Franciscans terminate Hospital ContractOct 12th, 2012 | By Jessica Gonzalez | Category: Top Story
During their October 4 board meeting the St. Bernard Parish Hospital Service District announced
their receipt of a 90-day termination notice from Franciscan Missionaries of Our Lady Health System [FMOL], the third-party management company for the newly-opened St. Bernard Parish Hospital.
The $70 million hospital opened last month, and has seen around 3,000 patients.
“The termination was pursuant to a no fault provision contained in the management services agreement,” said the HSD in an October 6 statement. “Under the terms of the agreement, FMOL provided the HSD with one executive, the hospital administrator, the only position that will be effected by this change.”
According to HSD Chairman Wayne Landry, FMOL was nervous about the future financial stability of the new hospital. The board currently owes FMOL $900,000 for services rendered over the last two years. Landry says that the bill will be paid through New Market Tax Credits, which were finally received six-days before FMOL sent their termination letter.
“FMOL could have opted to be paid through CDBG funds or through New Market Tax Credits,” Landry explained. “If they would have opted for CDBG money, they could have gotten it sooner but there are compliance issues that vendors have to adhere to that they thought would slow things down, so they didn’t want to comply.”
Landry says that the only other funding source were the New Market Tax Credits, and both FMOL and the board knew that they would not be coming in for quite a while.
“The truth is, they agreed to wait [to be paid] until we got them,” Landry stated. “And we received them right in the middle of September, six days before they sent us a termination letter.”
Now that the board has received the New Market Tax Credits, there are two components that must be satisfied before FMOL can be paid.
“Not only do we have to verify the money received is the appropriate amount,” Landry explained. “We have to audit and go through two years worth of invoices and ensure that every one of them is appropriate for payment.”
The HSD Board says the management changes will only effect the CEO. However, in the weeks preceding FMOL’s the termination notice, the HSD board eliminated the marketing department for the hospital.
“We’re reducing our non-clinical force, we’ve let two go and are encouraging another two people to resign—the reductions in forces should give us another $15,000 – $20,000 a month in savings,” Landry said. “The reductions in no way affect patient care.”
He explained that reducing the non-clinical workforce was the fiscally responsible thing to
do considering the tight financial spot the brand new, $70 million hospital is in.
“During the first year of operation it is essential to save as much as you can for the unforeseen,”
The board must now decide what to do going forward: find another third-party management
company or hire it’s own CEO that must report to the board.
Representatives from FMOL did not respond to requests for comment.