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.