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Charlotte Amalie
Monday, July 4, 2022
HomeNewsArchivesJFL Hospital Seeks Community Help in Solving Financial Dilemma

JFL Hospital Seeks Community Help in Solving Financial Dilemma

Juan F. Luis HospitalThe Juan F. Luis Hospital needs about $10 million – more would be better, of course – and on Thursday the community can help the hospital board figure out how to find it.

The hospital will hold a community forum at 5:30 p.m. Thursday in the conference room of the V.I. Cardiac Center to discuss options in obtaining an infusion of capital to keep the hospital solvent.

The meeting was scheduled at the governing board’s June 7 meeting, after the financial report showed the hospital had had a positive cash flow two months in a row, the first time that had happened in years.

But even though the hospital is headed in the right direction, JFL Chief Executive Officer Jeff Nelson said the modest improvement doesn’t begin to offset the overwhelming debt.

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“It’s a choice of whether we want to have a hospital or not,” Nelson said.

The Juan F. Luis Hospital owes its creditors more than $30 million and has no hope under current conditions of beginning to pay that off. Without an infusion of cash, Nelson said, creditors have already begun tightening up.

Nelson said the inability to repay the debts threatens patient care, repeating what he has been saying for more than a year – the hospital needs an infusion of cash.

Complicating the matter even further, the hospital needs facility and equipment upgrades of as much as $44 million in the coming years, but has only about $1 million available cash on hand, including what’s in restricted accounts.

In a statement issued a year ago, Nelson wrote that without an infusion of capital to replace aging equipment and facility systems, regain full accreditation and pay its debts, “JFL is subject to breakdown beyond repair which could close hospital services in total or in part.”

The board charged Nelson with reporting back by mid-June with options on how that financial shot in the arm could be raised. The only restriction is that the options must retain what are called the hospital’s critical community values – that the hospital continue to be government owned, provide treatment to anyone regardless of ability to pay, and be organized as a not-for-profit corporation.

The board also said it would prefer a solution that is already within permissible legal limits, so it does not have to spend months seeking a new law from the Senate.

Thursday’s community forum is just one of the meetings being held to discuss the situation. Officials are also meeting with physicians groups, labor, government agencies and others, beating the bushes to find the means of bailing the hospital out.

According to Nelson’s August 2011 statement, available on the JFL website, suggestions that have been explored or discussed in the last year include:

– Seeking funding from the central government. The hospital has appealed for capital in several meetings with government leaders but has been told repeatedly that there simply is not any money available.

– Using the hospital’s accounts receivable, debts that are owed to the hospital, as collateral to borrow the needed capital. The hospital’s statement said the money that might be raised could be used to negotiate with existing creditors, but in itself is not enough to reduce creditors’ balances to a reasonable level. “Therefore, such a loan is insufficient to address all of JFL’s capital needs,” the release said.

– Officials have considered using bankruptcy courts to protect JFL. Even with court approval of a reorganization plan of its debts, bankruptcy would not be enough to raise capital for the hospital’s current and future facility and equipment needs.

– By selling the hospital to an outside group and then leasing the facility back, the governing board would acquire more than $20 million in capital, according to the news release. However, such a move could be perceived by some in the community as a step toward privatizing the hospital, a fear expressed by many leaders and community members.

– Entering into an affiliation or management agreement with a larger hospital system. While such a move could provide local control, the community might also see this choice as privatizing the hospital. However, there are possibilities within these options that would provide the right balance between the need for capital now and the future, as well as retaining significant local control.

The hospital’s news release said there are multiple not-for-profit and for-profit hospital systems offering affiliation and/or management agreement options.

Meanwhile, the hospital has been active in tightening operations to get to the point of breaking even on a monthly basis.

Steps to do so have included:

– Streamlined hospital internal systems and operations;
– Increased rates which helped raise gross revenues by $23.7 million or 23 percent;
– Reduced expenses by $2.8 million.

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Juan F. Luis HospitalThe Juan F. Luis Hospital needs about $10 million – more would be better, of course – and on Thursday the community can help the hospital board figure out how to find it.

The hospital will hold a community forum at 5:30 p.m. Thursday in the conference room of the V.I. Cardiac Center to discuss options in obtaining an infusion of capital to keep the hospital solvent.

The meeting was scheduled at the governing board's June 7 meeting, after the financial report showed the hospital had had a positive cash flow two months in a row, the first time that had happened in years.

But even though the hospital is headed in the right direction, JFL Chief Executive Officer Jeff Nelson said the modest improvement doesn't begin to offset the overwhelming debt.

“It's a choice of whether we want to have a hospital or not,” Nelson said.

The Juan F. Luis Hospital owes its creditors more than $30 million and has no hope under current conditions of beginning to pay that off. Without an infusion of cash, Nelson said, creditors have already begun tightening up.

Nelson said the inability to repay the debts threatens patient care, repeating what he has been saying for more than a year – the hospital needs an infusion of cash.

Complicating the matter even further, the hospital needs facility and equipment upgrades of as much as $44 million in the coming years, but has only about $1 million available cash on hand, including what’s in restricted accounts.

In a statement issued a year ago, Nelson wrote that without an infusion of capital to replace aging equipment and facility systems, regain full accreditation and pay its debts, “JFL is subject to breakdown beyond repair which could close hospital services in total or in part.”

The board charged Nelson with reporting back by mid-June with options on how that financial shot in the arm could be raised. The only restriction is that the options must retain what are called the hospital's critical community values – that the hospital continue to be government owned, provide treatment to anyone regardless of ability to pay, and be organized as a not-for-profit corporation.

The board also said it would prefer a solution that is already within permissible legal limits, so it does not have to spend months seeking a new law from the Senate.

Thursday's community forum is just one of the meetings being held to discuss the situation. Officials are also meeting with physicians groups, labor, government agencies and others, beating the bushes to find the means of bailing the hospital out.

According to Nelson's August 2011 statement, available on the JFL website, suggestions that have been explored or discussed in the last year include:

- Seeking funding from the central government. The hospital has appealed for capital in several meetings with government leaders but has been told repeatedly that there simply is not any money available.

- Using the hospital's accounts receivable, debts that are owed to the hospital, as collateral to borrow the needed capital. The hospital's statement said the money that might be raised could be used to negotiate with existing creditors, but in itself is not enough to reduce creditors’ balances to a reasonable level. “Therefore, such a loan is insufficient to address all of JFL’s capital needs,” the release said.

- Officials have considered using bankruptcy courts to protect JFL. Even with court approval of a reorganization plan of its debts, bankruptcy would not be enough to raise capital for the hospital's current and future facility and equipment needs.

- By selling the hospital to an outside group and then leasing the facility back, the governing board would acquire more than $20 million in capital, according to the news release. However, such a move could be perceived by some in the community as a step toward privatizing the hospital, a fear expressed by many leaders and community members.

- Entering into an affiliation or management agreement with a larger hospital system. While such a move could provide local control, the community might also see this choice as privatizing the hospital. However, there are possibilities within these options that would provide the right balance between the need for capital now and the future, as well as retaining significant local control.

The hospital's news release said there are multiple not-for-profit and for-profit hospital systems offering affiliation and/or management agreement options.

Meanwhile, the hospital has been active in tightening operations to get to the point of breaking even on a monthly basis.

Steps to do so have included:

- Streamlined hospital internal systems and operations;
- Increased rates which helped raise gross revenues by $23.7 million or 23 percent;
- Reduced expenses by $2.8 million.