Ron Acton, a veteran of many community boards during his long business career in El Paso, is stepping down from his position on the El Paso Children’s Hospital board, which he chairs.
“It’s time,” he said. Children’s is out of the woods after its bankruptcy and has what he thinks is the strongest board in town, so it’s a good time to make way for someone else.
He’s been on Children’s board for a little over a year, but his continuous service on hospital-related boards goes back to 2005, when he was named to the county hospital board overseeing Thomason General, now University Medical Center.
The UMC board, which appoints four of Children’s nine board members, will name Alan Abbott, a CPA, well-known investor and former owner of Sunland Optical, as his successor, Acton said.
After Children’s emerged from bankruptcy, he said, the new board’s main objectives were to make peace with UMC, ensure Children’s independence and find a great new CEO.
With those accomplished, he said, the board has set its sights on a new objective that will mean a lot to Children’s and to the kids it serves.
Then there’s the bottom line. After opening in 2012, Children’s quickly found itself going deeper into debt to UMC for a few reasons it could’ve avoided and others it couldn’t. The hospital fell into bankruptcy.
But Acton said Children’s should break even on a cash basis when this fiscal year ends Sept. 30 and is looking forward to a big increase in Medicaid reimbursement rates in coming months that will be a boon to the hospital.
Financially, it may be the best thing that’s happened to Children’s in the five years since it opened its doors.
Acton sat down with El Paso Inc. and talked about the new Medicaid money that’s coming, what Children’s independence will mean to El Paso and the importance of volunteering for community boards in El Paso.
Email El Paso Inc. reporter David Crowder at firstname.lastname@example.org or call (915) 534-4422, ext. 122 and (915) 630-6622
Q: What’s the hardest decision that the Children’s board has had to make in the past year?
I think the decision had to come with prioritizing our goals and then having multitudes of conversations with the county and UMC and our consultant about El Paso Children’s being able to remain an independent children’s hospital. That was a hard decision for a lot of reasons because it increased the size of the board from seven to nine, and it really set the stage for what we will be for the next 20 years.
Q: When you say it would set the stage for what the hospital will be for the next 20 years, what do you mean?
Each year, our goal is and should be that fewer and fewer El Paso children will have to leave the city of El Paso to receive quality care. El Paso is becoming a large enough city that we should be able to justify covering most of the care needed. Certainly, there will always be some rare situation that doesn’t justify a city the size of El Paso having certain subspecialists. But more and more we see we need to able to do more.
Q: I understand that organ transplants and heart surgery for children are the two big specialties you don’t have now, because El Paso doesn’t have the capacity to support those practices.
Right. Until we do, we need to partner up with great children’s hospitals throughout the state and the region so they can come here and help serve our children.
Q: What were your goals when you joined the Children’s board and what has the new board accomplished?
When we all sat down together after coming out of bankruptcy on Jan. 8, 2016, we said we have to improve communication with UMC and our relationship with UMC. We have to let the community know that truly we are in partnership with UMC. We felt that was important because there had been so much publicity about the bad blood between the two organizations.
I can tell you that today there is no bad blood. We are thrilled with Jacob Cintron being the CEO at UMC. Our new CEO, Mark Amox, and Jacob have a great relationship.
Q: OK, what was your second goal?
Our second goal was to remain and independently licensed hospital. That was successful.
Our third goal was we wanted to bring in the very best CEO we could find. Fortunately, we found Mark Amox through our search firm. He and his family are wonderful additions, not only to the hospital, but to our city. They’ve already purchased a home and regard El Paso as their home. Those were the three big, primary goals at the beginning.
Then, we came across the fourth. There is a new designation being awarded to hospitals in Texas called a Level IV neonatal intensive care unit. That’s the highest level that will be offered. We just finished our survey last week, and the results were given to the state. Our goal is to be designated a Level IV. Based upon the survey and the type of care provided at Children’s, I believe we will be awarded that designation.
Q: When is that designation going to be made and what will it mean for Children’s?
I believe it will be made by June, if not, then July. And, it will be a statement that El Paso has the highest quality NICU care for preemies, brand new babies and infants that will be equal to any place else in this state. It says that people can feel comfortable having their babies here.
Q: It seems we heard Children’s expected to break even financially when this fiscal year ends Sept. 30. What’s the current budget and is that going to happen?
Our goal was to almost break even this year. I think we presented a half-million deficit in the budget. Right now, our deficit is greater than that, but in the hospital business, you’ve got to be very careful about judging your year on a month-to-month basis because, for example, the flu might hit in a different season than we projected.
What I believe and what our board is excited about is that we think we will break even on a cash basis this year. As you know, a hospital is a big business and it has lots of assets that depreciate, but that’s a non-cash item. I think that while our profit and loss will show a bigger loss than half a million dollars, the important thing is on a cash basis we’re going to be at break even.
Q: You mean you won’t actually lose money at the end of the year on the services you provided?
That’s important. We all survive on our cash on hand, whether we’re individuals or a business. When you have a business as big as a hospital and you have all this equipment that’s paid for, but it still depreciates. That depreciation on equipment or a building decreases your income, but it doesn’t cost you cash.
Q: So that means you will not have spent more than you took in.
Yes, and there’s something else.
Q: What’s that?
This is important. We did not know exactly when some new rate increases were going to come into managed care. We had hoped they might come in earlier in this fiscal year. It now looks like they’re coming in August. They are significant.
Once those rates are finally established, we’re talking about increasing our income on our managed care patients – the majority of all the patients we have – we’re talking about a 25 to 40 percent increase.
Q: What do you mean by rate increases? The reimbursements for certain procedures? And what managed care do you mean?
Managed care would be El Paso First. They’re the ones that pay the hospitals for all the Medicaid children that come into our hospital.
Q: So, Medicaid rates and reimbursements are going up?
Going up 25 to 40 percent on what we receive, based on what we’re hearing about the increased payments that we will receive from the managed care providers, such as El Paso First or Superior, that’s huge.
It’s a big number to us, because we’re not just looking to break even or just make money. What we’re looking at is being able to create additional service lines at the Children’s Hospital so that our children in El Paso can receive the very best care in El Paso without having to go to Dallas or San Antonio or Houston.
Q: What percentage is Medicaid of your overall income?
Probably over 80 percent. That’s not uncommon at a children’s hospital to have that high of a number.
Q: How many medical personnel does the hospital employ?
I believe we have about 450 caregivers.
Q: Do you have any serious concerns about the hospital’s future in today’s environment?
I feel very optimistic, I really do. We’re only five years old as a children’s hospital, but I think we’ve had five or six CEOs. Now, we have a CEO that’s purchased a home in El Paso and is on state boards already. I think we’re going to have a real voice, with the relationships he’s building and our relationship with UMC.
Q: Some of those CEO’s came with a lot of baggage and were very expensive. I suspect that Mark Amox is a bargain in comparison to those other guys.
I can tell you that Mark could have demanded more.
Q: What is he being paid?
I’m not going to tell you.
Q: Hospitals aside, tell us about your career in El Paso over the years.
I’m a third generation El Pasoan going back to my grandfather, who came in the 1890s. My daughters are the fourth generation, so we’re long-time El Pasoans. I went to UTEP for a business degree. I was a banker for a number of years.
If you looked at my resume, it looks like I worked at a lot of banks but actually I never moved locations. It was called First International, then InterFirst, First Republic, NCNB, Nations, and I’m not sure what it is now. I did that for 11 years in the same building on Hawkins. The bank just kept getting bought out.
Then I ran Triangle Electric Supply, a local supply house, for seven years. Primarily my life has been built around working for J.O. Stewart Jr. Not only have I known him for 45 plus years, I’ve worked for him for 23 years up to his passing in January 2016. I still work for the Steward family’s business, primarily investments.
Q: You joined the new board of El Paso Children’s Hospital after they came out of bankruptcy in January 2016, and now you’re planning to leave that board after 12 years of involvement with University Medical Center and Children’s. When will you be going and why are you leaving?
You know what? It’s time; it’s time for new blood. I was with UMC, which was Thomason Hospital in 2005 until 2010. I have been with El Paso First on their board for 10 years, and I’m currently chair of the El Paso Children’s board and have been since Jan. 8, 2016.
The Children’s Hospital board is so strong. They are Ted Houghton, the vice chair; Pat Gordon, a local attorney; Richard Fleager, the former senior VP of El Paso Electric; Amy Ross, an IT consultant; Mica Short, community relations manager at Texas Gas Service; Dr. Stuart Kahn, who’s been everybody’s pediatrician; Cindy Lyons Fields, a local CPA; and Miguel Fernandez, co-founder of Transtelco.
Q: Who’ll be replacing you?
The UMC board has approved the appointment of Allen Abbott, a pretty big name. He used to own Sunland Optical and is a local CPA who’s retired now. He will be going on the board beginning in May. He is appointed by UMC just like I am.
Q: It seems there are two types of people. Those who decide to serve on community boards and those who don’t. I’ve wondered how people like you who have a demanding day job manage to devote the kind of time you do to serving on community boards. What’s been your motivation in doing that?
It started with my marriage. My father-in-law is Evern Wall, former head of El Paso Electric Co. He was totally community oriented and he told me that if I wanted his daughter’s hand in marriage, I would follow suit.
Then, I had the privilege of being in banking and had the privilege of working for Steve DeGroat, who was and is a community leader. He echoed my father-in-law and said if you want to be in banking, you’ve got to be involved in our community.
But then I had the privilege of working for J.O. Stewart, who had a heart for this city like very few people. He put his money where his mouth was. He encouraged me to work for community boards.
Q: What would you say about the importance of volunteers in a community and how does the custom of volunteering get passed down?
I think the volunteers in El Paso are so important for our community. That’s what drives most of the boards. As long as we have people like the J.O. Stewarts, the Rick Francises, the Woody Hunts and the Paul Fosters who encourage their employees to be on community boards, then this city will do fine. But we have to have the leadership encouraging their employees and others to be on community boards.
Q: Do we have a shortage of willing volunteers these days?
It’s getting harder to find people.