September 26, 2018

 STATE OF TEXAS           X


The Board of Managers of the Walker County Hospital District, Walker County, Texas met in a regular session, open to the public, Wednesday, September 26, 2018 at 6:00 p.m. at Huntsville Memorial Hospital, Huntsville, Texas.

Members of the Board present included:

Chairman, Anne Woodard

Vice Chairman, Judy Emmett

Secretary, Jerry Larrison

Manager, Curtis Montgomery

Manager, David Toronjo

Also in attendance were: Keli Molina, WCHD Administrative Assistant; Ralph Beaty, Office Administrator and numerous guests on our sign in sheet attached.

Agenda Item #1: Call meeting to order.

Chairman Anne Woodard called the meeting to order at 6:00 p.m.

 Agenda Item #2: Consider approving the minutes for the regular meeting held on August, 2018 and the special meeting held on August 30, 2018.    

Mr. Larrison made a motion to approve the minutes for the regular meeting held on August 22, 2018. The motion was seconded by Dr. Montgomery.  The motion passed by unanimous vote.  Dr. Montgomery made a motion to approve the minutes for the special meeting held on August 30, 2018. The motion was seconded by Mr. Larrison. The motion passed by unanimous vote.

Agenda Item #3: Comments from the public.  If you wish to address the Board of Managers, please register prior to the meeting being called to order.

Rich Heiland stated HMH went from 40 million to a negative 79 Million under Shannon Brown and my question is how did we get here and it seems to me there could be an investigation by the Walker County District Attorney or by the State to include a very detailed forensic audit. Chairman Anne Karr Woodard stated she would put this before the board. No comments from the board. Loren Burns asked why wouldn’t you want an investigation done. Kim Sanders spoke up and stated as a tax payer she would like to know where the money went as well but the first priority at this time should be the hospital staying open. Chairman Anne Woodard stated there is a time and place for everything and right now we are in a period of negotiations and I think the most important thing on everyone’s mind in this room should be keeping the hospital alive and to pose a question that is negative at this time while we have companies very interested looking at our hospital would not be good. Judge Pierce stated this is the Hospital District not the Corporation.

Agenda Item #4: Comments and reports from managers and HMH administration.

Michael Morgan HMH CEO stated we have looked into the areas of the hospital that are   the most productive. The previous admin had put clinics in at various places to try and add additional volume coming to the hospital but this wasn’t the case it actually cost HMH more. WE have now shut down the clinics that were opened.  The outpatient and inpatient have both increases here lately. Both boards HMH Corporation and the WCHD have worked well together to help HMH at this critical time.

There has been very positive communication between the district and the board.  The ebitda for the hospital has improved by 46% by this same time last year. This improvement represents $1,126,000 earnings before depreciation. The Operating income has improved 37.4% 1.258 million dollars, and the net margin has improved 11.7% and   that’s $332,000. The operation is moving in the right direction due to us not having the clinics or the ED standing in Madisonville. We have been able to maintain the census here at HMH. Our admissions are up 2.2% from last year and our CCU Admissions are up 18.4%.  The total patient days are up 1.8% and the overall length of stay .4% this will help the profitability. Our case mix index has improved by 2.4% and the case mix index for Medicare has improved 4.6%. Surgeries are up 2.4% FTE’S have improved about 13% due to some clinics being closed and the Physician Org has improved by 52%.

Morgan passed a chart around for July, August and September showing the trend going up and should continue going up the next few months. A few of the problems we are dealing with is we should have received an uncompensated payment that usually comes in October for $500,000.00 but HMH will not be receiving this due to The Children’s Hospitals across Texas have filing a law suit to have the formula’s that all the hospitals use across Texas looked at again, they don’t feel like the formula is fair to them. The payment should come in December 2018 but it looks like we might have to pay back $50,000.00 versus receiving the $500,000.00. It’s not just this Hospital but all hospitals in Texas for this October uncompensated payment. Another issue we have is a very profitable outpatient area we have at HMH has suffered a great loss since May 2018 it’s   no one’s fault and will continue thru January in the amount of  $500,000.00, this is a huge amount and by November we will be struggling with this situation.  Part of the problem is we haven’t had the availability of the specialist that’s in that area to be able to do one part of the studies in that area. We will need to bring in another Physician to help with the volumes in this area sometime in January.  For the past two years till current the hospital has not had enough Medicaid patients to qualify for payments that are available to the hospital to what’s called the dsh payment system, that amounts to 4.7 million per year for two years that the hospital should be able to have but did not qualify for it. It’s usually paid in January and February, when we came in in April and learned of this we met with the obstetricians and that’s where most of the problem is and we need to have more Medicaid deliveries here at HMH. We put in a couple of nurse practitioners in the HMH Clinic that specialize in the pretreatment work for the delivery for the nine month period. The obstetricians have now agreed with that taking place they will deliver the babies. This has taken place about eight weeks ago and we now have 15 ladies enrolled and it grows each day. Dr. Montgomery stated having the nurse practitioners here makes this process very successful. In conclusion we also have a program that matches the districts funds by the government the 1115 Waiver, and it will not be in until January 2019.  HMH works with the district on this, the district provides the money and the government matches the funds and sends back to HMH, we should be receiving $3 to $3.4 million dollars the last week of January 2019.In order to do this we need to have supplemental payment of $2.9 million and this is our ask to the district tonight.

Chairman Anne Woodard stated this district was created by an enabling act to provide a hospital to Walker County and care to the indigent, keeping our hospital operational should be our first priority. Michael has provided us a plan and told us the problems, they need to be sustained until they can have a positive cash flow again. Michael spoke up and stated with this plan I have presented to you by the end of January 2019 HMH will have the best cash position it has had in years. Anne stated we are at a very critical point in a potential transaction and I think the board needs to talk about this tonight and I think if we approve the help it will stabilize the employees at HMH.

Michael Morgan said there are two companies that have stepped forward to be the capital partner and we are looking at both to see who will be the best.

Ralph Beaty stated he has looked at the plan with Michael Morgan on the cash flow on what is coming in and going out on the expenses.  He said HMH will pay the district the back rent and the district will be able to make the full match for the indigent care, the district will send out 1.7 million and HMH will get back 3.4 million. Dr. Toronjo said he has not had access to any info and asked if there was a written proposal.  Chairman Anne Woodard stated didn’t you go over the plan with Michael Morgan in his office earlier today. Dr. Toronjo said he had seen the cash forecast and Michael Morgan stated that is the written proposal. Dr. Toronjo had several questions about the written proposal.  Chairman Anne Karr Woodard said the district cannot loan money under Texas law but yes we can help the hospital out as it is in our enabling act to provide a hospital in our county. We have the authority to pay funds to help the corporation under  section 6 of the enabling legislation, we could do a tax of seventy five cents. The nonprofit corporation is not making enough revenue to keep this hospital going or to take care of our indigent population so the district in our enabling act gives us the responsibility to maintain the hospital in section 286 of the Texas Health & Safety Code   states all of this. The question is do we want to help the hospital, this board needs to decide. Mrs. Emmett said I think we don’t have a choice but to help this hospital to stay alive and I would like to see the accounting of where the money goes during this process.  Mr. Larrison said he was supportive of saving the hospital and he would agree to approve the 2.9 million or more if needed and he would also like to see a report of where the money will be going along this process. Dr. Montgomery was in favor of approving the assistance as well. Dr. Toronjo stated the public should know the overall plan or what the plan will be if HMH does not receive a partner and what will happen in January 2019 if the district has to take over the hospital.

Michael Morgan stated he has provided a very detailed cash forecast from now until the end of February and it shows by the time we get the match in January 3 to 3.4 million that the cash will be better than it has been in 2 or 3 years, even if one of these 2 companies don’t step in there will still be enough cash to operate the hospital and the district can look for an operator then.

 Agenda Item #5: Discuss and provide direction to the Chair and the Administrator regarding actions to be taken in connection with H2C, the Hospital, and Discuss any other issues related to the financial condition of the Hospital.

Mr. Larrison made a motion to agree to provide a subsidy to the corporation for 2.9 million to keep the operations of the hospital going until a buyer is found or until the district finds another solution to a successful operation of this hospital and the expenditures have to be specified in detail about what they are being spent on. Mr. Morgan will be meeting on Thursday with each board member to explain in detail how the money is being spent with a limit of 2.9 and anything going over would have to be brought back before the board. The motion was seconded by Mrs. Emmett. The motion passed 4-1 with Dr. Toronjo against.       

Chairman Anne Karr Woodard stated we will be keeping H2C due to the two companies looking to possibly buy HMH. Chairman Anne Woodard stated we did not receive the rent by the corporation on the 20th so the corporation is technically in default but we have been advised the Forbearance Agreement would not be as good as sending a Reservation of Rights letter to them which means we are not waiving the rights of them paying the rent and if there is any default we might be able to get the rent back.

Mrs. Emmett made a Motion to send the reservation of Rights letter to the corporation.

The motion was seconded by Dr. Montgomery. The motion passed by unanimous vote.

Agenda Item #6:  Ralph Beaty will give a report on the Indigent Care.

Ralph Beaty stated he had met with the hospital and they have an outstanding balance of $1,262,991.76 as of September 14th to various entities including EMS, UTMB, local Physicians they have a contract with and outside providers.  Chairman Anne Woodard and Ralph Beaty also met with Michael Morgan and Ralph stated the money we provide for the 1115 match are designed for the indigent care and we would appreciate an effort to get this caught up and Michael Morgan agreed to pay these bills.

 Agenda Item #7: Ralph Beaty will give a report on the Jail billing.

Ralph Beaty stated Chairman Anne Woodard and myself met with the auditor and the sheriff again to discuss a written agreement with the jail to get the budget with them reduced. We layed out a plan for them were they would take the total budget reduce the cost of the physician and the cost of the drugs and reduced it down to $5,700.00 a month. They are proposing to paying $60.00 a visit to see an inmate instead of a percentage. We received a draft this afternoon and there are a few changes we need to make. We will be adding up to 3 prescriptions only per inmate to the contract. The payment has been reduced by $5,000 a month as of a few months ago. It is the duty of   the hospital district to pay medical bills for the indigent which includes the inmates as well. We will bring this contract back next month for the board’s approval.

 Agenda Item#8: Consider approving payment of indigent care bills.

Ralph Beaty gave the Indigent care report. The indigent Care Bills total for this month was $26,499.25.  Mr. Larrison made a motion to pay the indigent care bills as presented.  The motion was seconded by Mrs. Emmett. The motion passed 4-1 with Dr. Toronjo against.         

 Agenda Item#9: Review and consider approving the monthly financial report.

The Statement of Revenues & Expenditures for the month ending August 2018 was presented by Ralph Beaty. The Revenue for the month was $ 394,768.72 and expenditures were $ 298,650.74. Dr. Montgomery made a motion to approve the financial report as presented. The motion was seconded by Mr. Larrison. The motion passed by unanimous vote.

Agenda Item #10: Consider approving payment of monthly bills.

Monthly bills in the amount of $37,949.70 were presented by Ralph Beaty.

Dr. Montgomery made a motion to pay the monthly bills as presented.  The motion was seconded by Mr. Larrison.  The motion passed by unanimous vote.

Agenda Item #11: Approve the recording of September 2018 budgeted indigent care expense in the amount of $240,000.00.

Mr. Larrison made a motion to approve the recording of the September 2018 indigent care expense.  Mrs. Emmett seconded the motion. The motion carried by unanimous vote. 

Agenda Item #12: Consider giving approval to Walker County Appraisal District      to accept the bids received on the properties in trust owned by the taxing jurisdictions.


Agenda Item #13: Adjourn meeting.

There being no further business, Chairman Anne Karr Woodard adjourned the meeting at 7:50 p.m.



Chairman Anne Karr- Woodard

Walker County Hospital District


Attest: _______________________________

Jerry Larrison, Secretary

Walker County Hospital District