If voters reject the proposed sale of the VHS to local physicians, the doctors will have the right to purchase Menifee Valley Medical Center (MVMC) for $29 million. Some might argue that the voters have an incentive to approve the sale while doctors are better with its defeat.
One statistical indicator is the cost per hospital bed. MVMC has 84 beds, which computes to $345,200 per bed. The VHS Web site says Hemet Valley Medical Center has 343 beds, but even Dr. William Cherry, VHS president admitted there is seldom enough nurses to fill all the beds.
Nevertheless $162 million for 427 beds is $379, 400 per bed, a better deal for voters. But the fewer beds HVMC has the higher the per bed price, thus doctors would do better with just MVMC.
Of course, the $162 million price is the Press Enterprise estimate and includes the $55 million of unsubstantiated claims. If that is deleted from the costs, the price per bed is only $250, 600.
So how one evaluates the sale, depends upon how many beds one assumes for HVMC and how reliable and accurate is the estimate of PHH claims totaling $55 million.
Showing posts with label PHH. Show all posts
Showing posts with label PHH. Show all posts
Wednesday, October 7, 2009
Wednesday, September 16, 2009
Is the VHS deal a good investment?
Welcome to JP’s blog. This is where we take off the gloves and the typing gets worse.
Again I have to stress, the current bondholders were the principal whiners to the bankruptcy judge. Despite VHS’ overall improving finances, the monthly results were still losses. The bondholders urged the judge to revoke bankruptcy protection and let the creditors loose on the district.
Basically, the terms that were revealed Wednesday, simply shift the debt to PHH from VHS. That is a simplification, but not far from the final solution. How will PHH pay its new debt if the hospital is still losing money or barely profitable?
Doctor after doctor spoke last night. They all implored the board to approve the deal and let them protect the valley patients by owning the hospital. Nearly all made to sure to mention the times they worked 18 or 24 hours in the hospital.
Nearly every doctor posed a binary choice. Either sell the hospitals to them or let them be sold to cover the “Wall Street bondholders” threats!!
This conjured images of men in waxy moustaches and top hats sitting in clubs and dividing up the world. If these robber barons sold the hospitals they would be closed.
Why would the buyers pay millions for hospitals and then close them? I guess to renovate Hemet Medical Center into a high rise hotel or condominium unit.
The other threat to the community was the looming shadow of Kaiser — a single payer healthcare. Dr. Fred White offered that connection to national politics. By the way, they also feared Kaiser would limit their access to hospitals.
Rejecting PHH was tantamount to selling to Kaiser Permanente, who has not made any informal bids. And that means not enough beds.
It’s true southwest Riverside County has a lower bed per capita ratio than the rest of the state. But HVMC and MVMC have a lot of vacant beds available, which aren’t filled very often.
Which brings one back to how will the doctors afford this deal? Dr. Alex Denes, the PHH spokesman, said 130 physicians have “signed up.” He did say PHH would release a list of members after the agreement is accepted.
But he did indicate that only 54 of them have made a financial commitment.
So back to the profit margin, Denes says PHH will save $300,000 monthly because they won’t have the cost of bankruptcy on its back. That still not enough for the secured bondholders.
The profits have to come from increased revenue because PHH has agreed to keep substantially all of the current employees. Of course, “substantially” was later defined to mean “most”.
Denes did announce that PHH has aligned itself with Catholic Healthcare West, the group that manages St. Bernadine Medical Center in San Bernardino. He said this will help PHH offer expanded services such as cardiac and orthopedic.
Meanwhile existing services such as emergency room and obstetrics will stay open for at least 5 years; but only “to the extent that it is commercially reasonable and viable to do so in the context of the then applicable health care environment.”
I’m not sure what the “health care environment” will be over the next five years, but I bet the economic environment will continue to make it difficult and costly for people to get adequate care. So the demand for emergency facilities will grow.
Denes suggested that PHH might establish some neighborhood clinics to treat non-severe cases and try to shift some demand away from the emergency rooms.
When asked if Idyllwild might be a location because of its distance from HVMC, he conceded the possibility. But PHH has not done any planning to enable them to say with authority where these clinics might be located.
Two final thoughts that may affect the deal in the long term:
1. There is talk and some action in halls of Congress to limit Medicare payments to physician owned hospitals. That would have a real effect on revenues — negative. Dr. Cherry, VHS chairman of the board, says that will never happen.
2. If the proposed new hospital were completed, how would that affect admissions to HVMC and what about the eventual costs to rehab it for seismic strengthening.
But on doctor was so cocky he said he was willing to invest his life savings in this deal. Right.t.t.t.t.t
Again I have to stress, the current bondholders were the principal whiners to the bankruptcy judge. Despite VHS’ overall improving finances, the monthly results were still losses. The bondholders urged the judge to revoke bankruptcy protection and let the creditors loose on the district.
Basically, the terms that were revealed Wednesday, simply shift the debt to PHH from VHS. That is a simplification, but not far from the final solution. How will PHH pay its new debt if the hospital is still losing money or barely profitable?
Doctor after doctor spoke last night. They all implored the board to approve the deal and let them protect the valley patients by owning the hospital. Nearly all made to sure to mention the times they worked 18 or 24 hours in the hospital.
Nearly every doctor posed a binary choice. Either sell the hospitals to them or let them be sold to cover the “Wall Street bondholders” threats!!
This conjured images of men in waxy moustaches and top hats sitting in clubs and dividing up the world. If these robber barons sold the hospitals they would be closed.
Why would the buyers pay millions for hospitals and then close them? I guess to renovate Hemet Medical Center into a high rise hotel or condominium unit.
The other threat to the community was the looming shadow of Kaiser — a single payer healthcare. Dr. Fred White offered that connection to national politics. By the way, they also feared Kaiser would limit their access to hospitals.
Rejecting PHH was tantamount to selling to Kaiser Permanente, who has not made any informal bids. And that means not enough beds.
It’s true southwest Riverside County has a lower bed per capita ratio than the rest of the state. But HVMC and MVMC have a lot of vacant beds available, which aren’t filled very often.
Which brings one back to how will the doctors afford this deal? Dr. Alex Denes, the PHH spokesman, said 130 physicians have “signed up.” He did say PHH would release a list of members after the agreement is accepted.
But he did indicate that only 54 of them have made a financial commitment.
So back to the profit margin, Denes says PHH will save $300,000 monthly because they won’t have the cost of bankruptcy on its back. That still not enough for the secured bondholders.
The profits have to come from increased revenue because PHH has agreed to keep substantially all of the current employees. Of course, “substantially” was later defined to mean “most”.
Denes did announce that PHH has aligned itself with Catholic Healthcare West, the group that manages St. Bernadine Medical Center in San Bernardino. He said this will help PHH offer expanded services such as cardiac and orthopedic.
Meanwhile existing services such as emergency room and obstetrics will stay open for at least 5 years; but only “to the extent that it is commercially reasonable and viable to do so in the context of the then applicable health care environment.”
I’m not sure what the “health care environment” will be over the next five years, but I bet the economic environment will continue to make it difficult and costly for people to get adequate care. So the demand for emergency facilities will grow.
Denes suggested that PHH might establish some neighborhood clinics to treat non-severe cases and try to shift some demand away from the emergency rooms.
When asked if Idyllwild might be a location because of its distance from HVMC, he conceded the possibility. But PHH has not done any planning to enable them to say with authority where these clinics might be located.
Two final thoughts that may affect the deal in the long term:
1. There is talk and some action in halls of Congress to limit Medicare payments to physician owned hospitals. That would have a real effect on revenues — negative. Dr. Cherry, VHS chairman of the board, says that will never happen.
2. If the proposed new hospital were completed, how would that affect admissions to HVMC and what about the eventual costs to rehab it for seismic strengthening.
But on doctor was so cocky he said he was willing to invest his life savings in this deal. Right.t.t.t.t.t
Friday, August 21, 2009
Bad nurses!! Good Physicians!
The Valley Health System directors say they don’t want to sell the district, but their creditors are forcing them to take this position. But keep in mind many creditors are the local physicians.
Well, if you sell something don’t you try to maximize the gain? Most of the VHS directors said, that is not their objective. They have a commitment to keep the hospital open. They want what’s best for the community.
They listened to the creditors about first a “dual track” than the focus on a sale of the assets. In July, they agreed to give the local docs an exclusive right to negotiate for 90 days.
During the discussion, one of the physicians arguing for the exclusivity explained that one of his children had won the Riverside Spelling Bee while attending Hemet High School. This proof of his commitment to the community because he could have sent his child to private school.
So is the gift a spelling bee champ worth the insider’s track on a multi-million dollar hospital deal?
Here’s what those same creditors have to say about the hospital’s finances.
Ask yourself who controls which hospital you might go to? Does you doctor recommend a facility or do you get on line and research it?
Have patient volumes been declining because VHS doesn’t have enough bargains! how about an appendectomy and gall bladder laparoscopy for one price! Or half off a caesarian section!
Patient volumes are in the hands of doctors who have been sending patients to other hospitals, forcing a bargain basement sell-off, but with little capability to keep the doors open after they buy.
The July volume at Hemet Medical Center were slightly worse than June while Menifee showed improvement it is about 1/3 the size of Hemet.
If patient volumes have been declining for more than two years, why will they change now? Steven Wade. Attorney for Physicians for Healthy Hospitals, says the local docs now realize their incomes may be at risk if the hospital closes.
"A precipitous drop in both inpatient and outpatient surgeries gives me cause for grave concern," says Martin L. Cohen, financial adviser for the bondholders.
He also opines that the district and certain members of the medical staff are battling for control of the hospital revenue streams and ability to determine which physicians have local privileges.
Notice nobody asks about the patients, but staff, nurses and aid staffing has been significantly reduced in the past two months. Must be their fault patients don’t come to VHS. Doctors spend long hours treating patients, too bad they don't get paid. so many are near homeless.
VHS Director Vinay Rao summarized the situation for the board when they gave the doctors the exclusivity agreement.
"We are community leaders. Our charge is to community … an important part of community is the physicians. We have criteria."
Well have you seen the criteria, have the leaders felt like sharing with you? But they gave the criteria to PHH.
Even Judge Peter Carroll, the bankruptcy judge, asked Gary Klausen, the VHS bankruptcy attorney, if PHH had the financial ability to close if the hospital were sold in the vicinity of "fair market value". Klausen had to reply, "not yet! There is some internal interest and some external, but no ability to close sale yet."
Well, if you sell something don’t you try to maximize the gain? Most of the VHS directors said, that is not their objective. They have a commitment to keep the hospital open. They want what’s best for the community.
They listened to the creditors about first a “dual track” than the focus on a sale of the assets. In July, they agreed to give the local docs an exclusive right to negotiate for 90 days.
During the discussion, one of the physicians arguing for the exclusivity explained that one of his children had won the Riverside Spelling Bee while attending Hemet High School. This proof of his commitment to the community because he could have sent his child to private school.
So is the gift a spelling bee champ worth the insider’s track on a multi-million dollar hospital deal?
Here’s what those same creditors have to say about the hospital’s finances.
- “The District’s historical indicators from FY 2006 through FY 2009 demonstrate a steady decline in financial and operational performance”
- “Acute inpatient volumes at the Hemet and Menifee hospitals have been steadily declining for many years”
- From FY 2008 to FY 2009, the District acute inpatient discharges fell significantly — 13.3 % at Hemet Valley and 9.8 % at Menifee Valley
Ask yourself who controls which hospital you might go to? Does you doctor recommend a facility or do you get on line and research it?
Have patient volumes been declining because VHS doesn’t have enough bargains! how about an appendectomy and gall bladder laparoscopy for one price! Or half off a caesarian section!
Patient volumes are in the hands of doctors who have been sending patients to other hospitals, forcing a bargain basement sell-off, but with little capability to keep the doors open after they buy.
The July volume at Hemet Medical Center were slightly worse than June while Menifee showed improvement it is about 1/3 the size of Hemet.
- The picture is no brighter for the District's consolidated outpatient service lines. On a consolidated basis, outpatient surgeries declined 20 %
- Inpatient surgeries decreased by 14.3 % in the past year.
If patient volumes have been declining for more than two years, why will they change now? Steven Wade. Attorney for Physicians for Healthy Hospitals, says the local docs now realize their incomes may be at risk if the hospital closes.
"A precipitous drop in both inpatient and outpatient surgeries gives me cause for grave concern," says Martin L. Cohen, financial adviser for the bondholders.
He also opines that the district and certain members of the medical staff are battling for control of the hospital revenue streams and ability to determine which physicians have local privileges.
Notice nobody asks about the patients, but staff, nurses and aid staffing has been significantly reduced in the past two months. Must be their fault patients don’t come to VHS. Doctors spend long hours treating patients, too bad they don't get paid. so many are near homeless.
VHS Director Vinay Rao summarized the situation for the board when they gave the doctors the exclusivity agreement.
"We are community leaders. Our charge is to community … an important part of community is the physicians. We have criteria."
Well have you seen the criteria, have the leaders felt like sharing with you? But they gave the criteria to PHH.
Even Judge Peter Carroll, the bankruptcy judge, asked Gary Klausen, the VHS bankruptcy attorney, if PHH had the financial ability to close if the hospital were sold in the vicinity of "fair market value". Klausen had to reply, "not yet! There is some internal interest and some external, but no ability to close sale yet."
Thursday, August 13, 2009
Is PHS better for VHS than PHH?
While the Valley Health Systems (VHS) directors continue to meet with the local physicians, another offer has been delivered to board President, Dr. William Cherry.
Prime Healthcare Services, Inc (PHS)., Chino, CA, sent a letter of interest in acquiring VHS. Several pages of the letter are shown below. If you are interested in the whole missive, just send an email (no donations necessary).
Actually, Michael Sarrao, vice president and general counsel for PHS, was present at the VHS board meeting on July 27. He told the board then that PHS was interested in the acquisition and would be submitting a letter.
Notice that Thomson - Reuters has designated PHS in the top ten hospital systems in the U.S. that seems like a good organization to run a local hospital.
Universal Health systems submitted a letter of interest about two weeks ago, so the board has at least three groups interested in its assets.
Nevertheless, the directors felt it was in their responsibility to open exclusive negotiations with Physicians for Healthy Hospitals (PHH). The local docs seem to rely on their longevity and the threat of a mass exodus if a firm purchased the VHS assets.
While some physicians may pack and move, it is hard to believe that many will. It is already clear that the valley won’t become a medical wasteland. Businesses will always fill a vacuum where the demand exists. Only a month ago, ADR Associates announced plans for a new hospital in San Jacinto.
If the existing physician corps decides to vacate, a new hospital and equipment should attract a replacement cadre of new and younger physicians.
Since the board has shown no interest in comparing offers and trying to maximize the benefit to the district’s owners — you the voters — we’ll have to wait see the results of the Aug. 18 bankruptcy hearing and the confidential deal being negotiated with the docs.
I have to acknowledge that the founder of PHS is Dr. Prem Reddy, who has been know to be invovled in controversial medical business deals. Nevertheless, PHS has garnered some national recognition.
Prime Healthcare Services, Inc (PHS)., Chino, CA, sent a letter of interest in acquiring VHS. Several pages of the letter are shown below. If you are interested in the whole missive, just send an email (no donations necessary).
Actually, Michael Sarrao, vice president and general counsel for PHS, was present at the VHS board meeting on July 27. He told the board then that PHS was interested in the acquisition and would be submitting a letter.
Notice that Thomson - Reuters has designated PHS in the top ten hospital systems in the U.S. that seems like a good organization to run a local hospital.
Universal Health systems submitted a letter of interest about two weeks ago, so the board has at least three groups interested in its assets.
Nevertheless, the directors felt it was in their responsibility to open exclusive negotiations with Physicians for Healthy Hospitals (PHH). The local docs seem to rely on their longevity and the threat of a mass exodus if a firm purchased the VHS assets.
While some physicians may pack and move, it is hard to believe that many will. It is already clear that the valley won’t become a medical wasteland. Businesses will always fill a vacuum where the demand exists. Only a month ago, ADR Associates announced plans for a new hospital in San Jacinto.
If the existing physician corps decides to vacate, a new hospital and equipment should attract a replacement cadre of new and younger physicians.
Since the board has shown no interest in comparing offers and trying to maximize the benefit to the district’s owners — you the voters — we’ll have to wait see the results of the Aug. 18 bankruptcy hearing and the confidential deal being negotiated with the docs.
I have to acknowledge that the founder of PHS is Dr. Prem Reddy, who has been know to be invovled in controversial medical business deals. Nevertheless, PHS has garnered some national recognition.
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