It's All Connected (naval gazing)

Of more interest than the Hospital to most Alamedans is the prospect of another tattoo parlor on Webster.  You can read about it over at alameda.patch.com.  It may be that the proprietor of Inkies could have an irrefutable legal argument that would allow him to open up on Webster regardless of the City's decision.  It might be that city ordinances specifically regulating tattoo parlors may not be enforceable.  (Of course, I have no idea because I am not a lawyer and I'm sure there's a lot of nuance to this question.)  In fact, maybe tattoo parlors must be allowed to open on the first floor even on (gasp!), Park Street.  

What I came across was the decision in Anderson v. Hermosa Beach in which the 9th Circuit ruled that a ban on tattoo parlors by Hermosa Beach violated the first amendment.

We hold that tattooing is purely expressive activity fully protected by the First Amendment, and that a total ban on such activity is not a reasonable “time,place, or manner” restriction.

Of course, Alameda's restrictions are not a total ban, but because they impose heavier regulation on tattoo parlors than other types of business, my (uninformed) belief is that these additional restrictions would probably be deemed unreasonable as well.  This was all serendipity because I was researching the trial judge who issued the AB97 injunction, the Honorable Christine Snyder.  She was the trial judge at the District level in Anderson v. Hermosa Beach.

Crisis? Maybe Not.

Three things I learned at this morning's Finance Committee meeting that suggest that the District may not be in imminent danger of default.

1.  An injunction against implementation of the DP/NF reductions has been issued.  You can view the decision here.  The judge accepted the argument of the CHA that these reductions could have an impact on access and quality not considered by CMS when the SPA was approved.  She rejected the argument that distinct part and stand alone SNF beds were interchangeable.   This is just the beginning of what will likely b a protracted process.  The District will continue to reserve at the reduced rates, but needless to say, this would be a major windfall for the District.  (I have stated in the past that I believe the rate reductions will ultimately be implemented, but other than any ego gratification I might get from being right, I am neutral.  On the one hand, more money for the District is a good thing; on the other hand, continued operation of the acute care hospital by the District is not something I am in favor of.)

2.  The loss for November may not, in actuality, be quite as steep as shown.  The percentage of gross revenue recognized by revenue is based on actual collections in prior months.  (I did not get the exact formula, but will probably ask.)  This means that if collections have been favoring low reimbursement providers or the amount of bad debt write-off has increased in prior months temporarily (the key word is temporarily) then it may translate into the appearance of reduced revenue for the current month that is not real.  There has been an ongoing effort to address the revenue cycle so it is possible that if the revenue cycle glitched in the first part of the year, that the net/gross number may be out of whack.  This would be expected, for example, if Medi-Cal billing (and to a certain extent Medicare) was happening without much interruption, but 3rd party payor billing was interrupted.  The lower reimbursement rate would translate into the income statement.  In November, one major reason for the poor financial performance was the net/gross percentage dropping about 2 percentage points below the year-to-date number.  This would not make up for all of the shortfall, but would translate the situation from an emergency to an urgency.  Of course, unless December is very surprising to the positive, the impact on the current ratio remains.

3.  On the other hand, I mentioned in my first post regarding the current ratio, that it was being calculated without reference to restricted assets.  If it turns out that those assets listed on the balance sheet under "Assets Limited as to Use, net" can be incorporated into the calculation of the current ratio, then perhaps the District is not in violation of the revised Bank of Alameda load agreement.

I'm sure more will be revealed at the Board meeting for some of these issues and as the lawsuit by the CHA winds it way through the courts with respect to the first issue.

CRISIS?(!)

The finance committee packet is out.  The bottom line numbers are truly alarming with a loss of 681k for the month of November alone.  This brings the YTD loss to just under 1 million dollars (combined loss of 995,000).  The impact on the District cannot be understated.  In addition, if the daily dashboard presented on the last page of the document is accurate (it is a sample for 12/29, but I assume that the numbers are actual numbers for that date), then December may be better, but not good enough to make up the difference and get the District to breakeven for the month.  In addition, the entire 750k of the Bank of Alameda line of credit authorized by the Board has been drawn upon.

Consequences:

1.  Current assets minus current liabilities is less than zero.  The current ratio is now less than 1.00 so unless this can be reversed in December to the tune of over a quarter of a million dollars (18,608,387 - 18,868,850 = -260,463), the District is in violation of the Bank of Alameda revised loan documents.

2.  The Net Assets line on the balance sheet is 7,746,083 which means that any future cumulative loss of $246,083 over and above the 995k already lost this year will put the total net assets below 7.5 million which is another violation of the Bank of Alameda loan agreements.

3.  Although I believe the District received an installment of parcel tax revenues in cash in December, this does not change the current assets picture (receivables decrease by the same amount that cash increases) so using the proceeds to pay off the Bank of Alameda LOC will just delay the inevitable when the District needs access to that liquidity again.

4.  This puts the development of the Wound Care center at risk.  Best case, another modification to the Bank of Alameda loan documents would need to be made.  Worst case, lack of financing will kill the project entirely.

5.  The working capital/management attention/state approval process for the the Waters Edge project will be seriously constrained by this development.

I must assume that something in December has changed to give Management optimism that the Hospital is not in imminent danger of default or, as a Board member, I feel blindsided by this development.  Even if December has resulted in a reversal (positive) of fortunes, I am staggered by the magnitude of November's loss and wish that I would have been alerted sooner.

Finance Committee Documents for 1/4 not Posted Yet

I do not consider the information I have official until it isposted on the website.   I expect they will be up ASAP.

UPDATE:  Here is the packet.

Sanjiv Handa, RIP

I never knew the man except for one passing reference somebody made to him in a discussion about Alameda politics.  He was most commonly referred to as a gadfly, but, from all appearances, he cared a lot more about good government in Oakland than his many detractors especially his nemesis, Ignacio De La Fuente.

What he did not realize is that few people in Oakland (and Alameda?) really put a priority on doing right.  Sure, most want to do the right thing, but the priority is political allegiance, money, and sticking it to your detractors.  The goal of benefiting people only gets factored in after it makes it through those filters.  That's why people like Perata and De La Fuente have enormous power and Sanjiv Handa had none.  Because if you are not in it for yourself then like Eugene McCarthy said, "Being in politics is like being a football coach. You have to be smart enough to understand the game, and dumb enough to think it's important."

Holiday Cheer

I hope that Alameda Hospital has been relatively empty this month, or, alternatively, people got in and out quickly because it stinks to be worried about your health or your loved one's health at this time of year.  And:

1.  For Kristen Thorson and the rest of the administrative staff who put together Board packets, update the website, and respond to special requests so quickly and efficiently.  Thank you.

2.  For Kerry Easthope who as far as I know is on good terms with everyone at the Hospital and has always graciously responded to my requests for information.  Thank you.

3,  For Jordan Battani and David Burton, who have sent an invitation both last year and this year to their holiday party.  (Unfortunately I could not attend either year.)  Thank you.

4,  For Michael McCormick and Stewart Chen who have at least paused to consider my arguments at times.  Thank you.

5.  For Denise Lai and Carol Gottstein who have publicly supported my position with regard to the District plus those who have privately reassured me that I am not crazy.  Thank you.

6. For Jim Oddie who has reached across a nasty political divide more than once.  Thank you.

7. For the commentors at Blogging Bayport especially Jack Richard where it seems to me the most engaging and engaged debates about Alameda issues takes place.  Thank you.

8.  For Action Alameda News which posts useful news and commentary about Alameda (often times first).  Thank you .

9. For all of the people at the Hospital and the various other facilities of the District who at the individual level provide care and support to patients.  Thank you.


Insert your favorite seasons greetings here.  Happy New Year too and keep an eye out next week for the Finance and Management Committee packet for the January 4, 2012 meeting.

Political Futures (navel gazing)

It's interesting that as of  10:00 this morning, you can buy at Intrade (I'm not sure if US citizens can) the chance that the Democratic nominee will be elected President for $5.12 and sell the chance that Obama will be re-elected for $5.16.  This would guarantee an arbitrage profit of $0.04 or about 0.8% which would be huge in the finance world.