There is one thing that the taxpayers of El Paso may want to celebrate and that is that at least everyone now knows that the El Paso Children’s Hospital is a scam. There was on article in the local newspaper by Marty Schladen titled, “Children’s bankruptcy settlement debated” that was published on Saturday, October 24, 2015. The article is very telling on how Veronica Escobar sees the children’s hospital bankruptcy settlement.
As you know, Andy Krafsur has been a critic of the children’s board for filing the bankruptcy in the first place. There is some controversy about a clause in the Children’s/UMC joint plan about his being able to be appointed to the reconstituted board of children’s. Krafsur was previously a bankruptcy attorney and served as bankruptcy trustee. He has been quoted extensively about the bankruptcy both in the local paper as well as on KVIA, and other news media outlets.
On Saturday’s paper, Krafsur is quoted as stating that the joint settlement “harms” the taxpayers.
Krafsur explains that the settlement agreement turns everything upside down in bankruptcy court, putting the taxpayers in back of all of the other creditors and even forgiving some of the debt. In essence, under the bankruptcy court, the creditors are treated evenly as determined by how the court accepts their classification as a creditor. In the case of UMC, the largest creditor, a bankruptcy court would give them priority over the others.
In the proposed settlement, UMC basically puts itself at the end of the line, in addition to giving up a significant chunk of the monies owed to it. As if that isn’t bad enough, Krafsur points out that not only does UMC give up money, puts itself in the back line but even assumes all of the other debts that are outstanding.
It is clear that this is unheard of and from a business perspective it is malfeasance for any company board to accept such terms. It may even border on criminal.
Schladen asks Veronica Escobar about the questions raised by Andy Krafsur and the obvious damage to the taxpayers. According to Veronica Escobar, as quoted by Marty Schladen, the problem lies in that those questioning the settlement are looking at it from a private point of view, instead of from a public officials’ point of view.
According to Escobar, the children’s hospital is a “vital community asset” whose survival must be ensured. Escobar lists the reasons that have been used before, especially during the 2007 bond election to fund the children’s hospital. These include the argument that El Paso deserves a stand-alone hospital and that it is part of the economic development plan based on a medical campus in El Paso.
Veronica Escobar argues that keeping the children’s hospital “alive as an asset for the community is a whole lot broader” and is a “public-policy discussion.”
The keywords are “public-policy.” They have been since the notion was created that El Paso could be the medical center of the Americas. It is a public policy based on creating jobs through incubating the medical industry in El Paso.
Today, I am not going to debate the merits of a medical center of the Americas as a public policy, instead I am going to focus on a very narrow issue about the children’s hospital.
From the onset, the business model for the El Paso Children’s Hospital is flawed. It is economically unsustainable because it relies on a model of artificially increasing the federal money pot which is consistently under pressure, more so now under Obama Care.
In 2007, the taxpayer voted to tax themselves $120 million. The argument then, as it is now, is that the business model for the children’s hospital would be sustainable because it would leverage additional federal dollars to the community.
The problem is that the federal government is also under pressure to curtail tax expenses because the taxpayers are demanding less taxes. The children’s business model is to operate using tax dollars by leveraging them through schemes.
A certain number of federal dollars, along with state money is allocated to El Paso. Through creative schemes, the children’s hospital is looking to have more tax money come into the community through UMC by “invoicing” services to UMC in order to leverage more money from the state and the federal government.
However, this was the original problem and it continues now as well.
Whether the tax money comes from the federal or state governments is immaterial because it is still taxpayer funds. Therefore, in addition to the $120 million in bonds, the $58 million “forgiven” by UMC and another $48 million to eventually be paid, if it gets paid, the El Paso taxpayers are still adding more to the pot through the creative financing scheme that UMC/Children’s and Escobar are advocating.
Nowhere, not in 2007 and not now do any of the advocates tell you that non-taxpayer funds will be used to pay for the children’s hospital. Think about that, the only money everyone is acknowledging is taxpayer funds. Look closely at the 5-year projection the joint plan calls and you can clearly see the majority is patient revenues floating back and forth between children’s, affiliated UMC entities and UMC itself. Those are the “contractual” agreements. The projection lists them and then subtracts them. Additionally, you have the DSH revenue of about $6 million annually.
The DSH, or Disproportionate Share Hospital is the scheme that drives the whole “rent” scheme. It used to be intergovernmental transfers (IGTs) but the federal government got wise and now they are going after another scheme. The object of DSH is to create “new” revenue streams from tax dollars for indigent care through Medicare payments. However, it all comes from tax dollars!
That is the ugly truth that the newspaper, the news media and the politicians completely ignore.
The worst part, though, is that in 2007 it was $120 million. The proposed plan adds another $106 million in addition to reduced rent payments. That is $226 million that the public policy pushers are acknowledging for a hospital that “was not going to cost the taxpayers any money.”
Add to that total the amounts of Medicaid and other health monies that have not been quantified and you begin to see that this whole thing is nothing more than a scam. Now add to the discussion another little inconvenient truth, Texas Tech Health Sciences Center, the second largest creditor of UMC is also a tax-supported entity.
I am sure you can now clearly see how the scam works.
You, the taxpayers pay into Medicaid, Medicare, Obama Care and other taxes that are used to fund UMC, TTHSC and children’s. Each of them takes a piece of that money, invoices each other and then tell you that there isn’t enough money to “pay” the bills. They then demand more from your wallet.
Now you know why it is all a scam to take more money out of your wallet.
Do not look for this explanation in the local news media because Marty Schladen and other reporters don’t bother to ask this rather simple question of the politicians. I wonder why?