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Hospital CEO Accepts That No More Money Will Be Coming From SF County

ALBUQUERQUE, N.M. — After a couple of recent meetings with Santa Fe County commissioners, Christus St. Vincent Regional Medical Center CEO Alex Valdez seems resigned to the fact that his hospital won’t be getting any more money from the county this year.

Valdez said Friday that the county “is pretty well tapped out.”

“I have lobbied, but at this point it does not appear there is going to be additional funding from the county,” Valdez said.

Santa Fe County has provided close to $70 million to the hospital since 2001, used as matching funds to attract roughly three times as much in federal money to provide care for the poor and uninsured.

That money goes straight into the hospital’s general revenue accounts to cover things like salary, lights and all other expenses, Valdez said. The funds work like a “reimbursement,” he said, for the cost of providing health care for the uninsured.

But this year, the county has cut its allocation — which was more than $9 million in some recent years — to less than $2.5 million, including a $165,000 supplemental contribution that Valdez recently coaxed from commissioners.

Earlier this month, Valdez sent a letter to staff at Christus St. Vincent’s with the subject line “Special Message … Q&A on Sole Community Provider Funding.”

In that letter, Valdez said the hospital is eligible for $18.8 million in funding from the county and the federal government. Sole community provider money is for hospitals which serve an entire community, to help cover the expense of care for people who can’t afford health insurance.

“This is significant dollar for our Hospital and we cannot just walk away from it!” he wrote.

To receive that much funding, however, he would have needed $5.6 million in matching dollars from Santa Fe County.

What the hospital got instead when Valdez approached the County Commission recently was the additional $165,000 supplement on top of $2.1 million from the county earlier this year.

Commissioner Liz Stefanics said that figure was determined by an analysis of what the county could afford to pull from declining gross receipts tax revenues earmarked for indigent programs in Santa Fe.

“They knew we didn’t have the money before for them,” said Stefanics, referring to the $5.6 million figure, “so to ask for that isn’t realistic.”

Complicating the issue is a draft audit finding by the federal government that says St. Vincent’s might need to pay back millions to the U.S. because of an alleged prior-years quid-pro-quo arrangement with the county, in which St. Vincent’s would take over certain county expenses like jail health care and the Sobering Center in exchange for a larger contribution.

Stefanics said the hospital is looking at paying back around $6 million or $7 million. The state’s Human Services Department is working with the U.S. Centers for Medicare and Medicaid Services “to resolve the issues in the audit,” said an HSD spokesperson who declined to comment further.

Valdez wouldn’t discuss the audit findings, except to say he is comfortable with the hospital’s response and to emphasize that the findings are a draft. He adamantly insisted there has been no “quid pro quo” with the county.

Last year’s dollars

For fiscal year 2011 which ended in June, the county gave Christus St. Vincent about $6.6 million, which the federal government matched with $20.4 million. The previous fiscal year, 2010, the contribution from Santa Fe County was $9.5 million and the U.S. gave $22.5 million, according to documents attached to Valdez’s email to hospital staffers.

Stefanics and another county commissioner, Virginia Vigil, said in a recent opinion piece submitted to local newspapers that “qualified indigent claims” that Christus St. Vincent has submitted to the county “have only totaled a fraction” of the county contribution and the federal matching dollars over the years. “The county has long asked, where did the rest of the money go?” the commissioners wrote.

In fiscal year 2011, the hospital submitted $13.4 million in indigent claims to the county but only $5.1 million have been approved so far. That compares to the $27 million Christus St. Vincent got in sole community provider funds.

Valdez said the county indigent expenses are narrowly defined. In his email to hospital staffers, he provided a chart showing that Christus St. Vincent provided $13.8 million in “uncompensated care,” with no payment from patients, and another $11 million in “undercompensated care” for the year.

Layoff issue

In his email to staff, one of the questions Valdez answers is “Are we planning on having layoffs?” His answer lists various maneuvering the hospital has made to avoid major layoffs (like not filling some vacancies) and says “CSV hopes to avoid layoffs.”

“In this day and age, in any industry in this country, as employers we need to address the elephant in the room as forthrightly as we can, in real time,” Valdez told the Journal.

In fact, the hospital has cut 44 jobs this year, Valdez said, including 12 last week. But Valdez said only one of the people whose jobs were eliminated so far did not receive the opportunity for reassignment or take a severance package.

Valdez said he brought up the potential for layoffs with county officials: “I tried to point out that we are doing everything possible to avoid serious layoffs.”

Valdez, in a second email to the hospital staff on Thursday, said, “There are multiple erroneous rumors regarding massive layoffs at (Christus St. Vincent). This is untrue.”

He wrote that the job cuts that have taken place so far weren’t made lightly. “The reality of seeing people lose jobs haunts me and haunts all of us profoundly,” he added.

Stefanics said Valdez brings up layoffs to pressure commissioners.

“I think they use that as a threat all the time,” she said.

Valdez said the hospital administration is working to reduce expenses to address budget shortfalls, including a $27 million loss of revenue this year that includes the cutback in sole community provider funds and a reduction in Medicaid funding of more than $6 million.

Stefanics said she doesn’t buy that the hospital is running low on funds, noting the recent purchase by St. Vincent’s of the Physicians Medical Center — which specializes in orthopedics — for more than $10 million, and a federally required financial form released this year that said the nonprofit hospital made $21.3 million above expenses in 2009.

“The hospital has money,” she said.

Valdez’s most recent staff email said the revenue gains from past years are being used for “continued operations” and to help reduce the impact of funding losses this year.

He said hospital also has grown revenue with new service offerings, including expansions into Taos and Los Alamos, more surgeries and the recent purchase of the Physicians Medical Center. He said having the center on its portfolio will add an additional $700,000 to the hospital’s operational bottom line this year.

“You cannot shrink to success,” Valdez said. “You have to grow.”

The hospital’s total revenue annually is about $300 million, he said.

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