As you know, yesterday the University Medical Center (UMC) gave County Commissioners a preliminary budget of $587 million. UMC makes these types of presentations to Commissioners Court each year because the County Commissioners must approve UMC’s budget each year. I have been trying, through various blog posts, to explain to you why I believe UMC has been perpetuating a fraud upon the taxpayers of El Paso County.
Today I am going to try to be as articulate as possible about my belief that a fraud has been committed by UMC.
In the El Paso Times article “UMC of El Paso proposes $587M budget” by Aileen B. Flores published yesterday, Veronica Escobar is quoted as stating, “many of the numbers could change by the end of the week.” The newspaper article adds that Escobar believes the numbers presented by UMC are “very preliminary” because the “decisions expected to be made by a bankruptcy judge on the El Paso Children’s Bankruptcy case” will affect UMC directly.
One of the rulings that the bankruptcy judge may issue later today is how much, if any, the children’s hospital will pay UMC for services.
According to the newspaper article, UMC “expects to collect at least $5.2 million” from the children’s hospital for services and rent. It is important to note how many comments were attributed to Veronica Escobar about the children’s hospital’s impact upon the budget for UMC. I commented about this yesterday.
This is why it important to note this and why I believe a fraud has been perpetuated by UMC.
A budget presentation includes two fundamental numbers, how much is going to be spent and how much money is going to be taken in by UMC. The newspaper article clearly shows that UMC relies on money that El Paso Children’s Hospital is supposed to pay it in order to balance the budget.
All budget presentations are expected to be honest representations of the finances of the entity making the presentation. Part of being forthright is notifying the policy makers about potential shortfalls in revenues. You see that when Veronica Escobar makes the point to discuss that the children’s hospital bankruptcy will affect UMC’s budget numbers depending on how the judge rules and when children’s may run out of money.
In 2012, UMC and the El Paso Children’s Hospital renegotiated their agreements in order to restructure the payment arrangements between the two. In essence, children’s could not make their payments to UMC as originally agreed.
Although I believe that Jim Valenti knew as far back as 2010 that children’s was in financial turmoil, at this point I can only show that he was likely aware of it when the payment terms were renegotiated. Regardless, the accountants, who prepare the budgets for UMC, must have known that children’s was in financial distress, as far back as 2012.
How many budget presentations have been made since 2012 to County Commissioners? Two, three or more?
Since we know that it wasn’t until April of 2014 that UMC publicly acknowledged that children’s wasn’t paying its bills the question becomes, how many budget presentations were made by UMC that did not disclose that children’s wasn’t paying its bills and were likely to be unable to pay them in the future?
Honest and forthright financial disclosure is a legal responsibility for those making the presentation to a governing body.
Therefore, was Jim Valenti and his staff honest and forthright with their budget presentations to county commissioners in 2013 and 2014? I submit to you that they were not and that is the definition of financial fraud. A fraud that was perpetuated against the taxpayers of the city.