Board chair, administrator, acknowledge Walker County Hospital Corporation bankruptcy possible and sale of facility may be on table
By Rich Heiland
Free Press Publications, LLC
For Walker County News Today
FOUR OF FIVE board members of the Walker County Hospital District met for two hours Thursday afternoon in closed “emergency” session to discuss with lawyers issues around the pending financial collapse of Huntsville Memorial Hospital.
Hours after the meeting the media were emailed a release by the District’s lawyer, Janice Davis of Bracewell LLP in Dallas over the name of the District chairwoman, Anne Karr-Woodard.
The release did not go into any details about the two hours behind closed doors or any pending developments. Board members Woodard, Dr. Curtis Montgomery, Judy Emmett and Jerry Larrison attended. Dr. David Toronjo was out of town.
However in a free-ranging discussion with several media representatives and at least one board candidate in the November election, Woodard and WCHD Administrator Ralph Beatty did answer questions about the ongoing crisis.
(The entire release is carried at the bottom of this story)
In that exchange Woodard left open the possibility of the sale of the physical plant and discussions with the District Attorney concerning the rapid fiscal decline of the hospital, managed by the Walker County Hospital Corporation.
The District is a state-created political subdivision charged with providing indigent care and maintaining a hospital. It’s board is elected and it has taxing authority. The WCHC is a private non-profit entity with an appointed board and is the contract management corporation that runs the hospital. It is that group’s management that has come under scrutiny. It has suffered major losses, laid off personnel, closed outposts in Madisonville and Willis, left suppliers unpaid and failed to pay rent to the WCHD, which serves as landlord.
Two months ago both bodies hired the same investment banking and bankruptcy reorganization firm Hammond Hanlon Camp, LLC, leading to speculation that a planned bankruptcy was being considered to be coordinated with finding a new operating partner. The hospital also has a contract turnaround manager in place to plug the leaks.
DURING THE PRE-meeting discussion Woodward and Beatty responded to several questions and touched on several points, but without releasing specific details or timelines.
- On the reason for the closed session: Woodard said she had met with the WCHC board earlier and needed to report back to fellow board members as well as have one of the District’s attorneys on the line.
The meeting was called to discuss:
- Unforeseen circumstances relating to the hospital’s operations that require immediate action. No explanation was given as to what those circumstances were, nor was any action taken. (Action cannot be taken by law in a closed executive session)
- Developments regarding potential transactions relating to the hospital and the hospital operational matters.
- Discussions of options related to the hospital’s financial issues and its impact on the District and the community.
Woodard, challenged by at least two media members, said she had spoken with attorneys and felt all the items were permitted under the executive session sections of the Texas Open Meetings Act;
- The hospital has gone from solvent to bankrupt in just a few years. Woodward, in response to a question, said she would consider asking the board to request an investigation by Walker County District Attorney David Weeks into any possible irregularities;
- Woodard and Beatty both said the sale of physical property, including land and the building, is on the table, as is a possible lease with a new and solvent operator;
- While Woodard said she could not comment that a bankruptcy filing was imminent on the part of WHCH, Beatty at one point in answering a question said, “since the bankruptcy is a foregone conclusion.”
- That comment came in response to a question about the District’s state-created status should it no longer physical own a hospital. Beatty said there are models for districts retaining their standing, including taxing power, and managing indigent care. He added that a windfall from a sale of the hospital could lead to a reduction in property tax for funding that care.
Contacted while the District board was in closed session, WCHC Chairman Mac Woodward said he did not want to comment about a possible bankruptcy or a timeline.
“I think it’s best not to comment or discuss what may or may not happen. I just think that misinformation is worse than either good or bad information,” Woodward said.
Sources have speculated to the Walker County News Today that a likely scenario could be the WCHC would declare bankruptcy, the District would agree to sell the land and building and be out of the landlord business. That source said in today’s world of hospital management a company might be wary of being involved at a lease level with a building it could not alter, add to or otherwise change to fit its operational model.
Another option would be the status quo – a viable contract operating company with the District as the landlord.
Woodward said his board would meet Thursday, Sept. 27, supposedly to discuss the District’s response. The WCHC is not required to hold public meetings.
The Board of Managers of the Walker County Hospital District has been working for the past year with the Walker County Hospital Corporation to improve its financial condition and maintain the hospital facility. The non-profit hospital corporation leases and operates Huntsville Memorial Hospital under an agreement with the District.
The District and the Hospital Corporation have made many attempts to identify a hospital system partner, but to date we have not secured a new partner. The District has also taken numerous steps to help the Hospital Corporation improve its finances, including maximizing reimbursement for the Hospital Corporation through the Medicaid 1115 Waiver Program, paying for maintenance and repairs and capital improvements, and lowering rent among other initiatives.
Unfortunately, all of these steps have failed to sufficiently improve the Hospital Corporation’s financial situation to make it a viable operation. Although the Hospital Corporation continues to work to find options for a successful turnaround, the facility’s condition and the healthcare market in which it operates present serious challenges to its long-term viability. To this end, the District met with Hospital Corporation Monday to discuss the Hospital Corporation’s immediate needs, including the District providing the necessary subsidies to the extent they are affordable and prudent. Today the District held a meeting of the Board of Managers to provide updated information about the Corporation’s unforeseen financial needs resulting from the prolonged process to identify a hospital system partner. The District discussed and explored various options to assist the Hospital in remaining viable, and to facilitate its continuing operations.
The long-run future for a viable hospital in Huntsville is very positive. Huntsville’s demographic market of insured residents, the county’s growing population, its small business growth and expansion of I-45 make prospects for a new hospital strong. In addition, the Hospital District’s demonstrated ability to raise money for a hospital facility and subsequently pay off its debt make the county’s profile appealing for investors. Indeed, it is possible to foresee a new, state-of-the-art facility for our community, ideally with a hospital system partner, that will serve Walker County citizens for many generations just as Huntsville Memorial has done. While the current situation is no doubt daunting for many, the District asks for your patience as we continue to explore opportuni
ties. We will continue to maintain and open dialogue with Walker County citizens and look forward to sharing developments as the hospital’s future continues to evolve.
Rich Heiland, former publisher of the Huntsville Item and owner of Free Press publications, LLC, a reporting/writing firm working with media, has been a reporter, editor and publisher at several daily papers. He was part of a Pulitzer Prize winning team. He taught journalism at Western Illinois University. He can be reached firstname.lastname@example.org or 936-293-0293.