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Finance Commissioner: Hospitals Had Been Warned

June 21, 2004 – Finance Commissioner Bernice Turnbull spoke out Monday on the issue of payroll reimbursements for the territory's hospitals.
Contrary to statements made last week by Rodney E. Miller Sr., chief executive officer of Roy L. Schneider Hospital, Turnbull said, Miller had been informed in a meeting prior to her May 21 letter that drastic action was in the offing if the hospital did not reimburse the Health Revolving Fund.
Turnbull referred to a March 10 meeting called by the administration. At that meeting, she said, all department and agency heads were told to put an end to the practice of allowing certifying officers to certify for funds they don't have. According to the Finance commissioner, the attendees were told that should the practice continue, there "would be consequences."
But after that, Turnbull said, both Miller and Gregory Calliste, Juan F. Luis Hospital CEO, "continued to authorize payroll costs against the Health Revolving Fund with what was said on March 10."
Miller responded on Monday afternoon that he was not going to bring up the hospital's finances in front of all the government agencies at that meeting, which he did not consider an appropriate forum. He acknowledged the hospital had stopped paying into the fund last December when the hospital was hit with a $6 million nursing crisis. (See "Schneider CEO: Government Owes the Hospitals, Too".)
The two hospitals were put on notice in Turnbull's May 21 letter that they must pay back millions of dollars on loan from the V.I. government by June 11 or risk losing access to government resources used to cover their biweekly payrolls. At that time, the outstanding balances were put at $4.5 million for Schneider and $5.7 million for Luis.
Both hospital made payments of $200,000 last week, but officials of both say making ends meet is impossible, given the obligations and obstacles they face. (See "Schneider Board Backs CEO in Clash with Government".)
"It's been an issue for years," Miller said on Monday. "If we stopped reimbursing in December, why wait until May to write a letter?" He continued: "We did have a gentlemen's agreement based on our ability to pay, but after the nursing crisis, the hospital could no longer afford to cover the payroll reimbursements."
Just setting up meetings between the two sides proved problematic. Turnbull said a June 8 meeting was held to discuss the issue after her letter was received by both hospitals but only Calliste and members of his board attended. She said Miller was away on vacation and that he sent no board members or management team members in his absence.
Miller said on Monday that he was in Michigan to receive an award but that he was back on island that day and could have been available that night, but Turnbull said she could not meet at that time. Miller said he would not send board members to such a meeting in his absence, because "I work for them; I should be there."
Turnbull acknowledged that Miller had tried to reach her by telephone after June 8 but said she didn't return his call because she was busy with the fiscal year 2002 Single Audit and was scheduled to go off-island June 12.
On June 11, she said, she; Miller; Lt. Gov. Vargrave Richards; Juel Molloy, the governor's chief of staff; and Amos Carty, Schneider Hospital's chief operating officer, took part in a telephone conference call. Subsequently plans were made for Turnbull, Miller and Molloy to meet on June 30.
In her statement Monday, Turnbull said: "I would like the public to know that I am not authorized to allow the hospitals or any other entity to spend special and other funds without legislative authorization. I am not responsible for any department or agency that owes the hospitals. The hospitals must collect what is owed outside of the Department of Finance. We are not audited on feelings or public opinions, but on accounting principles."
Miller and Calliste have stressed that the government owes their institutions millions of dollars for services. They say this should be taken into consideration when reconciling their financial difficulties. Turnbull said on Monday that she is aware of their positions. However, she said, "These are two separate issues . We are a processing agency and there must be funds to support payments."
Turnbull, speaking on WVWI Radio Monday morning, read a seven-page statement which she later faxed to the source.
In it, she traced the history of both hospitals since they became semi-autonomous. She said a series of meetings was held in 2002-03. In a June 2003 meeting, the hospitals were told the financial situation should be taken seriously. Consolidation of the hospitals utilizing only one CEO was discussed.
Miller said he had heard nothing more about consolidation of the hospitals. "That was up to the governor and his administration," he said.
At a subsequent meeting, the "gentlemen's agreement" was reached that the hospitals would reimburse the central government as payrolls were paid from the Health Revolving Fund each Tuesday before payday. These are the payments that are at issue.
Turnbull supplied documents showing that as of this month, Schneider Hospital owes $9.3 million and Luis Hospital owes $15.4 million.
Miller said he just learned on Monday that Gov. Charles W. Turnbull in his proposed FY 2005 budget has called for the Schneider Hospital appropriation from the General Fund to be slashed by $2.5million. "We should focus on that," he said. "Do you know how many doctors and nurses that would afford?"
The governor's budget would reduce Schneider Hospital's appropriation to $21.7 million from the current $24.2 million, and the Luis appropriation to $19 million from the current $20.8 million.
"The big question is what is the hospital going to do in 2005?" Miller said. "We can't continue to do more with less. With our funds being cut, they have to be shifted to the Hospital Revolving Fund, which is already on life support."
Even so, Miller said, he is optimistic that something can be worked out at the June 30 meeting. "We will make health a top priority," he said.

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