MINUTES OF A REGULAR MEETING OF THE BOARD OF MANAGERS OF THE WALKER COUNTY HOSPITAL DISTRICT
December 05, 2018
STATE OF TEXAS X
COUNTY OF WALKER X
The Board of Managers of the Walker County Hospital District, Walker County, Texas met in a regular session, open to the public, Wednesday, December 05, 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
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 October 24, 2018 and the Special Meeting held November 16, 2018.
Mrs. Emmett made a motion to approve the minutes for the regular meeting held on October 24, 2018. The motion was seconded by Dr. Montgomery. The motion passed by unanimous vote. Mr. Larrison made a motion to approve the minutes for the special meeting held on November 16, 2018. The motion was seconded by Dr. Montgomery. The motion passed by 4-0, Dr. Toronjo was absent from this meeting.
Agenda Item #3: Comments and reports from managers and HMH administration.
Michael Morgan HMH CEO stated there are two organizations that are in due diligence right now to look at the transaction for the hospital, one of these have provided us a 25 page due diligence request letter which is a very deep dive into the due diligence situation for a transaction. We are hopeful one of these two will provide a letter of intent which would allow both the hospital and the district to look into the letter of interest and try to develop that into a complete agreement for some type of transaction for both the district and the hospital. We are at a point now where if there is not a transaction at this point and time and I think I mentioned this at the last meeting that we have been in a period where purchasing hospitals in this region have been chilled and it has been chilled for a couple of reasons and one is that managed care contracts that became effective January 01, 2018 have lowered the outpatient reimbursement to hospitals to what is called commodity pricing and that commodity pricing is much different than the hospital based outpatient pricing that hospitals have experienced for years with that in place just as an example one of our agreements a three year old agreement who we have with the managed care company their offer to us in January if you put both inpatient and outpatient volumes together is 2-1/2 less for that volume you would have in the hospital three years ago. This same type of pricing is happening all over and in Houston as well so I think everybody is steeping back and saying we really need to take a look at this before we go out and bring more hospitals into our system. One other thing that has chilled the sale process is Herman Hospital and Baylor Scott White over the last eighteen months have been in negotiations to merge and those two bohemian organizations are merging and that was announced a couple of months ago as a result of that neither one of those organizations were interested at the time we went out to talk about any purchase transaction, why would these two large organizations want to merge and I think the answer is they want to be able to compete with managed care companies in Texas. We believe over time HMH needs to be a part of a much larger system so it can have the ability to negotiate managed care contracts and have some leverage to be able to do this. We are very close after about the first week of February we will be very close to some initiatives that will take place that will move this hospital to a cash flow wise where it’s going to be in black, one of them will be the Medicaid Dish payments.
Our Health Clinic is handling the prenatal Medicaid patients, and we know have over 40 women and more to come into this program. One of specialty clinics is getting back on track and should be doing well again by January 2019. HMH fiscal year runs from July thru June of each year, so from July thru October our total operating expenses are down 6.192 million from the same period last year. The revenue hasn’t quite caught up with the reduction and expense yet because of the two factors the dish payments and the clinic we were talking about should be back in service and providing revenue to the organization in January so as a result of that by the time we receive our funding’s by the first week of February our cash position will probably be better here than it has in two years. Thanks to the work that the district has been able to do to make sure that we maintain a base level of cash to the hospital, we haven’t had to use any of that yet to just this week on that situation. Michael Morgan stated they have looked thru the hospital to see what Capital Equipment needs are for the hospital and we have presented a budget for those needs to the district to look at, which some of this has to do with the building.
Michael Morgan stated the FTE’S have been reduced for HMH as well, the point for tonight I am trying to make is HMH should be fine if we do not receive a transaction. We have put in place a 52 week forecast for the cash flow.
Dr. Toronjo stated he had several questions for Mr. Morgan. Can HMH survive long term without a partner? Mr. Morgan stated that HMH would need a partner moving forward to be able to grow for the community. Dr. Toronjo stated he was referring to HMH Corporation remaining or leaving. Michael Morgan said that Corporation will go away if there is a transaction and you still have to have an operating entity and HMH has a license. Dr. Toronjo said looking at Plan B with your cash flow projection for 52 weeks what happens with the Corporation if there is not a transaction after that 52 weeks. Michael Morgan stated we can put forth another 6 month cash flow and HMH should be fine with the initiatives I talked to you about earier and should continue running.
Dr. Toronjo stated looking at the vendors that have not been paid and the debt do you foresee that anyone could sue the hospital. Michael Morgan stated that HMH has a specialist who will be working with the vendors to get paid on a payment plan and they will be happy to have. Dr. Toronjo asked for Michael Morgan’s opinion if anything could chances that could suddenly happen to force the district to take over the hospital, do you consider this to be low or high? Michael Morgan stated based on the 52 week forecast HMH should be fine but nothing is 100%. Dr. Toronjo asked how much a month does it take to operate the hospital you had mentioned 6-8 million. Michael Morgan stated it takes $6 million to 7 Million monthly with a new CEO and CFO in place with salary and this will also lower the cost.
Agenda Item #4: Comments from the public.
None at this time.
Agenda Item #5: Administer the Oath of Office to the re-elected Board Members Anne Karr-Woodard, Curtis Montgomery and Jerry Larrison.
The oath of office for Anne Karr-Woodard, Cutis Montgomery and Jerry Larrison were read aloud by each newly elected board member and the oath was administered by Judge Pierce.
Agenda Item #6: Re-organize the board of managers.
Chairman Woodard reported that elections for Chairman, Vice Chairman and Secretary Positions were needed. Judy Emmett nominated Anne Woodard for Chairman. The motion was seconded by Jerry Larrison. The vote to elect Anne Woodard for Chairman passed by unanimous vote.
Chairman Woodard asked for nominations for the position of Vice Chairman. Jerry Larrison nominated Judy Emmett for Vice Chairman. The motion was seconded by Curtis Montgomery. The vote to elect Judy Emmett for Vice Chairman passed by unanimous vote.
Chairman Anne Woodard asked for nominations for the position of Secretary. Judy Emmett nominated Mr. Jerry Larrison. Chairman Anne Woodard seconded the motion. The vote to elect Mr. Jerry Larrison for Secretary passed by unanimous vote.
Agenda Item #7: Receive a presentation of the audit of Walker County Hospital District’s 2017 financial records from Davis, Heinemann & Company, P.C., discuss and approve.
Dianne Solock from Davis, Heinemann & Company, P.C. office presented the WCHD 2017 audit. Mr. Larrison made a motion to accept the audit as presented. Dr. Montgomery made a second to the motion. The motion carried by unanimous vote.
Agenda Item #8: Consider approving payment of indigent care bills.
Ralph Beaty gave the Indigent care report. The indigent Care Bills total for the Month of October 2018 was $7,313.73. Mr. Larrison made a motion to pay the indigent care bills as presented. The motion was seconded by Dr. Montgomery. 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 October 2018 was presented by Ralph Beaty. The Revenue for the month was $560,588.15 and expenditures were $ 336,683.85. Mrs. Emmett made a motion to approve the financial report as presented. The motion was seconded by Chairman Anne Karr-Woodard. The motion passed by unanimous vote.
Agenda Item #10: Consider approving payment of monthly bills.
Monthly bills in the amount of $94,171.02 were presented by Ralph Beaty.
Mr. Larrison 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: Consider and approve proposed 2018 budget amendments.
Mr. Emmett made a motion to approve the 2018 budget amendments. The motion was seconded by Dr. Montgomery. The motion passed by 4-1 with Dr. Toronjo against.
Agenda Item #12: Review and approve the Agreement for Treatment of Walker County Indigent Jail Inmates.
Mr. Emmett made a motion to approve the Agreement for Treatment of Walker County Indigent Jail Inmates. The motion was seconded by Mr. Larrison. The motion passed by 4-1 with Dr. Toronjo against.
Agenda Item #13: Approve the recording of November 2018 and December 2018 budgeted indigent care expense in the amount of $240,000 for each month with a total of $480,000.00 together.
Mr. Larrison made a motion to approve the recording of the November & December 2018 indigent care expense. Mrs. Emmett seconded the motion. The motion carried by unanimous vote.
Agenda Item #14: Consider giving approval to Walker County Appraisal District to accept the bids received on the properties in trust owned by the taxing jurisdictions.
None
Agenda Item #15: Review Capital Needs Request from HMH Corporation. Talk about controls regarding Capital Expenditures. Consider approval of amount requested.
Mr. Larrison made a motion to approve the Capital Needs request from HMH Corporation in the amount of $460,000.00 with the following conditions; HMH needs to take bids on the expenditures and allow the district to see such bids and approve the bids and pay the vendor after installed and also allow two board members to be present in all HMH Financial meetings. Mrs. Emmett seconded the motion. The motion carries by unanimous vote.
Agenda Item #16: Adjourn meeting.
There being no further business, Chairman Anne Karr Woodard adjourned the meeting at 7:30 p.m.
__________________________________
Chairman Anne Karr- Woodard
Walker County Hospital District
{Seal}
Attest: _______________________________
Jerry Larrison, Secretary
Walker County Hospital District