Central Government again bails out Luis Hospital payroll
Published: December 11, 2013
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ST. CROIX - Gov. John deJongh Jr. has accepted the resignation of Luis Hospital board member Wallace Phaire, while the V.I. government again has stepped in to provide a temporary bailout for the troubled hospital to meet payroll.
The Daily News reported Tuesday that Phaire had resigned effective Monday afternoon, leaving the hospital with only two board members and a single certifying officer, Interim Chief Executive Officer Dr. Kendall Griffith. Most hospital checks have to be signed by two certifying officers.
The governor told The Daily News on Tuesday that he saw Phaire's resignation on Tuesday and accepted it. Phaire originally had submitted his resignation a week earlier, but the governor had asked him to stay on while the federal Centers for Medicare and Medicaid Services conducted a weeklong inspection of the hospital. Phaire agreed, but resubmitted the resignation Monday.
DeJongh said that Phaire had been "very committed to the hospital" and thanked him for his service.
Phaire told The Daily News on Monday that he resigned because he no longer was comfortable with the way the hospital is being managed, particularly the books and accounts. He said he was being kept out of the loop and that he no longer felt comfortable putting his name on the hospital's checks and financial documents.
"The time has come for me to back up and say thank you," Phaire said on Monday. "I don't want to jeopardize my reputation. I'm actually very sorry it has come to this. I regret wholeheartedly making that decision. But I don't see any other resolution right now."
Phaire also said that the board was not consulted when Griffith fired Chief Financial Officer Deepak Bansal on Nov. 29. Griffith said he spoke with interim board chairman Dr. Anthony Ricketts about the plan to fire Bansal.
V.I. Code requires the CEO to get the advice and consent of the hospital board when appointing or removing the chief financial officer.
Phaire's resignation leaves the nine-seat Luis Hospital board with seven vacancies.
New board candidates
Even if both of deJongh's current nominees to the board - Philip Arcidi and Dexter Skepple - make it through the Senate confirmation process, the board still would not have enough members to muster a quorum to conduct business.
DeJongh said Tuesday that he has spoken with two more candidates for the board and is waiting to receive their resumes and their answers. DeJongh said he hopes to make an announcement about one or two additional nominees to the board within a week to 10 days.
He declined to name the candidates.
DeJongh also said that the government once again is stepping in to help the hospital make payroll.
"We're working with them to make sure they make payroll in time," he said. "We recognize we may have to advance them an allotment."
In recent months, the Central Government repeatedly has had to step in to provide the hospital with advances on its allotment so it could make its payroll, most recently two weeks ago. At that time, employees were paid two days late.
On the same day employees finally got their checks, Griffith fired 15 staff members and reinstated 8 percent salary cuts across the board for hospital staff, saying it would help the cash-strapped hospital. Among those fired were Bansal and the hospital's financial management team.
No extra funding
DeJongh said the government cannot continue to step in every month to provide a cash advance to the troubled hospital.
"It cannot go on like this," he said.
The governor met with hospital officials and Sen. Clarence Payne III, who heads the Senate Hospitals, Health, Human Services and Veterans Affairs Committee, for about five hours on Nov. 27 about the situation at the hospital.
DeJongh said he would be meeting with senators in the next week or two to discuss where they can find funding to help Luis Hospital meet its operating expenses.
Providing the hospital with additional funding will require making "difficult decisions" because any additional money appropriated to the hospital will have to be taken away from something, deJongh said.
"There's no additional influx of resources," he said.
Although there has been discussion of possible funding for the hospital from a bond issuance that previously was authorized by the 29th Legislature that has not yet moved forward, deJongh said that money would have to be used for capital expenses at the hospitals, not for operations.
DeJongh said he is working with underwriters and bond counsel at this point, and that the bond could move forward after the first of the year. That issuance would provide approximately $4 million for each hospital - but with the caveat it be used for capital projects, not operations.
The governor said he is less concerned about the situation with certifying officers at the hospital.
Griffith fired the last of his certifying officers with the financial management team, leaving only himself and Phaire as certifying officers. Now that Phaire is gone, Griffith is the only certifying officer remaining.
DeJongh said that he believes Griffith could appoint certifying officers himself as an administrative function, with the acknowledgement or ratification of the action by the territorial board.
However, V.I. Code indicates that the hospital board - not the CEO - is in charge of the hospital's bank account.
Former Luis Hospital board chairwoman Kye Walker said that the statute is about checks and balances and financial controls.
The practice of the board for years has been to designate certifying officers by resolution at a public meeting, she said. The resolution can then be presented to the bank.
"If you had a CEO who fired anyone who didn't agree with everything he said and surrounded himself with 'yes' people and made only 'yes' people his certifying officers, then the hospital has been exposed to the potential for misuse of public funds," Walker said. "There's a reason why the CFO is a certifying officer and why the CFO is removed only with the advice and consent of the board."
DeJongh said Tuesday that Griffith was contacting territorial hospital board chairwoman Lynn Millin-Maduro, but the governor did not know whether a territorial board meeting had been scheduled to deal with the certifying officer situation.
Griffith did not return calls Tuesday from The Daily News.
DeJongh also told The Daily News that he met with CMS on Friday at the end of their weeklong inspection and discussed the hospital's situation.
The hospital should receive an official report on the inspection within two weeks, he said.
DeJongh said he told the inspectors that he recognizes they have a tough decision because the hospital has not met deadlines contained in a systems improvement agreement with the agency.
The governor said he also told them that he believes Griffith and the hospital leadership team is on the right track and that the government will do whatever it can do to help the hospital, he said.
DeJongh said he applauds the work hospital staff do every day.
"I think right now the staff at Juan Luis is really showing its strength," he said. "The hardest part is not to let any of the negative things going on effect what they do."
The governor said he is "cautiously optimistic" about the CMS inspection and its results.