The 2007 Kurt Salmon Study for the El Paso Children’s Hospital


kurt-salmon-reportThe El Paso Children’s Hospital debacle was based on a March 2007 feasibility study commissioned by Thomason Hospital, now known as the University Medical Center of El Paso. Much of the public commentary, if not all of it, was based on the feasibility study now dubbed the Kurt Salmon Study. Although the whole children’s hospital financial model was based on this study, it has been extremely difficult to acquire a copy of it. I have been asked numerous times if I had a copy of the feasibility study. I did not until late last week.

As the feasibility study is central to the reason why El Paso taxpayers voted for the bonds to fund the children’s hospital, I believe it is important that the feasibility study become part of the public record. Thanks to readers of my blog, who remain anonymous but are known as the “ELP Tax Guardians,” I have finally received a copy of the report. It comes courtesy of the September 29, 2015 deposition of UMC’s Chief Financial Officer (CFO), Michael Nuñez. Attached to his deposition, marked exhibit “17” is the report.

I have extracted the report from the entire deposition and I am making it available to you to read for yourselves. Remember, it is this feasibility study that launched the El Paso Children’s Hospital promising you that it would not cost you a tax dime after you made your initial investment in building it a building.

The Michael Nuñez deposition exposes other issues that should be important to you. I will be pointing those out to you tomorrow. For now, enjoy the Kurt Salmon Study courtesy of some of my readers.

Click here to access the study.

Here are a few details that I believe you should note:

1. The Kurt Salmon Study was the fourth study commissioned into looking at the feasibility of an El Paso Children’s Hospital. The first two concluded that a children’s hospital was financially unfeasible. The third report, by the Katz Consulting Group, concluded that a children’s hospital would be feasible if it had access to “preferential reimbursements” under Medicare and Medicaid programs and that there was “sufficient revenue from non-traditional sources.” The non-traditional sources were listed as “philanthropy and El Paso County property taxes.” [page 3]

2. The Kurt Salmon Study’s objective was “to create preliminary” financial projections for the 2003 Katz Consulting Group report.

3. The Kurt Salmon Study acknowledges from the onset that “the number of patients admitted in recent years to the pediatric unit at Thomason Hospital would not be sufficient to support a stand-alone Children’s Hospital.” [emphasis mine] The study adds, “a Children’s Hospital will be financially feasible if the number of pediatric patients can be increased.” [emphasis mine] [page 3]

4. One of the largest points of contention about the children’s hospital came from for-profit hospitals who argued that a tax-funded children’s hospital was unfair competition. According to the Kurt Salmon study, in 2004, Providence Memorial Hospital had a market share of 41.12% of the pediatric care. Thomason, now UMC, had 23.67% of the market share. Del Sol and Las Palmas followed at 19.02% and 11.83%. [page 6]

5. The Kurt Salmon Study agreed that property taxes were needed to fund the Children’s Hospital. The study assumed that the taxpayers would pay $3.9 million annually to help support the children’s hospital. The study budget was from 2011 through 2015. [page 19]

6. In addition to taxpayer funding, the Kurt Salmon Study agreed that “shifting market share from other area hospitals to Thomason (UMC) and eventually to the Children’s Hospital is essential.” [page 20] In other words, the study recognized that a children’s hospital was only feasible if you took the existing patient population away from for-profit hospitals and moved them to the taxpayer funded one.

If you want to read what I have previously written about the children’s hospital debacle you can do so by following these link:

El Paso Children’s Hospital
IGT‘s

Finally, I am aware that certain pages are duplicated in the study. I decided to leave them as they were inserted in the deposition in order to avoid mistakenly altering the study or removing important information. The page numbers I use in my write up are the page numbers generated by the PDF document reader.