll see very soon after it’s up and running is families coming to El Paso for health care. They have to stay in hotels. They have to buy food. They expend resources here locally and that helps our community.” [3]

On August 9, 2007, county commissioners voted unanimously to allow the voters to vote on the $120 million bond election. [4] Veronica Escobar is quoted by the El Paso Times as stating, “I feel so lucky to do this one thing, to put this on the ballot and let the people vote on the people’s hospital”. [4]

During the county commissioners hearing on whether to place the ballot initiative on the ballot none of the public comments were in opposition. Keep in mind that the rhetoric centered on the “needs of the children” and no one wants to be publicly identified as being anti-children. In fact, Jim Valenti is quoted by the weekly business paper as stating that if he were in John Harris’ shoes “it would be very difficult to come here and try to tell patients and their families that a children’s hospital is not needed.” Harris was the CEO of Sierra Providence Health Network that owned a hospital that had a dedicated children’s health care section. John Harris stated that the feasibility study was “severely flawed”. [6]

On October 17, 2007, Veronica Escobar held a press conference in front of Thomason Hospital where she stated “This is a historic time in El Paso, we are redeveloping downtown, preparing for unprecedented expansion at Fort Bliss, building a medical school and investing in the community”.

As is the normal modus operandi of the El Paso Times for controversial items based on dubious feasibility studies and further plundering of the taxpayers’ coffers, the local paper’s editorial board came out in support of the bond election. The paper wrote on October 21, 2007 that no one likes paying taxes but that the taxpayers “will be seeing positive results from the investment of tax money and will even see increases in money coming into El Paso”. [8]

In November 2007, the electorate approved the issuance of the bonds by 768 votes. [9]

In a January 30, 2012 article in the El Paso Inc., Dr. Raj Marwah questioned how long the Children’s Hospital’s high salaries used to entice pediatric specialists to come to El Paso would last. Marwah asked, “how long can they sustain those salaries?” [9]

The Children’s Hospital held its grand opening celebrations on February 14, 2012. [9]

In 2012, when it was holding its grand opening, the Children’s Hospital was already aware that the government had reduced Medicare reimbursements. Larry Duncan, then CEO of the El Paso Children’s Hospital dismissed the reductions by proclaiming that they were actually good for the Children’s Hospital. [9] Duncan is quoted by the El Paso Inc. as stating that the hospital would be getting “more money for the care of children covered by Medicaid – a significant part of the hospital’s income.” [9]

Now fast forward to the last couple of weeks and notice what public pronouncements are being made by Jim Valenti, the Children’s Hospital spokesperson Susie Byrd and her close friend Veronica Escobar. Reconcile those arguments with the public record I laid out here for you.

1. Thomason board Oks children’s hospital plan; Johnson, Erica, El Paso Times, March 14, 2007
2. Chamber endorses plan for children’s hospital in EP; Meritz, Darren, El Paso Times, July 24, 2007
3. Children’s hospital hopes: County may allow public vote; Johnson, Erica, El Paso Times, August 5, 2007
4. County to let voters decide on children’s hospital; Johnson, Erica, El Paso Times, August 9, 2007
5. Proposed children’s hospital: the pros and cons; Mrkvicka, Mike, El Paso Inc., April 15, 2007
6. Emotional arguments for a new children’s hospital; Mrkvicha, Mike, El Paso Inc., August 12, 2007
7. Powerpoint Presentation “Proposed El Paso Children’s Hospital” presented to the Thomason Hospital District and the County Commissioners in 2007
8. Children’s hospital Bond issue is worthy investment; El Paso Times, October 21, 2007
9. Children’s hospital raises spirits & questions; Crowder, David, El Paso Inc., January 30, 2012
10. Press release issued by Dennece Knight on March 13, 2007 on behalf of the El Paso County Hospital District Foundation

Martin Paredes

Martín Paredes is a Mexican immigrant who built his business on the U.S.-Mexican border. As an immigrant, Martín brings the perspective of someone who sees México as a native through the experience...

2 replies on “The Children’s Hospital Timeline of How We Got Here”

  1. Good research. The pattern continues here as politicos and vested interests – the Horde- become infatuated with vanity projects, the stadium being the latest example. There is a superficial business case defined (Salmon; Carmen A-C) to justify the project and then the full-court press of media hype and pressure on organizations like the Chambers for endorsement. Opponents are called “crazies” and “anti-progress” until there is the inevitable funding crisis a few years down the road when reality catches up to the hype. Then those who were originally opposed are vilified again as being “crazies” and “anti-progress” as the supporters back-pedal and dissemble. “Who could have seen that Medicaid would be cut?”

    It never changes and neither will El Paso. The Next Big Thing will be a soccer stadium paid for by taxpayers only thru the County, as Hunt’s political capital in City Hall is currently tapped out.

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