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JFL Board: Hospital Faces Ultimatum from Creditors

Deepak Bansal, board member becomes hospital CFO.At a meeting focused on financial issues, the board of directors of the Juan F. Luis Hospital was told the hospital might have to curtail some services as soon as next month if an infusion of cash isn’t found.

During Wednesday’s meeting, the board:

– Approved a healthy raise for the hospital’s registered nurses, which should actually help the hospital save money;
– Endorsed the hiring of board member Deepak Bansal, a certified public accountant, as the hospital’s new chief financial officer
– Learned that the hospital marked its fourth straight month with a positive cash flow, earning $531,000 more than it spent during June. That’s compared to a loss of $1.99 million in June 2011.

But despite that good news, the hospital is still in a state of financial crisis, chairwoman Kye Walker told the board. The positive cash flow is more than offset by more than $30 million in debt accrued over the years.

According to Walker, at least one of the hospital’s creditors is at the end of his rope and has issued an ultimatum: Either the hospital pays at least $2 million on what it owes or the creditor will withhold any further services.

Otherwise, she said, “The board will have to consider shutting down some services.”

The problem with curtailing services is that it adversely affects revenue, JFL Chief Executive Officer Jeff Nelson said.

To forestall that, the hospital has looked at a variety of funding options that will bring in enough money to put a dent in the debt. At a meeting earlier this month, the board heard two proposals from private groups interested in operating the hemodialysis unit, both as part of a larger clinical development. Afterwards the board asked the JFL executive team to issue a request for proposals for others interested in running the program.

The original suggestion had been for the RFP to be open only 15 days, but Wednesday the board expanded it to 30 days, closing on Aug. 17. Nelson told board members there were groups interested in bidding, but they needed more time to tour the facility and get the information necessary to put together a serious proposal.

Nelson also has been talking with hospital management companies, some of whom might be interested in taking over operation of the hospital in exchange for an infusion of cash big enough to clean up the hospital’s books.

Nelson reiterated, as he has repeatedly during the months of discussion on financing alternatives, that any such discussion has to adhere to three basic principles – the hospital has to remain government-owned, open to all and nonprofit.

One of the country’s larger hospital management companies has already passed on JFL, but at least one other is interested in talking, Nelson said.

The attorney general’s office has yet to weigh in on whether Virgin Islands law would allow a for-profit management group to operate the island’s nonprofit hospital.

Nelson added that he has no financial interest either in other hospital management companies or in any of the groups bidding on managing the dialysis unit.

In approving an increase in the pay scale for registered nurses, the board was following through on a long-stated promise. Since February, when the hospital laid off 85 certified nursing assistants and licensed practical nurses, Nelson has said the goal is to reward the registered nurses, who now handle all aspects of nursing at the hospital, and to reduce by 90 percent the use of expensive traveling nurses.

The new pay scale was worked out in negotiations between the nurses union and the hospital, the Schneider Regional Medical Center and the Department of Health.

Under the new pay scale, the opening salary for zero to two years experience jumps from the current $47,800 a year to $63,000, an increase of 31 percent.

The other new wages are: 3-5 years experience, $66,000 annually; 6-10 years, $75,000; 11-15 years, $76; 16 years or longer experience, $79,000.

The new pay scale raises the average salary of the JFL nursing staff from $51,000 to $72,000, and is retroactive to last Oct. 1.

The new salary will cost an additional $2.6 million a year, plus about a $900,000 cost for the retroactive pay. However, Nelson said the additional cost will be more than offset by the reduced use of traveling nurses.

JFL has tried to recruit more local RNs, he said, but the prevailing wages were not competitive with other possibilities registered nurses have. The new scale makes the hospital a more attractive option, he said.

Bansal has been the board member with financial background for several years and knows as well as anyone how dire the hospital’s situation is. That’s why he was willing to step into the void of the vacant chief financial officer position.

“We’ve got to a save this hospital,” he said after the meeting.

Bansal has run his own accounting firm on St. Croix since 2012. He has taught at the University of the Virgin Islands. He was one of several candidates both local and from off-island to apply for the position, Walker reported to the board.

Bansal stepped down as a board member to take the position. The board was already short two members from its official complement, and now has only six members instead of the nine.

Walker worried that the small number might make it more difficult to get a quorum for meetings. In the past she has called on the Executive Branch to hurry in filling the two vacancies.

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