With Election Underway, No on I Holds Forum

No on Measure I advocates held a forum in Tulare on Wednesday, inviting Tulare voters to hear why the group believes Measure I, the $55m Tulare Regional Medical Center hospital bond, should be voted down.

These advocates were joined by their counterparts: Yes on I protesters held signs outside the site of the forum, the Olive Branch Masonic Lodge, and on the streets intersecting where the building sits.

The forum, which ran for two hours, was attended by roughly 100 people and featured nine speakers; each cited various aspects of the hospital’s operations, oversight, or contracts that, in their opinion, made the bond measure an untenable option.

Among the speakers were Bill Postlewaite and Alberto Aguilar, former members of the TRMC Bond Oversight Committee and Dr. Prem Kamboj, Deanne Martin-Soares, and Lonnie Smith, former members of the TRMC Board of Directors. Speakers were given questions by the audience to answer.

Dare to Compare

Postlewaite opened up the forum as its first speaker. He invited the audience to draw comparisons between Measure D, the 2005 $85m bond measure, and Measure I.

“Like Measure D, hundreds of workers are involved in Measure I, many of them paid. So, compare the two campaigns. Measure D was well documented, Measure I, no documentation for a $55m request. Measure D, funded by many donors,” Postlewaite said. “Measure I, funded by one large donor, an older Tularean. Measure D, hundreds of unpaid volunteers, Measure I, many paid workers. Measure D, passed by 83 percent, Measure I, many people are expressing concerns.”

“Tulare has a long history of supporting not only their hospitals but their schools, but voters have always expected to be well-informed regarding how the money was to be spent,” Postlewaite continued. “They won’t tell us what happened to the $85 million. They won’t tell us how the proposed $55 million is to be spent. We deserve better.”

The Other Suitors

Dr. Patricia Drilling, a Tulare dentist, spoke about the process by which the TRMC Board of Directors, and the Tulare Local Healthcare District, came to choose Healthcare Conglomerate Associates (HCCA) as its management partner.

Drilling stated that the board, at that time, had hired Medical Development Specialists, LLC — now known as Vizient — to field offers from companies interested in managing the hospital.

The board wanted, she said, a detailed history from each company: details of each facilities the companies had owned or operated, financial statements, details of each company’s experience and expertise in the industry, and track records of operational success. Instead, Drilling said, the board chose to partner with HCCA, which was legally formed two days after it was chosen.

Drilling also compared the fee structure the board sought, to what it ended up choosing: the board wanted to pay the potential suitors a management fee that scaled with the hospital’s income, and even make the management partner responsible if the hospital faced losses.

Instead, the agreements with HCCA provide the company a flat-fee arrangement of more than $250,000 per month, increasing either five percent per year or with inflation, whichever is greater.

“There’s really no incentive, as I see it, for success,” Drilling said. “If you’re getting a flat, base fee, there’s no way that there’s any incentive for that.”

Drilling’s final comparison showed what the board wanted from a potential management company in relation to finishing the stalled tower project.

“If the bonds are spent, then they want the management company to kick in something — to have some skin in the game,” Drilling said. “What we got was a request for an additional bond right now.

“None proposed the closure of any facilities including the ER,” Drilling said. “And that is a fact, although it’s been said otherwise, there is no data to support that.”

Talking Money

Ken Nunes, a Tulare CPA, spoke about the effect the bond, combined with the first bond, would have on property taxes, giving an example of the taxes on a Tulare home assessed at $150,000.

“Measure D is still in place at $125, but we now would add on another $80 for Measure I, so you can see the percentages here that would rise to about 11 percent of your taxes would be going to Measure D and Measure I,” Nunes said.

He then compared that tax percentage — 11 percent — to a percentage referred to in a mailer against Visalia’s Measure H, a similar bond measure with a higher price tag.

Dr. Benny Benzeevi, CEO of HCCA, the company that runs TRMC, was a major donor to the political action committee that sent out such mailers, Nunes said.

“District taxpayers are already paying a 2.2% property tax, Measure H would increase the total KDHCD taxes to a staggering 6.8%!,” the mailer reads.

“If you recall the percentage that I showed you in a previous slide, I ask you — what’s the difference here?” Nunes said. “If it’s good there, I think it’s good here.”

Nunes also spoke about the four bond financial reports, referred to by some as audits, in response to a question from an audience member — specifically, whether those reports were audits.

“There were no audits performed on the bond,” Nunes said. “As a matter of fact, they all contained that one sentence that says, ‘we did not audit, and had we, we may have come to some other conclusion.’”

Nunes also noted that two of the four reports reflected more than $1m in “non-qualified expenditures” of the original $85m bond.

“So when you get a flyer that says there were four examinations done and they found no unauthorized expenditures,” Nunes said, “that’s just plain, ah… not correct.”

The Contract

Joseph Soares, a Tulare lawyer, took the audience into a deep dive on the contracts between HCCA and TRMC.

TRMC and HCCA have entered into a total of four major contracts: the Management Services Agreement (MSA), Interim Joint Operating Agreement (IJOA), Long-Term Joint Operating Agreement (JOA), and the Option Agreement, which would allow HCCA to purchase the hospital or enter into a long-term lease of the hospital facilities.

HCCA and TRMC currently operate under the MSA. The MSA lasts for 15 years and automatically extends itself for 10 years, unless it is superseded by the IJOA.

The MSA, Soares said, allows HCCA to have unlimited hiring ability, with the expenses of those hired paid by the district, without the district’s prior approval.

The agreement also transfers all employment of hospital employees from TRMC to HCCA; TRMC is then expected to pay HCCA for all employee benefits, and 130% of the base pay, Soares says. He noted a point in the contract that would allow HCCA to defer those payments towards the purchase price of the hospital.

Under the MSA, TRMC would also be prohibited from soliciting any of the employees transferred to HCCA for employment for a period of two years after HCCA’s operating period.

The agreement also disallows the board from doing anything that would cause HCCA to be viewed in an unfavorable light, including criticizing HCCA or revealing confidential information that could cause HCCA to be brought into “public disrepute, hatred, contempt, scorn, scandal or ridicule.”

More seriously, the agreement does not allow members of the board to access the hospital, clinics, or other facilities except upon prior arrangement with HCCA, except in case of an emergency.

The IJOA, Soares said, can only supersede the MSA when the bonds are paid off, or if the bond trustee approves of the shift; it would increase the amount paid to HCCA significantly, and allow HCCA to determine on its own accord that loans are needed without the board approving them.

The district can terminate the agreement, Soares said, but at a cost of $87,500 per month, for a total of up to 120 months — a maximum possible amount of $10,500,000.

The long-term JOA, Soares said, introduces even more perks: if HCCA determined that improvements to facilities are needed, it would not need to seek board approval — either the board allows for the costs to be financed, or the board will simply pay fair market value for the improvements anyway.

It would also allow HCCA to take 95% of the hospital’s profit and leave the district the remaining 5%.

“Who’s in control?,” Soares asked. “We think HCCA is.”

View and listen to each speaker’s presentation by clicking here.