Fiduciary Irresponsibility

Forgive what promises to be lousy formatting, but I wanted to post balance sheets below.  I plan to refer back to them over the next few weeks as I explore a couple points (see the last paragraph).  The first column is for 6/30/2003 (which is the first audited year-end balance sheet after the District was formed).  The second column is unaudited and from the Finance Subcommittee package.  Some lines on the originals were consolidated for ease of presentation and comparison, but I can email the originals to anyone or you can just obtain them from the District.

In the Finance Subcommittee, the vote was unanimous to recommend to use the Bank of Alameda Line of Credit with more favorable terms than originally presented to the Board.  If you look at this balance sheet (and the income statements), you would understand that this loan would be crazy except for one thing.  The people of Alameda are on the hook for all liabilities of the District until they are paid off completely.  I don't have the exact letter that Tom Driscoll (District counsel) wrote to the Bank saying as much, but that's the bottom line.

Nine years of incompetent oversight, mismanagement, undue optimism, and a stubborn refusal to face the facts has brought the District to this point.  The blame can be spread across many people;  it certainly includes the present Board majority, but also can be partially laid at the feet of such notable Alamedans as Lena Tam, Rob Bonta, and Mary Ezzy-Ashcraft.  Each dollar of the 12 million in the reduction of net assets over the 8 years encompassed by this picture are an additional unlevied tax on Alamedans.  That 1.5 million per year in losses would work out to an additional $75 to $80 tax per parcel per year (or over $600 per parcel total) that was voted upon only in the sense that the District Board is supposed to represent the voters.

The final point is that for the following reasons, the true financial situation is worse than shown.
1.  Long term debt does not include 4 to 5 million dollars of liabilities that are off balance sheet because they are leases (equipment and real estate).
2.  There is about a 500,000 liability (18 month severance) associated with Deborah Stebbins contract unless she resigns. 
3.  The net assets line includes over 1 million dollars in work in process capitalization that, in my opinion, is impaired since the seismic retrofit is not happening in the forseeable future.
4.  The other receivables line includes the parcel tax for the year coming up (which is why it is balanced with the deferred revenue line in liabilities) and the 760 thousand of IGT funds which CMS is having trouble paying.

Don't be intimidated by people who claim that healthcare accounting is complicated and requires special expertise; nothing in this balance sheet goes beyond the level of basic accounting.  (I should know since I have taught intro to accounting in the past.)


 Alameda Hospital Balance Sheet

					6/30/2003	6/30/2011
Current Assets
	Cash and short term investments				8,329,777	1,802,225
	Accounts Receivable				7,589,128	7,249,185
	Other Receivables					8,216,998
	Third Party Settlement Receivables					278,580
	Inventories				919,658	1,238,762
	Other Assets				842,807	262,359
Total Current Assets					17,681,370	19,048,109
Restricted assets					228,300	483,716
Fixed Assets					9,045,560	8,321,570
Total Assets					26,955,230	27,853,395
Current Liabilities
	Current Portion of Long Term Debt					711,784
	Accounts Payable and accrued expenses				2,423,715	7,025,089
	Payroll accruals				2,707,005	4,003,695
	Deferred Revenue					5,725,900
	Third Party Settlement Payable				266,200	267,474
	Other Liabilities				340,016	343,382
Total Current Liabilities					5,736,936	18,077,324
Long-Term Debt					676,787	1,142,109
Net Assets					20,541,507	8,633,962
Total Liabilities					26,955,230	27,853,395

The World Does Not End

When a hospital closes, the patients are moved in an orderly transition to other facilities.

Walter Reed Closing After More Than 100 Years

Random Questions

1.  Are my fellow Board members so wealthy (all are considerably above Alameda's median family income and net worth) that a wasted $298/year means nothing?

2.  Is there a bridge between "closing the hospital" and "keeping it open" that can be built with more effective communication?

3.  Are my fellow Board members ruthless enough to try to destroy me (after all they sat idly by and seemed to tacitly endorse Leah Williams libelous attempts to have me expelled from UCSF  have my current license revoked, and have all future license applications denied)?

4.  What major issues have my fellow Board members been right about?  Seriously, am I crazy or weren't they wrong about Kaiser, budgets, and seismic retrofit?

5.  Doesn't weak evidence (and I am not suggesting the evidence I have presented is weak, but just assuming for the sake of this discussion) trump no evidence?  Assuming that direct evidence trumps indirect evidence, why is the Board against doing a study on stroke outcomes that would yield direct evidence?

6.  Where do people get the idea that 74% of the District voters support the Hospital?  That was not even the percentage 10 years ago before the tens of millions in losses, the inability to complete the seismic retrofit, and the renunciation of the promise to not encumber district voters with debt that would live past the closing of the Hospital.  Why, all of a sudden is this inflated number being bandied about?

Bedside Manner

Lauren Do writes about the Hospital Board this AM.  I wanted to make sure that I had something up for any visitors so here is a post I wrote after June's meeting where the District budget was approved.

Should the Board Majority and Deborah Stebbins Resign?

My tentative answer is yes.

1.  The ability of the Board and management to execute on a budget has been dismal over the past six years. (a cumulative 9 million miss from projected budget.)
2. The Hospital is not compliant with regulations issued by OSHPD.  This gives OSHPD the ability to shut down acute care services at any time.  A writ of mandate lawsuit could potentially accomplish the same thing.  This has been the case since 1/1/2002 preceding the present Board and management but not corrected by them.  (Confirmed with OSHPD legal counsel.  If I really wanted to turbocharge my efforts to shut down the Hospital then I would go to court for a writ of mandate.)
3.  The District is so short of cash that management is asking to borrow against the emergency line of credit from Bank of Alameda.  This and other borrowings are not compliant with the current covenants of these loans and so the covenants will have to be renegotiated or depend on the forbearance of the Bank in not calling the loans.
4.  The District's balance sheet is a disaster.  The major assets of property plant and equipment are overvalued on the balance sheet because the Hospital is subject to approximately 10,000,000 of seismic retrofit work for them to continue to be used in their current use.
5.  Management and the Board majority cannot point to one iota of evidence that the Hospital provides improved healthcare outcomes to Alamedans but confidently assert (misleadingly so) that such outcomes are indeed happening.

I don't really believe that either the Board majority or Stebbins will resign, but I don't think any informed observer should have any confidence in their leadership.  (Now understand there are plenty of uninformed observers who will disagree, but I am willing to offer a free cup of coffee to any knowledgeable person who wants to argue with me.)

P.S.  Given her past behavior, I fully expected the post (which I knew would be coming at some point) to be a "hit piece".  Anyone who knows her blog, knows what I am talking about.  This is relatively benign by Lauren's standards.  Color me pleasantly surprised.

Quick Notes for Board Meeting 7/11

1.  Closed session agenda meets the criteria set out in the Brown Act.  Hope that continues in the future, but unlikely.

2.  Consent agenda.  I pulled nothing. Yes, May was dismal with another 816k of losses, but the Board majority and management ignores everything.  Why bother beating a dead horse?  Approved unanimously.

3a.  August Board meeting date changed.  Approved unanimously.
3b.  Mike McMahon appointed to Community Relations Committee.  I think this is a good choice, but have never spoken to Mr. McMahon directly to see if he lives in the same fantasy world that the Board majority inhabits.  I am, in general, positive about his tenure on the School Board.  I am leery of the fact that he apparently belongs to the current political clique in power.  Approved unanimously.
3c and d.  Let's tax Alameda to preserve an underperforming Hospital.  Let's ignore the evidence that health outcomes are not improved despite spending tens of millions of dollars of taxpayer money over the years.  Let's insult and disparage those who ask for evidence that the Hospital serves a purpose.  3c:  Approved 4-1;  3d;  Approved unanimously.
3e.  Cannot remember how I voted.  The Bank of Alameda could not definitively say what changes in the loan they would require prior to approving the loan.  I recalled that there was a promise that this information would be available by the Board meeting, but others said that it was just a promise to discuss the issue with Bank of Alameda prior to the Board meeting.  Regardless, the Board voted 4-1 to take out an emergency loan without knowing the terms and conditions.  Furthermore, they acted like not being able to pay your bills is no big deal.  (It may have been unanimous.  I might have been too exhausted to argue at this point.)

The rest of the meeting was updates and reports.   Presentation on a communications strategy plan by Tom Clifford of Tramutola.  They also worked on "Let's Move Alameda"  (slides are in the updated Board packet).  June promises to be better financially according to Stebbins, but I have no basis for trusting that statement.  Stroke accreditation should be scheduled soon; the Hospital has asked the County to start routing stroke victims to the Hospital again. 

Last point to note which was not presented at the meeting, but happened subsequently was that CFO David Neapolitan is leaving the Hospital effective 7/15/2011.  He will be replaced on an interim basis by a consultant.

Perhaps it is a Distinction WIthout a Difference

A letter suggesting I have insulted the medical staff of Alameda Hospital has been circulated.

I have always tried to carefully couch my issues with Alameda Hospital in terms of outcomes.  I have pointed to numerous studies published in this country's most prestigious medical journals that support my statements.  (I have not included data that supports the relationship between volume and outcome that are not relevant such as surgical data for procedures not performed at the Hospital.)  I believe in the absence of evidence to the contrary, my statements are entirely appropriate.  I have asked, begged, and pleaded for evidence that contradicts these major studies.  I have been careful to not overstate the data which does not identify the specific cause of these differences in outcomes nor to disparage the doctors, nurses or other care providers at the Hospital (with the exception of suggesting that they are not exceptional relative to the clinicians at other East Bay Hospitals which I believe is a totally uncontroversial remark).  If someone wants to be insulted by me quoting these studies or saying that Alameda Hospital physicians are likely not better than the medical staff at nearby hospitals , then the best I can do is to be totally silent or dishonest which does not suit me.

If someone wants to engage in the debate and present additional evidence that contradicts what I have said, I am totally open to that discussion and have even offered to purchase coffee for any reasonable person who wants to have that discussion.  I'll up the ante to a meal, but come prepared to defend your position.

The Joint Commission's Quality Report

TJC does issue quality reports.  The one for Alameda Hospital can be found here.  Before anyone tries to tell me that the Hospital does a better than average job on 30 day mortality for heart attacks, realize that Alameda Hospital does not treat STEMI's and the calculated risk adjusted mortality rate does not distinguish between STEMI and NSTEMI.  NSTEMI's have a lower 30 day mortality so by eliminating all of the more serious cases (because Alameda Hospital does not have the resources to treat them), the Hospital gains an inherent advantage in this metric.

Click through to the patient satisfaction report as well.

Callous

The idea that there is a relationship between higher volumes and better outcomes in healthcare is completely uncontroversial.  The exact nature of the relationship, thresholds, and areas where it is strongest is the reason that all these studies are published.  The Board majority and management don't care.  (I think I have seen this kind of thing before - someone sticking their fingers in their ears and chanting, "nah, nah, nah, I can't hear you.")

The problem is that Alameda discharges around 2500 patients per year.  Even a 0.1% difference in mortality is  2 to 3 unnecessary deaths.  The studies I have quoted have found relationships much stronger than that (they would not even have been able to detect something as small as 0.1%).  For every 1% difference in mortality, it is 25 additional deaths.  Real people dying because Alameda Hospital is a smaller volume hospital that the Board refuses to close and route those cases to larger hospitals (at least 5 of them within a 10 mile radius).

UPDATED:  The question that keeps getting asked by the Board majority is where is the DIRECT evidence that Alameda Hospital is inferior.  They don't seem to believe that the responsibility lies with them to justify the tens of millions of tax dollarsthat have been used to prop up this failing institution.  I will listen to that evidence as long as it doesn't consist merely of the endlessly repeated words, "I trust The Joint Commissision."

Denialists

There are numerous people in this country who do not believe in global warming.  Some of them reject the science.  Some believe that it might be happening, but it is not caused by human activity.  A vast majority just do not bother to understand the issue and, because it does not affect them directly and/or they do not see how to change their lives to make a difference, they adapt whatever they feel in their gut*.

The same thing is true for healthcare.  Any study that I can post here that talks about a volume/outcomes result will be denied by the Board majority and management.  No study exists directly about Alameda Hospital.  To do a comprehensive study would be difficult and expensive and likely inconclusive. 

Last night at the Board meeting I proposed a natural experiment that would solve the first two problems (but not address the third).  I proposed it in the context of the Board once again deciding to assess the more than  5.5 million dollars of tax on Alamedans to keep a hospital open that can only deliver mediocre healthcare outcomes.

I challenge the Board and management to undertake that experiment.  Since 12/1/2010, the County has directed ambulances with all witnessed potential strokes with onset of symptoms less than 4 hours to facilities other than Alameda Hospital.  We know those cases came from the 94501 or 94502 zip code.  Prior to 12/1/2011, most suspected stroke victims from 94501 and 94502 were transported to Alameda Hospital.  It would be possible with the help of Alameda County (which the Board has considerable pull with politically) to devise a study that compared outcomes for these patients for the six months prior to 12/1/2010 and the six months post 12/1/2010.  I think this is an elegant design (probably since I thought of it myself).  Unfortunately, even this relatively simple study would take a huge amount of time and face significant logistical hurdles.  I rashly offered last night to do it, but that was a mistake.  The study would have to be conducted by someone independent and someone who had more time/money. 

Absent such a study, I will just have to go with something other than my gut to lead me to the conclusion that there is no circumstance that I can imagine where I would want to be treated for a potentially life-threatening  condition at Alameda Hospital if advanced life support transport to another East Bay hospital was available.

*"That's where the truth lies, right down here in the gut. Do you know you have more nerve endings in your gut than you have in your head? You can look it up. Now, I know some of you are going to say, "I did look it up, and that's not true." That's 'cause you looked it up in a book. Next time, look it up in your gut. I did. My gut tells me that's how our nervous system works. " (Stephen Colbert)

People who say it better than I can - NEJM edition

"Admission to higher-volume hospitals was associated with a reduction in mortality
for acute myocardial infarction, heart failure, and pneumonia, although there was a
volume threshold above which an increased condition-specific hospital volume was
no longer significantly associated with reduced mortality."
The thresholds in the study were <610 cases for AMI, <500 for HF, and <210 for pneumonia.  I do not know what Alameda's case numbers are although I am pretty sure they fall below those numbers for at least one of these conditions.

Dr. Deutsch Plans to Work For a Long Time to Come

My apologies for making an assumption that he would retire if Alameda Hospital closed.  I just assumed (mea culpa) that at around 60 years old (he graduated medical school in 1974), he was nearing retirement and that such a major change in his practice would lead to retirement.  I was wrong and I apologize for that mistake.

A great quote (navel gazing)

This is why I love the Internet.  FDR said it.  Roald Dworkin quoted it.  Mark Thoma pointed it out and then Brad Delong brought it to my attention.  I don't know any of these people, but I get to share in their expertise and discernment.

"Instead of Twirling Our Thumbs We Have Rolled Up Our Sleeves"

Mark Thoma sends us to Ronald Dworkin quoting FDR:

How FDR Did It: For nearly four years you have had an Administration which instead of twirling its thumbs has rolled up its sleeves. We will keep our sleeves rolled up. We had to struggle with the old enemies of peace—business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering. They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob. Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me—and I welcome their hatred. I should like to have it said of my first Administration that in it the forces of selfishness and of lust for power met their match. I should like to have it said of my second Administration that in it these forces met their master.

Public Information

 From the June 6 Board Packet:

• Acquisition of one or more large community based skilled nursing facilities within the District.

We have had two recent promising meetings with local nursing home operators outlining
our proposal to sublease their operation and assume their licenses as additions to our
distinct part skilled nursing bed complement. We have submitted a term sheet to one of
the facilities, outlining a proposal which is subject to Board approval. This acquisition
could have as much as a $2.0-2.5 million impact on our bottom line as a result of
allowing us to recoup more of our overall infrastructure expenses. Worst case, this
impact would mitigate the reimbursement cuts outlined above. In the best case, if the rate
reduction is not approved, this impact could mark the most significant improvement in
our operating performance that we have on the strategic horizon.

We are awaiting an indication, expected within a couple of weeks, of whether the second
facility with whom we are talking has a serious interest in similar discussions. Again, the
positive financial impact on the Hospital is estimated to be in the $2-2.5 million range.

We are heartened for the first time in a couple of years about the level of receptivity we
are experiencing and attribute it to the fact that our proposal would relieve these operators
of assuming their own risk of declining operating margins under AB 97. While not built
into our base budget for FY 2012, this strategic initiative would have a major favorable
impact on our operating margin

Should the Board Majority and Deborah Stebbins Resign?

My tentative answer is yes.

1.  The ability of the Board and management to execute on a budget has been dismal over the past six years.
2. The Hospital is not compliant with regulations issued by OSHPD.  This gives OSHPD the ability to shut down acute care services at any time.  A writ of mandate lawsuit could potentially accomplish the same thing.  This has been the case since 1/1/2002 preceding the present Board and management but not corrected by them.
3.  The District is so short of cash that management is asking to borrow against the emergency line of credit from Bank of Alameda.  This and other borrowings are not compliant with the current covenants of these loans and so the covenants will have to be renegotiated or depend on the forbearance of the Bank in not calling the loans.
4.  The District's balance sheet is a disaster.  The major assets of property plant and equipment are overvalued on the balance sheet because the Hospital is subject to approximately 10,000,000 of seismic retrofit work for them to continue to be used in their current use.
5.  Management and the Board majority cannot point to one iota of evidence that the Hospital provides improved healthcare outcomes to Alamedans but confidently assert (misleadingly so) that such outcomes are indeed happening.

I don't really believe that either the Board majority or Stebbins will resign, but I don't think any informed observer should have any confidence in their leadership.  (Now understand there are plenty of uninformed observers who will disagree, but I am willing to offer a free cup of coffee to any knowledgeable person who wants to argue with me.)

People who say it better than I can - Heart Failure edition

Ann Intern Med. 2011 Jan 18;154(2):94-102.

The association between hospital volume and processes, outcomes, and costs of care for congestive heart failure.

Joynt KE, Orav EJ, Jha AK.

Harvard School of Public Health, Brigham and Women's Hospital, Boston, Massachusetts, USA. kjoynt@partners.org

"RESULTS: Hospitals in the low-volume group had lower performance on the process measures (80.2%) than did medium-volume (87.0%) or high-volume (89.1%) hospitals (P < 0.001). In the low-volume group, being admitted to a hospital with a higher case volume was associated with lower mortality, lower readmission, and higher costs. Similar, though smaller, relationships were found between case volume and both mortality and costs in the medium- and high-volume hospital groups."

People who say it better than I can - Sepsis version

Crit Care Med. 2010 Nov;38(11):2161-8. 

Volume of emergency department admissions for sepsis is related to inpatient mortality: results of a nationwide cross-sectional analysis.

Powell ES, Khare RK, Courtney DM, Feinglass J.

Department of Emergency Medicine, Feinberg School of Medicine, Northwestern University, Chicago, IL, USA. emilie-powell@md.northwestern.edu

"CONCLUSIONS: After adjustment for comorbidity and hospital-level factors, there was a significant relationship between emergency department sepsis case volume and overall and early inpatient mortality among patients admitted through the emergency department with sepsis. Patients admitted to hospitals in the highest-volume quartile had 27% lower odds of inpatient mortality in this large heterogeneous sample."

People who say it better than I can - 2002 version

Stroke. 2002 Jul;33(7):1851-6. 

Association between subarachnoid hemorrhage outcomes and number of cases treated at California hospitals.

Bardach NS, Zhao S, Gress DR, Lawton MT, Johnston SC.

School of Medicine, University of California, San Francisco, CA 94143-0114, USA.

 "CONCLUSIONS: In this study of discharge abstracts in California, hospitals that treated more cases of subarachnoid hemorrhage had substantially lower rates of in-hospital mortality. Few patients with subarachnoid hemorrhage are being transferred to high-volume centers."

People who say it better than I can

Hosp Pract (Minneap). 2010 Nov;38(4):54-62. 
Improving patient outcomes from acute cardiovascular events through regionalized systems of care.

Edwards JM, Carr BG.

Department of Emergency Medicine, University of Pennsylvania, Philadelphia, PA 19104, USA.

"...Significant regional variations in practice are commonplace, and facilities with higher patient volumes of STEMI, cardiac arrest, and ischemic stroke consistently have better outcomes compared with lower-volume facilities. ..."

Reality bites

I remain baffled how Director Battani, and the voters she interacts with, see reality so differently than I do.

John Stewart in a great segment on the Daily Show finished with this:

“"I used to think your reality shapes your politics. Instead, it's clear to me now that your politics shapes your reality."

Of course, that is not new to Stewart.  In a different context, Shakespeare wrote:

"Then God be blessed, it is the blessed sun,
But sun it is not when you say it is not,
And the moon changes even as your mind.
What you will have it named, even that it is,
And so it shall be still for Katherine."

On the other hand, reality can occasionally achieve a consensus (e.g. bankruptcy).
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Updated:  I was reminded of the statement I made to the City of Alameda  Democratic Club back in September, 2010.

"...Alameda Hospital is less able to deal with the situation  [referring to a true emergency medical situation] than larger, more skilled facilities close enough to overcome any advantage of closeness that Alameda Hospital has.  This is reality.  It is true even if you are unwilling to believe the results of years of research involving hundreds of thousands of patients.  That is a message that is politically incorrect.  It is a message that means that some of the Club's brightest lights are simply wrong when it comes to this issue."
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