Texas Hospital Opts to Avoid Takeover
In response to their struggling financial situation, Children’s Hospital in El Paso, Texas has decided to consider filing for bankruptcy protection rather than negotiate a takeover with their biggest creditor, University Medical Center (UMC). UMC, the county owned hospital system, claims that they’re owed nearly $90 million from El Paso Children’s Hospital.
UMC doesn’t believe that bankruptcy protection is the best path for Children’s Hospital to take. They think that the wisest move forward is to allow themselves to begin managing Children’s Hospital, and therefore offered a proposal with details of the takeover. UMC was quite vocal about their displeasure in Children’s Hospital’s rejection of the offer.
“We invite the Children’s Hospital to provide a counter solution,” said Ryan Mielke, spokesman for UMC. “If they have a plan, let’s see it.”
Bankruptcy is Not a Smart Move
“To say that our only option is bankruptcy, that is a false option, and it would be the worse option,” said County Judge Veronica Escobar.
“Bankruptcy would have ripple effects on the Children’s Hospital’s workforce, its patients and the community in general,” said Escobar, “It would put a black eye on all of us.”
In response to UMC’s comments, Children’s Hospital’s Chairwoman Rosemary Castillo said, “”We have discussed it. More than that I’m not willing to say.”
Previous Mediation Failed
During the previous weeks, the two companies had met in a series of meetings to discuss a solution between them, with nothing materializing. Children’s Hospital has asked to renew the meetings.
“What we decided to do is, present to the public the terms that were negotiated between the two entities during the mediation that we had with our attorneys present,” said Castillo, who commented on last weeks sessions. “We got a lot of things resolved, but there still were some terms that were outstanding.”
“What we would like to request is, that we be given the opportunity to present our case to the Commissioners Court, and the terms that were partially agreed to,” added Castillo. “Before the mediation was ever completed, it ended.”
UMC Thinks Bankruptcy is Counterproductive
“In a couple of months, as the bankruptcy process goes through, we could find out that they don’t have enough to actually repay their debt, and then what happens?” questioned County Commisioner David Stout. “They would have to liquidate their assets, and basically close their doors.”
“UMC has presented a plan to keep Children’s Hospital open, and to provide the same level of services to the children of El Paso in the future,” added Stout. “Children’s Hospital has to accept UMC’s help.”
Relationship Between the Two Entities May Sever
Children’s Hospital is a non-profit organization, and is run under a volunteer board. The two hospitals are located close to each other, and UMC has several service contracts with Children’s Hospital. These services include housekeeping, information technology, payroll and food services. UMC has threatened to end these contracts if Children’s hospital doesn’t accept their term sheet.
When asked what Children’s Hospital would do if UMC would live up to their threat, Castillo responded, “We’ve got a plan in place.”