It’s been a rocky five years for El Paso Children’s Hospital since it opened on Valentine’s Day 2012, with turmoil, budget trouble and a parade of CEOs.
But Children’s expects to finish this fiscal year at break even, and things appear to be clicking along as El Pasoans had hoped before the hospital filed for bankruptcy in 2015.
To Children’s president and CEO Mark Amox – who became the nonprofit’s fifth chief executive last October – the quick turnaround is just the beginning.
“Last year, when you were looking at us going into bankruptcy, we were projecting around a $20-million loss,” he said. “We’ve projected this year to be breakeven with a budget of about $100 million in net patient revenue.”
Children’s emerged from a seven-month bankruptcy last May after federal bankruptcy Judge Christopher Mott relieved the hospital of more than $40 million in debt, most of that to its landlord, the county’s University Medical Center.
Amox, who has 15 years of experience in hospital administration in Arkansas, Florida and Texas, said the plan is to repay the remaining $48 million in debt to UMC, with interest.
Just as its finances have improved, so has the once bitter relationship with UMC, which also has a new CEO in Jacob Cintron, and its board. That, Amox said, has made all the difference. “We are in lock step, planning together, talking strategy together,” he said. “It is a really, really productive relationship.”
Some thought the bankruptcy left Children’s as a subsidiary of UMC, but Amox said Children’s is a UMC affiliate – not a subsidiary – although four UMC board members sit on Children’s nine-member board.
One of those shared board members is Dr. Stuart Kahn, a longtime El Paso pediatrician, who said he appreciates Amox’s expertise, energy and a willingness to listen. “We’ve turned things around, and I think it’s going to be nothing but the positive for the future,” Kahn said.
In his office at Children’s, with books about leadership on his desk, Amox sat down with El Paso Inc. to talk about the hospital’s finances, how it’s changing health care in El Paso, and the future.
Email El Paso Inc. reporter David Crowder at email@example.com or call (915) 534-4422, ext. 122 and (915) 630-6622.
Q: What does a dedicated children’s hospital mean to El Paso?
When you look at the children’s hospital world, there are about 250 in the country. There are a little over 5,500 hospitals of all kinds in the country. So children’s hospitals have a very small part of the market.
Of the 250 children’s hospitals, only 50 are freestanding. What does that mean? It means that our facilities, our teams, our processes are uniquely and 100-percent designed for kids. Everything that we do from the moment you walk in the door to the moment you leave to the people we hire and the processes we use is 100 percent about kids.
I grew up in the children’s hospital world and worked in both freestanding and in embedded children’s hospitals, as we call them. In an embedded children’s hospital, you’re constantly competing with adult service lines. It may be capital dollars, it may be space, it may be marketing. The adult service lines typically are much more profitable and much more resource rich. In the kid world, we’re much more kid intensive and less profitable.
What a freestanding children’s hospital means to El Paso Children’s is we’re the only one in more than 400 miles, from San Antonio to Phoenix. For the kids here, it’s sort of the gold standard.
Q: How many pediatric specialists and subspecialists does Children’s have?
Q: Is El Paso getting close to the number of pediatricians needed to serve the population?
I think we’re about half way there in terms of the pediatricians you need per capita. When you look at what El Paso Children’s Hospital has been able to bring to this market, our goal was two things. One is to bring a higher and deeper level of subspecialty care to El Paso and, two, doing that to keep the kids that were leaving the market from leaving.
We’ve reduced that by about 70 percent since we opened. When you look at the routine bread-and-butter pediatrics, the question is, are there enough to serve this population? There’s not.
So, that’s really the job of Texas Tech – to train the next generation of physicians, and our job at Children’s Hospital is to provide a place that they can do that training.
Q: What kinds of care are kids having to go to other cities for?
Cardiovascular issues. We don’t have a pediatric cardiovascular surgeon here in El Paso, so any child that needs any sort of invasive cardiovascular procedure is going to have to go somewhere else.
Pediatric cardiovascular surgery is completely volume dependent. To be really good at it, you’ve got to do a lot of it. So, if it were my child, I would want them to go to a surgeon that does a whole lot of cases a year so they’re really, really good at it.
Can we get there? Absolutely. Will it take time? Yes, it will.
Q: How are admissions going?
We’re up about 7 percent in our admissions over last year and about 11 percent in our emergency room visits. So that’s telling me the whole boat is rising.
Q: What’s the breakdown of admissions?
Probably 20 percent of the admissions in pediatrics come from a specific specialty illness, like cancer, gastroenterology or cardiology. The other 80 percent are runny noses, flu and all that stuff – a bunch of diagnoses.
But when you look at our intentionally grown and developed programs, that’s where our cancer program is our biggest. It’s not our biggest number of admissions, but it’s our largest single program. Five doctors are part of that program, and they’re with Texas Tech in hematology and oncology.
We have about 300 cancer patients that we’re following at any given time. If you think of childhood cancer in El Paso, no longer do you have to go to MD Anderson or St. Jude’s or another major cancer center. You can receive the same treatments in El Paso that you can at any of these other cancer centers because we’re all part of the same network.
Q: Has Children’s has become a regional hospital, attracting patients from Southern New Mexico and West Texas?
We have a huge number of patients coming to us from all over New Mexico. A lot of that has to do with our ability to go get them. We have our transport team available 24/7. We’re able to launch that team within 20 minutes of being notified that a kid needs our support. That’s a big piece of it because the next closest hospital in New Mexico is really Albuquerque.
Q: What about West Texas?
We get kids from as far east as Lubbock, even though there’s Covenant Children’s Hospital in Lubbock. We have things that they don’t or we have availablility that they don’t.
Q: And Mexico?
We get a lot of patients from Mexico, those that have means and those that don’t. As a nonprofit children’s hospital, our doors are wide open. We don’t turn anybody away based on their ability to pay.
I remember kids that came to our hospital because they were really, really sick, and there wasn’t a provider in Juárez that was able to help them. But there are also those families that have means that are self-selecting to come to our hospital that may have chosen to go somewhere else in the past.
Q: This hospital came out of bankruptcy last May. There were major disagreements between Children’s and University Medical Center, mostly about money. With Children’s now a subsidiary of UMC, are there lingering problems or financial issues with UMC?
Just to clarify, we are not a subsidiary of UMC. We’re an affiliate. They don’t own us. They are a member of our corporation, but they don’t have control over our corporation. We’re still an independent, separately accredited hospital.
We have a nine-member board. Five of them are community members and four are appointed by UMC, so it is an independently structured board. We have a debt that we owe them of $48 million that came out of the bankruptcy. That has to do with the way we are structured as a hospital.
Q: Many understood there was a parent-subsidiary arrangement after the bankruptcy, even though Children’s was a separate, nonprofit corporation. But you’re saying it isn’t?
It is not. There’s some confusion in the market. We’re an affiliate, but they’re not the boss of us. My boss is my board and the board is the owner of the company, just like any other nonprofit. UMC doesn’t have ownership in our company; they have membership in our corporation.
Q: How has this new arrangement helped Children’s financially? As I recall, there were significant additional amounts of money that would come to Children’s as a result of its new relationship with UMC.
The new relationship really starts at the top with our board chairs and both CEOs. I can honestly say today that we are probably working together better than we ever have in the past. We are in lock step, planning together, talking strategy together. It is a really, really productive relationship.
In all honesty, I wouldn’t have come here had it not been. Because we have this unique structuring – a hospital within a hospital – and we’re designated as a children’s hospital, that allows us to participate in certain exemptions and certain reimbursement programs that children’s hospitals are allowed to take advantage of.
The best estimates of the impact that I’ve seen is that means around $10 million a year to us.
Q: What’s this year’s budget, and do you foresee a deficit?
We’re budgeted for a break-even year. Last year, when you were looking at us going into bankruptcy, we were projecting around a $20-million loss. We ended the year Sept. 30 with a $1-million loss. We’ve projected this year to be breakeven with a budget of about $100 million in net patient revenue.
Q: You’ve reached breakeven earlier than expected. Is that due to anything in particular?
It’s been a lot of things. The support we’ve received from the consultants we brought in to help us has been incredible, just to reset the playing field for us. But I think probably the biggest benefit to us has been this new relationship with UMC.
Our biggest vendor is UMC. We buy a lot of services from them. They’re our landlord. We buy our environmental services from them, a lot of our accounting services and what have you. To be able to right size those expenses, we manage our own expenses so we’re not spending more than we’re bringing in. We only have right number of people working in the hospital for the right number of patients. That’s been huge.
Q: What else are you doing?
The other piece is managing our revenue cycle. As we send claims out the door to insurance companies, we make sure that they are clean and that we’re getting paid the money we are owed and we’re not leaving money on the table.
Q: Children’s still owes UMC $48 million. How will that be repaid?
We have a repayment agreement with them and that process is like any long-term debt that any company might have, whether it’s a mortgage or you bought a bunch of equipment.
We now have a note with UMC that has terms and conditions that will probably last 15, 20, 30 years, I’m not sure, depending on our ability to repay it, how fast we grow and how fast our money turns around. But we will absolutely pay it in full, with interest.
We also had debt to Texas Tech that was to be paid off first, so we’re fully paying them back and as soon as we’re done with that in another two to three years, then we’ll start back on the UMC side.
Q: You started here last October. What are your impressions of El Paso?
We love El Paso. My whole family’s here, my wife, my two kids and my dog. It’s a really easy place to live. It’s been so warm and welcoming. Everybody from the hospital staff to our board of directors to the community is very welcoming. We love it.