As we previously reported, our research suggests that the University Medical Center of El Paso (UMC) did not discuss a feasibility or marketing plan with the Board of Managers before they voted on including almost $80 million for a cancer center that is part of UMC’s request for the $345.7 million in non-voter approved debt that county commissioners were expected to vote on September 12.
The apparent lack of any formal discussion over the feasibility of the cancer center raised the question of whether UMC has plans to sustain a cancer center after it uses the $80 million that they expected county commissioner to approve. As part of our investigation, we submitted an open records request asking for “any financial analysis, feasibility studies or marketing studies” for the cancer center. We submitted our open records request on August 17, 2022, and we received a reply on September 1.
UMC provided us with a “Financial Proforma: Comprehensive Cancer Center” single page financial statement showing what it anticipates the revenues and expenses to be for the first five years of the cancer center’s operation. According to UMC, the proforma was provided to us because UMC “had previously released” the document to “another PIA request by another party” and as a result they are providing it to us as well. It is unclear who else submitted an open records request for financial details of a cancer center. Nevertheless, the proforma shows that UMC expects to lose $272,190 during the cancer center’s first year of operation and begin to make money on the second year and thereafter.
However, it is important that readers understand what a proforma financial statement is.
A proforma financial statement is a hypothetical financial analysis based on assumptions about the profits and expenses of an entity, in this case the proposed cancer center. It is nothing more than a guess as to how it will perform.
When UMC asked voters to pay for the El Paso Children’s Hospital they based their request on a financial model that took several feasibility studies before it could be modeled as a feasible project. The children’s hospital filed for bankruptcy in 2015, three years after it opened its doors. It emerged from bankruptcy after UMC became the sole-owner of the non-profit.
In response to our open records request we now know that there is “some material” that meets our request for a feasibility or marketing study for the proposed cancer center, but we cannot tell you what it contains.
According to UMC, they object to releasing the information requested because they “believe that some of the information requested may be protected from release under the Public Information Act.” UMC cites section 552.014 as the likely reason to deny our request.
Section 552.014 is a provision of the Texas Public Information Act that allows UMC, in this case, to withhold information that “protects the competitive interests of governmental bodies.” [1] This provision of the law is normally applied during bidding processes to protect the interests of those bidding on a government contract. However, a governmental body raising this exception is normally only successful if the governmental body can prove it intends to continue bidding out the work in the future related to the project.
Thus, UMC may be arguing that releasing any financial studies to us may give bidders an opportunity to see what their financial modeling shows is budgeted for specific projects. However, it is hard to imagine that a feasibility study which models patient revenues and related expenses to show how a cancer center is feasible to the taxpayers can be used by contractors looking to bid on patient services like staffing and consumables as these models usually model finances with publicly available data associated to them. For example, the cost of consumable medical gloves are modeled based on what UMC is already paying for the item or on what the open market rate for such consumable is.
County commissioners delayed their vote on the UMC bonds because the Libre Initiative submitted a petition with about 35,000 signatures forcing the commissioners court to delay the vote until the signatures are verified.
On September 8, we received a follow up notification from UMC to our open records request.
As readers can observe, UMC is asking the Texas Attorney General to allow UMC to withhold a 57-page document that contains information that is mostly “duplicative,” according to UMC. As expected, UMC is arguing that releasing the document would provide unfair competition for UMC.
It is unknown when the Texas Attorney General will rule on the matter, but as soon as we receive a ruling, we will report the results.
Although we do not know what the 57-page report contains, we can assume that it contains some financial analysis on the proposed $80 million cancer center that UMC wants to build.
This is a developing story which we will continue to monitor and report as more information becomes available.
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- Texas Attorney General Greg Abbott opinion letter to the Texas Department of Insurance (OR2012-00293), January 6, 2012.
