Filing Deadline Approaches for Hospital Board Candidates

Why would someone like me spend time documenting and publishing a list of twelve blunders or problems that have beset Whidbey Health in just the last 18 months? Two reasons: one is of immediate importance, and one is aimed at the longer term.

Reason 1: To convince potential candidates that we need new people on the hospital board if we are to reverse WH's financial downturn.

In case you don’t know, Whidbey Health is overseen by five board members, or commissioners. For almost 12 years now, there has not been one commissioner who thinks any differently than the others. There has been a complete lack of oversight of the hospital administrators.

The commissioners throughout this time have refused to conduct their business openly and transparently – as a result, few people know how mismanaged our hospital has been over the last almost a dozen years. My previous posting (May 10) is meant to verify that current and recent commissioners, and the two CEOs they’ve selected, have pushed the hospital to the very brink of extinction.

All current members share the responsibility for this, which is why I have advocated that they all resign and make way for others to try to fix things. The people who’ve caused the problems are not going to be the ones who to cure them.

Many board members have resigned before their 6-year term ended, so most new board members are initially appointed – not elected. When it comes time to run for election, those appointees then run as incumbents. Furthermore, they have the support of the existing board, many of the establishment medical professionals who work at the hospital, and a good portion of Island County residents who have been led to believe, based on WH’s endless public relations efforts, that hospital leadership is in good hands and doing well.

In most cases, incumbents are elected without opposition. This is how board membership has become self-perpetuating. The names sometimes change, but the board’s irresponsible posture remains the same.

Two board members are up re-election, and because the deadline for filing to become a candidate is May 17, it’s vital that prospective candidates understand how urgent the need is to get some fresh blood on the board.

The two incumbents are Ron Wallin and Nancy Fey. Wallin the current board president, has been there since 2008, and Fey Opponents need to reside in one or the other’s hospital district. Most residents who live north of Coupeville fall into this category – you can check with county elections to be sure.

Will anyone heed the call to bring an open mind and a commitment to Whidbey Island residents to try to save this community asset?

Reason 2: WhidbeyHealth Is on the Brink of Financial Demise 
 
My longer-term reason for publishing a recent list of our hospitals travails is that with each passing year the hospital goes deeper in debt – and has its reputation more tarnished. This is an emergency – and yet how desperate the situation has become is rarely even discussed at the monthly public board meetings. Instead, board member have been crossing their fingers for over a year that they will be rescued (temporarily) by receiving a USDA loan that they are unlikely to get.

Let’s first consider the hospital’s finances. WH was excited over what appeared to be two very good years, 2016 and 2017. Each time the ledger showed that income had exceeded expenses by somewhere between $1 million and $1.5 million. That’s great, except: (1) the “profits” were largely achieved by putting off expending money on maintaining its physical facilities; and (2) even if WH could achieve a profit of one or two million dollars year after year, that wouldn’t begin to dig the hospital out of the hole it’s in.

As I’ve pointed out elsewhere, by its own admission, WH has “deferred maintenance needs” that will cost an estimated $35 million to address. We have one sparkling new inpatient wing, and about a dozen other clinics, offices, and other buildings that have been neglected – I’m not sure how many years this has gone on.

Because WH lost about $6.3 million last year, that’s another major amount that will have to be recouped somehow. The hospital is also concerned about potential liability from some pending lawsuits.

Also of enormous financial concern it that just over the last half year or so, many of WHs primary sources of income have been on the decline. Surgeries, considered a cash cow for such hospitals, have declined “catastrophically.” Income from diagnostic imaging testing, such as MRIs and CT scans, has also plummeted.

In an effort to get people to go to Coupeville for such testing, last December WH announced some drastic cost reductions. An MRI brain imaging exam (without contrast) now costs $1,743, compared to $3,336 in 2018. A CT head scan (without contrast) now costs $859, compared to $1,843 before. Physical therapy charges have also come down. Time will tell if such measures will result in more or less revenue.

Taxes that Island residents pay to the hospital district will surely be going up. But consider: for 2019, WH forecasts it will take in $104 million is patient revenue and nearly $6 million is tax levy revenue. Even a big tax increase, therefore won’t be enough to pay the new bills and the old debts. Nor will such an increase make our hospital more popular with residents. Patient payments for medical services are the only source that can save WhidbeyHealth. Or a huge bequest.

I believe that WH is currently staying afloat by way of loans, borrowing via a line of credit, or the like (I have a pending request for documents on this). Even if WH were to be approved for the USDA loan it is seeking, such loans currently call for interest payments of 4.5%. Whenever WH has to resort to a loan or loan-like measure, paying it back with interest is simply adding to the expenses. It’s a band-aid approach, not a solution.

Here’s one final indicator of out hospital’s perilous financial condition. In late March, Moody’s Investor Service downgraded one of WH’s two general obligation bonds two notches – assigning it “junk bond” status. Moody’s also just changed its “Credit Opinion” for both WH bonds to “Outlook Negative.” In other words, Moody’s thinks there’s a high risk that WH will not be able to repay an investor who purchased such bonds (see my post of 4/22 for more details).

Earlier I made mention of WH’s reputation. The only way I can account for a drastic drop in surgeries, diagnostic imaging testing, clinic visits, patient days, etc., is that the local population is going elsewhere for medical services. They have increasingly lost their trust in this community hospital. That takes a lot of doing, and it will take a long time to restore in back to what it should be.

The way to start that process is to install a new set of leaders – leaders who will conduct hospital business openly, honestly, and responsibly. It will take leaders who will accept accountability for their mistakes. We’re getting a new CEO – but we need new board members too. It’s time we stop hoping that the people who got us into this mess are going to get us back out of it.

And dammit, let’s demand that our leaders get our hospital accredited!

P.S. Come to the 7 a.m. board meeting on Monday, May 13, if you wish to see just how non-transparently our hospital board conducts its business.