Las Vegas Sun

August 1, 2014

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Q+A:

Board member discusses University Medical Center’s cash crunch, new CEO and future plans

The new University Medical Center board of directors is in triage mode.

The board took on the public hospital’s oversight from the Clark County commissioners earlier this year.

Since then, the nine-member board has had to manage the surprise resignation of CEO Brian Brannman and cash flow problems tied to the rollout of the Affordable Care Act and the Medicaid expansion. Those challenges came on top of the hospital’s perennial operating deficit, which requires county subsidies of up to $70 million per year.

The Sun spoke with new board member John O’Reilly, CEO of the O’Reilly Law Group, to hear about his first four months on the board.

What have the board’s first several meetings since January been like?

We began with some of the basics in determining what the bylaws should be and also adopted policies and procedures. Among the significant items in the policies and procedures was the establishment of board committees. It’s the same process that we follow in the private sector. The committees can spend more detailed time focused on their areas of interest and expertise and provide reports in a more summary fashion to the board.

Why did the board forgo a national search for a new CEO and instead choose to promote UMC Chief Operating Officer Lawrence Barnard?

The loss of Brian (Brannman) caught us by surprise. As we looked around, we were equally pleasantly surprised to find that since Larry (Barnard) has been on board at UMC, he’s taken a significant role in day-to-day operations as the chief operating officer. As we evaluated Larry’s experience, we were most impressed. It was an opportunity to engage and hire Larry as CEO so we did not have an absence of leadership for an extensive period of time, which would have been the case if we had to go seek leadership from outside the valley.

What’s behind the cash flow issues that prompted UMC to request two emergency loans totaling $45 million from Clark County in recent months?

I think the most basic problem in terms of cash flow is that UMC has been and is a safety net hospital. As we look at the financials, I think we’ll find approximately $250 million of uncompensated care is provided by UMC (each year). So long as that burden is borne to that extent by UMC, we will continue to have cash flow issues, period. The changes as a result of the Affordable Care Act provide additional challenges. Specifically the transition (of patients) from Clark County Social Services to Medicaid has become a big issue in our cash flow. We’ve yet to see a dollar from Medicaid. The state has a major backlog, which exacerbates the cash flow issues the county hospital already suffers from.

How else is the Affordable Care Act affecting UMC?

The requirements for electronic health records (the law) has imposed add an incredible burden and incredible expense on not only our hospital but others. We’ve had a contractor for tens of millions of dollars come in to try and implement the electronic health record. It’s not implemented yet. It’s one of many challenges.

What plans does the board have to address UMC’s longer term financial problems?

The governing board has been in place a little over three months. To suggest that we have answers is foolish at this point. But we’re spending each week trying to gather the facts. Financial stability is a goal. I’m hopeful that UMC can function as a standalone facility that provides health care to as many people as it does now.

How does UMC fit into plans to bring an academic medical school to Las Vegas?

The state of Nevada, and particularly Southern Nevada, deserve to have an academic health and science center. I’d hope to work with the university system so that we can develop UMC as a key component of that.

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