The Juan F. Luis Medical Center required an advance of their June appropriation from the central government to meet payroll this week, but a payment from the government that came advanced of its Friday due date allowed the hospital to pay its employees.
The news came at a meeting of the board of directors during which Kye Walker, the board’s chairwoman, also announced that they would begin searching for a permanent chief executive officer.
Calling the hospital’s cash flow situation “dire,” Walker said JFL informed the government on Wednesday that it would not be able to pay its employees this week without assistance. The government did not allocate additional funds to the hospital, but delivered a payment due June 1 a few days early.
During the hospital’s April board meeting, Deepak Bansal, the hospital’s chief financial officer, warned that the hospital would struggle with payroll in May. The hospital pays its employees every two weeks, meaning there are two months a year in which employees receive three paychecks instead of two. May was one of those months.
Bansal said at the April meeting that the monthly appropriation the hospital receives from the government covers one round of paychecks a month, leaving the hospital to cover the rest. He said the hospital would struggle to come up with the funds to cover two paychecks that month.
The payroll concerns were given as justification for the round of 24 layoffs that occurred in April.
Even with the advance in funds, Walker said a small number of employees did not receive a direct deposit of their paychecks Thursday, but the money would be in their bank accounts Friday. She could not specify how many employees were affected by this delay and said it depended on which bank they have an account with.
Walker said the hospital had been expecting a large payment from Medicare, but it was delayed leading to the payroll crisis. She said that while the episode was regrettable, it was predictable given that the hospital only has about one day’s worth of cash on hand at any given point.
“When you’re living on a day-to-day basis, any one event can throw off your day or your week. That’s what occurred,” she said.
Walker added that she had no reason to worry about the hospital’s ability to make payroll in June. She said only part of the June appropriation was used to cover the May payroll and the expected payments from Medicare should make up the difference.
Walker also announced at the meeting that she felt it was time to start searching for a permanent CEO. Dr. Kendall Griffith has been serving as interim CEO since Jeff Nelson resigned in January.
Griffith said he had not yet made up his mind on whether or not he would apply for the permanent position. He said it was unlikely he would win the job, given his background as a physician. Regardless, he said he would continue to address the hospital’s issues until he was relieved.
“I’m going to do as much as I can for as long as I can,” he said.
Walker requested the board give her authority to begin negotiating with recruitment firms on their fee and ultimately select one to carry out the search.
The measure, which passed, was opposed by board members Dr. Anthony Rickets and Imelda Dizon.
Dizon said she opposed the measure because she felt, given the hospital’s financial situation, it was not the right time to take on the expense of a search.
“We have a serious problem on finance,” she said “And we have to hold on to every little cent we have.”
She also expressed concern that changing CEO now would disrupt the continuity of leadership and hinder the hospital’s efforts to complete its plan of correction with the Centers for Medicare and Medicaid Services.
During the financial report, Bansal informed the board that the hospital continued to lose money on a month-to-month basis. He said gross revenue for April was 9.9 percent higher than the same month last year, but expenses also grew, leading to an operating loss of $481,980.
Bansal also informed the board of what he considered a troubling development in the hospital’s hemodialysis unit. He said eight patients had been dropped from Medicare because they had failed to pay their $114 monthly co-pay. By law, the hospital has to continue providing services to these individuals, regardless of their ability to pay.
“It seems, according to staff, that there has been a pattern that individuals are saying JFL is going to take care of us anyway, so why pay the $114,” he said. “That level of apathy is why we are in the hole we are in. It’s one contributing factor at least.”
Bansal said the individuals would not be eligible to rejoin Medicare until June 2014, and estimated that the hospital would lose out on $1.1 million in Medicare payments over the course of the year from these patients alone.
He said he would appeal to Medicare and ask if the hospital could retroactively pay the patient’s co-pays for them and have them readmitted to the program.