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Charlotte Amalie
Wednesday, September 27, 2023
HomeNewsArchivesInterim CFO Outlines JFL Financial Crisis

Interim CFO Outlines JFL Financial Crisis

Nelson Bowry, the interim chief financial officer of Juan F. Luis Memorial Hospital, told the territorial hospital board Friday that he has spent his first five days on the job dealing with the hospital’s financial crises, including dealing with reimbursements to Medicare for millions of dollars in overpayments, he told the board.

Friday Bowry reported that during 2011 and 2012, Medicaid had overpaid JFL a total of about $3 million. During that time the hospital negotiated a payment arrangement with Medicaid, and began to slowly repay the overpaid amount.

However, JFL reneged on some payments laid out in the first settlement, Bowry said, then failed to hold up its end of a revised settlement.

“When I tried to renegotiate a third time, I ran into some fierce resistance,” Bowry said. “I have not been meeting a lot of success in trying to get anybody’s interest in re-negotiating a settlement.”

Initially, Medicaid tried to reimburse the hospital for patient treatment “as usual,” under the assumption that JFL would turn around and continue reimbursing for the overpayments. However, after the hospital failed to pay according to the first two settlement arrangements, Medicaid began withholding reimbursements altogether until the overpayment is recouped. That means that the hospital has not been receiving monthly payments for the full amount of Medicaid patients treated at JFL.

“What’s unusual is the size, and the recoupment is so drastic,” Bowry said. “Last month or so, we got zero reimbursements from Medicaid. That’s what has been putting pressure on the payroll.”

Because the reimbursements have withheld, the balance of the overpayments to Medicaid dropped to $980,000, according to Bowry. The amount continually decreases as Medicaid continues to withhold reimbursements. But the hospital’s financial morass gets deeper each month without the Medicaid money for its cash flow.

The Friday board meeting was Bowry’s introduction to territorial board members, who unanimously approved his appointment and the termination of his predecessor. The actions had to be taken by the territorial board, since the St. Croix District Board has lacked a quorum since last summer.

Bowry, who had served as interim CFO for other V.I. government agencies including the Water and Power Authority and the Port Authority, got the call from Juan F. Luis CEO Kendall Griffith Jan. 5 to serve in the same capacity, and immediately set to work.

“I had to grapple with the fact I walked into an organization that had just lost senior management personnel,” he said. “I had to do lot of stabilization."

According to Bowry, his primary focus was cash management, especially considering the early paydays and shortened workweeks of the December to January timeframe at JFL.

“The difference between meeting payroll or not could be a couple of days of cash,” he said. “I think I could begin to do the legwork to see what’s doable given the cash situation that we have.”

The cash situation looks dim, based on Bowry’s report. An annual working cash deficit of $6 million on the average contributes to soaring accounts payables – a debt of about $40 million at the end of fiscal year 2013.

“To state the obvious, we have been in fiscal duress, and it’s going to take a very aggressive plan to work our way out of it,” said Bowry.

Bowry’s plan includes a “very aggressive billing and collection on our side.” While cost-saving measures are a part of his plan, there is only so much cost-saving that can be done, according to Bowry.

“There’s a point at which you cut fat, then starting cutting muscle, and that becomes counterproductive,” he said. “As a matter of fact, I do not imagine how we can shrink ourselves out of this.”

In addition to cutting expenditures, Bowry said JFL needs to look at outside support to get over the fiscal hump, including a line of credit with financial institutions, which he said he would seek to procure if the board agreed, and sustained government appropriations, which he noted have been steadily shrinking.

“I don’t think we’re too big to fail; I think we’re too critical to fail,” said Bowry. “If the Juan Luis hospital goes under, then the cost to the government is going to be a lot."

Bowry also faces a looming 2013 audit deadline, about which board member Angel Dawson was primarily concerned.

“We are under immense pressure to remain current in our audits,” said Dawson. “The central government cannot do it alone without the cooperation of the 20-odd units, including Juan Luis and Schneider."

Bowry admitted that the “the loss of the senior management folks has caused a delay in the timeframe planned for the audit.” Juan Luis is still trying to reset the date, he said, focusing on the cost report, which has a February timeframe for completion and ramifications for the Centers for Medicare and Medicaid Services, the agency which assures that medical facilities which receive Medicare and Medicaid funds meet standards.

In spite of walking into an organization with a hefty financial crisis, Bowry shared, “I told [Griffith] I’m in it with them until they find my replacement. That’s the commitment I’ve given.”

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