Special Board Meeting of the Board of Directors Nacogdoches County Hospital District Tuesday, August 28, 2018
BOARD IN ATTENDANCE:
Patrick Kuhns, Vice -President
Ahammed Hashim, Secretary
BOARD IN ABSENT:
Lisa King, President
OTHERS IN ATTENDANCE:
Gary Kendrick, Interim CEO
Rhonda McCabe, Interim CFO
Jerry Baker, Legal Counsel
Ella Nobles, Executive Assistant
I. CALL TO ORDER: Mr. Kuhns called the meeting to order at 8:0.4 a.m. in the Executive Board Room.
II. Items to Be Considered:
A. Loan from the Charles and Lois Marie Bright Foundation for Intergovernmental Transfer (IGT)-Gary Kendrick: Mr. Kendrick presented the Loan from the Charles and Lois Marie Bright Foundation. This loan will be dedicated to the funding of the IGT.
Resolution No. 2018-13
Resolved, that the District borrow the sum of Two Million Three Hundred Thousand Dollars
($2,3 00,000.00) (Debt) from the Charles and Lois Marie Bright Foundation, payable over a maximum period of 45 days and bearing interest on the unpaid principal balance of 7%. If the loan is paid back before the due date, the interest rate will be less. The Secured Promissory Note Agreement, Security Agreement and Resolution No. 2018-13 are attached to the agreement.
Mr. Kendrick stated that if there are no changes with the state as of September 6, 2018, we will pay $2.3 Million for the IGT and the return from this investment will be $5.9 Million. After we pay back the $2.3 Million as promised, we will net $3.6 Million. Mr. Kendrick also state that the numbers could change.
Walter Scott asked if the return would be a least the $2.3 Million over the amount we are borrowing. Mr. Kendrick stated that when we find out the exact amount, it will tell us what we need to put in. Ms. Ronda McCabe stated as of last week that the number was $2.3 Million. Patrick Kuhns said this would help our 13-week cash flow.
Patrick Kuhns asked for a motion to approve Resolution No. 2018-13. Walter Scott made the motion to approve Resolution No. 2018-13, seconded Ahammed Hashim. Motion carried unanimously by a number of votes 5.0.
B. Discussion and possible action regarding financial information to be provided to the Board at monthly meeting with the "Results of Operations"-Anita Kite: Ms. Kite stated that after hearing the information in the Special Committee meeting and hearing the presentation given to the full Board, there was still a lot of non-transparency going on. Ms. Kite feels like we really truly need to have more financial information provided to the Board and the public before making decisions.
Ms. Kite provided each attendant a discussion sheet to review on items that she felt was essential in making decisions. For example, she gave the requested detailed 13-week cash flow table including IGT money and with/without debt reductions, updating each month with projections for monthly projected estimates. Ms. Kite stated that we need this information whether it comes the form of email or paper. It seems as if we need to have this kind of information.
Ms. Kite stated that Rhonda McCabe has done a lovely job on the chart of accounts payable, with having how many accounts over ninety, over sixty, and less than thirty. This information also included payment decisions made by our Administrative staff that meet on a weekly and sometimes daily basis to make vendor payment decisions. Ms. Kite stated that, even after all of this decision making, we as a board still do not have a due what is going on with those decisions. Ms. Kite stated that we just do not know and we do not get that information.
Ms. Kite stated that a list of all service lines being considered for what their future is, she feels like the Board needs to know what is being considered. Whether it is Rehabilitation, Ambulance or whatever it is, those discussions need to be discussed with the Board and not just administration and committee before decisions are made.
Mr. Kendrick stated that all recommendations on the service lines will be presented to the Special Committee, and then the Special Committee takes these items to the full Board. He also stated that if we put the information out there that we are considering closing or getting rid of, EMS or closing such and such, it would be total panic. Mr. Kendrick stated that something has to be discussed, decided upon and recommended before taking to the Board. Mr. Kendrick stated that the Special Committee will meet and take recommendations to the September Board-.
Mr. Kendrick asked, “How would you like to be working in a department that you hear might be closed.” Ms. Kite stated that there is a difference between being closed and being sold or given away. Mr. Kendrick stated that he is talking about a department and gave this example: If you work in NICU and hear that we are going to dose NICU, we will lose more and more employees before the decision has even been made.
Linda Lawson CNO stated that she looked at the staffing and saw that we lost five nurses when we started talking about closing NICU.
Walter Scott wanted to know "Why is it we have to put everything on the front line before the Board has even discussed, looked at or talked about; stating that it is very hard to get good employees, and that if you put it out there and you don't have anyone to work in this hospital then we are just up the creek.
Mr. Scott referenced Farrar Bentley and stated that the Special Committee and the Board needs to come to a conclusion before throwing it out.
Mr. Bentley stated that M r. Scott was missing the point, and that he had no problem with the Special Committee meeting, but that he had not seen this information until just a minute ago. Mr. Bentley stated that the board needs to know what is being discussed. If the three -member Board does not share what is going on with the rest of the Board, then it is a break down. Mr. Bentley stated that he has no earthly idea what has been discussed in the two meetings that the committee has had.
Mr. Scott agreed with Mr. Bentley on that point. Mr. Scott said he stated the same thing a few years ago. However, when should the Board know? When the rest of the people know?
Mr. Bentley stated that the Board should know first. Mr. Kendrick asked how he proposes that it could be done, in an open meeting? Mr. Bentley stated that you could still let individual Board members know, what is going on without a formal meeting.
Ms. Anita stated for example, rather than selling off the Ambulance Service to a competitor who says can make money on it, "Why can't we make money, why haven't we made money."
Mr. Kendrick stated that Lufkin, the city and hospital do not do their own EMS service anymore. In the city of Lufkin, the Fire department does it there. In different places it is the county. They contract it out to someone; that is all they do, they know how to bill, know how to staff.
Dr. Hashim interrupted stating that he does not agree with the statement coming from Mr. Kendrick. Dr. Hashim stated that if someone else could make money then we should be able to. Once again, Dr. Hashim stated that this does not make sense. Mr. Kendrick said if that were the case, every hospital would be doing it. Dr. Hashim replied that we have only a few things we can exploit that have the potential to make money, such as the NICU, and we have been losing money on it. Dr. Hashim said maybe we need to turn this hospital into a private entity and maybe they can turn a profit because we cannot. Mr. Kendrick said that was the whole plan. Dr. Hashim said that the complete thought process really looks flawed; and does it mean to say that the management is not capable? If the right company can turn a profit, then that shows a weakness in management. Mr. Kendrick stated that those hospitals are owned or leased. Dr. Hashim stated that he was referring to the Ambulance service as an example. Dr. Hashim said: "If you are saying that ambulance company ''A'' can run it well and make a profit in the same environment and same kind of thing and we cannot, that is a weakness of management". Mr. Farrar Bentley agreed.
Rhonda McCabe CFO stated that the company looking at the Ambulance service has not looked at one piece of our data. The company is saying that they can make money, but have no idea if they can. It is just an assumption that they can. The company is saying that they want it all; and with a financial loss of $1.5 Million, we are saying let's give it to them. Rhonda confirmed that she has not provided them one bit of data and they have not performed one analysis. Rhonda stated that they could come back in six months to a year and want a subsidy.
Mr. Kendrick stated out of all the ambulances we have, which he thinks is eight; they all need to be replaced. We are talking about $100,000 easy. Ms. Lawson stated it is not just the repairs; it is the expense that goes along with it, and the rates of pay is now $2.00 lower. Mr. Kendrick stated that we would recommend two options, we keep it and this is what we do, or we sale it or turn it over and assign it to them.
Mr. Bentley said, "let us focus on transparency within the board and it is not complicated." Mr. Bentley suggested that if you are in a meeting just pick up the phone and say this is what was said and this is the reason why we came to these conclusions. Mr. Scott agreed if this is the point Mr. Bentley and Ms. Kite were trying to make.
Ms. Kite stated this was why she felt like a discussion was needed and that the full Board was not getting the full story. Ms. Lawson was concerned with the fact that it feels like there is a lack of trust within the Board toward Administration. Mr. Bentley as well had trust concerns from the standpoint of Board, Administration level when it comes to information.
Mr. Kendrick stated that this is not for action but offered to bring Dykema and Kelly Hart invoices just for clarification.
After much discussion on how to inform board members about the Special Committee meeting
Information, Mr. Kuhns volunteered to call the Board members after each Special Committee meeting to inform them on what was discussed. Dr. Hashim commented that that proposal was not sufficient; and that the topic of the Special Committee meeting should be formally discussed in Executive Sessions, in order for the complete Board to receive all of the information.
Part B. of the Special Board meeting was for discussion only no action was taken.
III. ADJOURN: Mr. Kuhns adjourned the meeting at 8:46 a.m.