October 24, 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, October 24, 2018 at 6:00 p.m. at Huntsville Memorial Hospital, Huntsville, Texas.

Members of the Board present included:

Chairman, Anne Karr-Woodard

Vice Chairman, Judy Emmett

Secretary, Jerry Larrison

Manager, Curtis Montgomery

Manager, David Toronjo

Absent from meeting is Secretary, Jerry Larrison.

Also in attendance were: Keli Molina, WCHD Administrative Assistant; Ralph Beaty, Office Administrator; Attorney Joe Henderson by phone 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 special meeting held on September 20, 2018 and the regular meeting held on September 26, 2018.

Dr. Montgomery made a motion to approve the minutes for the special meeting held on September 20, 2018 and the regular meeting held on September 26, 2018. The motion was seconded by Mr. Larrison. The motion passed by unanimous vote.

Agenda Item #3: Receive a presentation from Tri-County.

Evan Roberson gave a brief presentation on mental health in Walker County.

Mr. Roberson stated Tri-County covers all 254 counties in Texas, currently working for the citizens of Walker, Liberty & Montgomery Counties. The State funding is low per person, half of the funding is from the state. Tri-County in crisis serves anyone who comes in need, adults and children, for ongoing outpatient services, we serve adults with Severe and Persistent Mental Illness (SPMI) and kids with Serious Emotional Disturbances (SED). The amount of adults and children we serve has been rising each year. Mr. Roberson said the biggest pressure point of communities for mental health care are the indigent, the jail and those requiring hospitalization, twenty two thousand people in poverty who suffer from mental illness are repeatedly cycling through jails, emergency rooms and hospitals. This is causing the Texas Tax Payers billions of dollars. In June of   2018 we hospitalized 64 Indigent clients and we spent just under $250,000. In one month and in 2017 we spent $1,614,482 for indigent psychiatric hospitalization; many of these clients are homeless. As of right now the current County funding is $28,728 and Walker County Hospital District is $30,000. Tri-County is asking for an additional request of $20,000 from the hospital district for Crisis Inpatient Treatment and Assessment.

Chairman Anne Karr-Woodard stated the board can discuss this at our next monthly board meeting.

Agenda Item #4: Comments from the public.

Mr. Richard Almendarez asked for a list of the current assets and liabilities of the hospital and the district. Chairman Anne Woodard stated he would have to request that from HMH and contact Michael Morgan and he can receive the districts information from our office. Mr. Rich Heiland asked if there were any updates on the Open Records Request. Chairman Anne Woodard stated we have one new Opens Records Request and we will be taking care of that on Friday. Chairman Anne Woodard stated all Open Records Request have been taken care of except the one the Attorney General has held up. Chairman Anne Woodard also stated the district has received many Open Records Request that have cost the district and the tax payers a lot of money in attorney fees, as a law if there is another party you are doing business with then legally you have to give the request to them and ask if they want all their business out there and if the other party doesn’t want it out then you will need to protect it.

Wade Thibodeaux, Walker County Press stated he hasn’t received his request answered because it got mixed up with another request. Chairman Anne Woodard stated Wade’s request was mixed in with another open request on the Attorney General office’s side and was their mistake. Kim Sanders stood up and said it was her understanding that the 2.9 million would be for the operations of the hospital, Chairman Anne Woodard agreed and said that is correct. Dr. Toronjo said the district reserves were at 14 million but stated that would not be enough to run the hosipital for a very long time period.

Agenda Item #5: Comments and reports from managers and HMH administration.

Michael Morgan HMH CEO gave a report on the sale process of the hospital, he stated The investors working on the sale process sent out 38 invitations and from the 38 invitations we received 9 disclosure agreements and all went into the electronic data room and 8 have dropped off. One of them are still looking very closely at the hospital and the other one looking is going to have to back away due to some purchases they have made. Michael stated if both fall away they do have a Plan B process for the district and the corporation bases on the funding the district has agree to at the last meeting which was 2.9 million but were we stand now we will not need any funding until the first week of December which will be $191,000.  HMH needs to keep a base line of cash of $1.9 million dollars every week in the hospital. Also from Dec 1st up to January 26th we will receive a 3 million dollar DISRIP payment will bring our cash to over 4 million dollars. This will bring the cash back up for HMH. Some of the reasons the district needed to come forth   will the funds during 2018 the following funding sources have completely fallen away from HMH are Medicaid Dish Payments a 4,085,000.00 that we no longer qualify due to not enough Medicaid patients going thru our system. HMH has just recently started taking Medicaid for pregnant women and we are already halfway there for the Medicaid. We will need around 60 women on this Medicaid program.

The second one that is down is the uncompensated care payments by $760,000.00 dollars.  Michael Morgan also stated they are down $2,813,000.00 in DISRIP Program changes, due to more hospitals move in particular pool across the state. We have also had a $2,300,000.00 reimbursement loss from what’s called a Northwest Hospital Community Benefit, in this situation HMH and Northwest in Houston were able to pool their funding and matches but now HCA has purchased the Northwest Hospital and HCA is no longer willing to pool the matches together. HMH should have received $400,000.00 in October 2018 but The Children’s Hospital has a law suit out now requesting they receive more funds than they currently are, so no funds will go out at this time for this funding, this affect all hospitals in Texas.

The Medicare Dependent Hospital Status which is a CMS Program has expired September 30, 2018 this will be a reduction to the hospital of $1,498,000.00. Michael Morgan stated this totals $11,466,000.00 of funding that was available to this hospital   that is no longer funded. We may get the 4 mil back from the Medicaid Disc Payments but I caution you unless the program builds to 60 women very quickly and we maintain this for 12 months we will not get a payment for 12 months this will be out there in the future. We have done some reductions at HMH to have a better cash flow we have closed clinics inside and outside the county and save a tremendous amount for the hospital and we have increased our volume on our clinic here in Huntsville. The Cold Springs clinic was closed and had a loss of $287,460.00 for 2017, the Riverside clinic just recently closed and it had a loss of $276,625.00, the HMH Clinic had a low volume last year and the loss for 2017 was $1,123,000.00 and in 2018 it is $759,000.00 but in the last few months the volume has been up and looks to keep going up for future and will be profitable for the hospital. The Madisonville Clinic had a loss of $545,000.00 in 2017 and a loss of $370,000.00 in 2018 before it was closed down.

Michael Morgan stated for our Sept Income statement our Ebita was up 9% as against the budget and our prior year improvement for the same month September was $1,419,000.00 and our Net Margin is up $140,000.00 over budget for September, the FDE improved 2.9%, Physicians Org has improved 38.5%. We are working with our Blue Cross situation here at the hospital, and we believe this is one of the reasons some of the hospital systems have fallen off looking at the purchase of this hospital because they are probably having the same problem. Blue Cross is a HMO now and won the bid from Humana in 2017, and HMH has not had an increase from Blue Cross in 3 years, we called them and they increased the inpatient by a small bit but they decreased our outpatient by a lot and if you add them both together its about 2-1/2 % less than the contract was paying us 3-1/2 years ago. They have changed their outpatient for reimbursement to hospitals and or calling it commodity pricing. This is a big hit for a lot of hospital systems.

Dr. Toronjo asked what the basic overhead would be to run HMH for a 30 day average. Michael Morgan stated 6-8 million a month. Michael also stated if a new entity comes in they can take over the billing numbers and the licenses then you can continue the billing process, you don’t have to reestablish those and will have money coming in 90 to 120 days later have money coming in. We can also work with our lender that should still work with the hospital.  If the new entity did not want to keep the same numbers they would have to wait a lot longer to bill or have their own lender. Dr. Toronjo asked if the corporation is willing to look to a plan B?  Michael Morgan stated the corporation is willing to work on whatever it takes to sell to a new entity or to move it to a new operator, they want to make sure this community has a hospital.

Dr. Toronjo asked Michael Morgan to explain the 1115 Waiver . Ralph Beaty WCHD Administrator explained the 1115 Waiver is funds the district puts up to the comptroller and its matched (depending on the formula at the time) and then sent to HMH. This happens several times a year. Ralph Beaty stated after 2019 the funds will be more stable with HMH. Dr. Toronjo stated HMH has not paid the rent for the past 3 months and asked about the future rent. Michel Morgan stated HMH will be paying the back rent in January or February of 2019.

Agenda Item #6: Review Reservation of Rights Letter.

Chairman Anne Woodard stated we voted on this Reservation of Rights Letter last month to send to the corporation about the money. This letter was sent on October 5th to the corporation to protect the district so the corporation cannot make a claim that they don’t owe any more rent to the district because the district waived its right to the rent. This letter states that we gave them 15 days after the notice to pay July and August rent which they were behind on, the first time they became behind was July 2018. Since they did not pay they became under default in the Lease and Operating Agreement. This letter notes that even though we didn’t take immediate action after the corporation for not paying the rent at that point we have reserved all of our rights to go after the corporation pursuing any remedies we need too. We have also gone forward and said on December 1 on any money we give to the corporation we will have Reservations o f Rights to. If the corporation files for bankruptcy they have the ability to accept or reject the current lease, if the lease is accepted the new owner would be liable for the back rent, but if the corporation rejects the lease the district would become an unsecured creditor in a bankruptcy suit and we would get some of that back.

Agenda Item #7: Joe Henderson will give a report on Ella Smither.

Attorney Joe Henderson gave a report by phone. He stated that the district is set for a hearing on a summary judgement on November 26, 2018 at 9:00am with Judge Ridley. Judge Ridley has had a couple of hearings on this, starting with our Plea and Abatement and he has granted our Plea and Abatement.

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 $13,114.68.  Dr. Montgomery made a motion to pay the indigent care bills as presented.  The motion was seconded by Mrs. Emmett.  The motion passed by 4-1 with Dr. Toronjo against.   

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

The Statement of Revenues & Expenditures for the month ending September 2018 was presented by Ralph Beaty. The Revenue for the month was $387,949.29 and expenditures were $373,084.70. 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 $32,806.26 were presented by Ralph Beaty.

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

Agenda Item #11: Discuss giving approval for Ralph Beaty to be added to the Bank signature card in order to sign checks in the office.

Mrs. Emmett made a motion to approve Ralph Beaty to be added to the Bank signature card in order to sign checks in the office. Dr. Montgomery made a second to the motion. The motion passed 4-1 with Dr. Toronjo against.

Agenda Item #12: Approve the recording of October 2018 budgeted indigent care expense in the amount of $240,000.00.

Dr. Montgomery made a motion to approve the recording of the October 2018 indigent care expense.  Mrs. Emmett seconded the motion. The motion carried by unanimous vote.

Agenda Item #13: 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 #14: Adjourn meeting.

There being no further business, Chairman Anne Karr Woodard adjourned the meeting at 7:53 p.m.



                                                                                    Chairman Anne Karr- Woodard

                                                                                    Walker County Hospital District



Attest: _______________________________

Jerry Larrison, Secretary

Walker County Hospital District