Kaufman Hall, Where Are You?

Once the new Imperial Valley Healthcare District board is sworn in, they will face the task of bringing together two healthcare districts and potentially acquire El Centro Regional Medical Center based on a very short timeline mandated by Assembly member Garcia’s AB 918.  Among the many tasks they are faced with the most important is this acquisition of ECRMC if the intent is to form a single healthcare district.  The board must now engage in a serious and deliberative effort to conduct due diligence. This requires acquiring and studying multiple sources of data. While many of us strongly believe that a feasibility and comprehensive financial study should have been accomplished prior the enactment of the bill, that was not done.  It is now the responsibility of the initial board to undertake this study.

The law states “The initial board of directors shall recommend a permanent funding source mechanism to be presented to and approved by voters via ballot measure. The funding source mechanism shall be placed on the ballot for the March 2024 or November 2024 election. The initial board of directors, in collaboration with the Imperial County LAFCO, shall use the financial feasibility studies conducted by the Imperial County LAFCO and Kaufman Hall to determine the funding source mechanism.”

As detailed earlier, the deadline to get this on the March 2024 ballot date has been missed so the new target is now early August, in order to be placed on the November 2024 ballot.   Additionally Imperial County LAFCO study was completed but as previously been noted is incomplete. It omitted the ECRMC debt but included a projected cost by PMHD for funds to complete a new tower for the requisite seismic retrofit.  There were other issues with it including a composite cost of $7.5 million for administrative cost by ECRMC.  My team has looked at several years of ECRMC financials and notes that in the last eleven  years, ECRMC professional fees have increased by 457% to $21 million at YE 2022 up from $4.8 at YE 2011. There is no detail as the components of those professional fees, so the public does not know why so much money is being spent in this area. We do challenge the new board to make that determination.

The second financial feasibility study referenced is the Kaufman Hall study.  It seems that LAFCO, PMHD, and the public in general have not seen the report.   We have confirmed on two separate occasions that LAFCO does not have this study in their possession. A third party independent group, of which I am a member, the Imperial Valley Coalition for Sustainable Healthcare Facilities, issued a Freedom of Information Act (FOIA) and the California Public Records Act dated January 10, 2024 to both ECRMC and the City of El Centro’s. ECRMC’s responds on January 19th stated, “In response to your requests consist of Closed minutes and/or trade secrets that are not subject for public disclosure pursuant to the California Public Records Act, Div. 10,( Sections 7920.000, Title 1), and shall be kept confidential.  The response further states, “The Kaufman Hall report is not a public document.  The document is not a document owned by El Centro Regional Medical Center”.

This raises a number of serious concerns:

1. The Kaufman Hall Study is specifically referenced as a required feasibility study in AB918 which is now law.  If this study will be used in the determination to acquire ECRMC, then it needs to be made public.  This document apparently was privately funded and is entitled to keep their document under their control.  However, as a matter of public policy you cannot use a source document to influence public policy and simultaneously keep the source document confidential. Once this document is used in any negotiation to acquire or transfer public assets, the source document is no longer privileged and confidential.
2. The Kaufman Hall Study is specifically referenced in the AB918 (now law) as a source document to assist in the negotiation to acquire ECRMC.  Based on ECRMC’s stated position the IVHD interim board will not have access to this document.
3. If the study is made available to the IVHD interim board which is subject to Brown Act regulations, the study must be made available to the public.
4. If Preston Hollow, the current bond holder for ECRMC owns this document and has made a determination to withhold this from the public, we now have a bond holding corporation with a financial interest, making determinations that will effect healthcare in Imperial County.
5. While the content of the study remains a mystery, now the motivations and purpose of this study are now in question as well.

To date the City of El Centro has not responded to the FOIA request. I suspect their response will be the same.

With a flawed BAE study and a secret Kaufman Hall Study which is available to no one, the IVHD interim board is handicapped in the effort to complete their due diligence to acquire ECRMC.  If Assemblyman Garcia is planning to amend the law, we encourage him to amend the language removing Kaufman Hall from the law and giving IVHD the authority to commission their own study.   LAFCO can direct BAE to complete a more detailed study with a broader scope of work instructions.  This will require funding, access to hospital data and time.

The flawed bill created some of these issues, but the responsible parties withholding information have further complicated the problem.  Based on this can we expect ECRMC to negotiate in good faith? Early indications cast doubt on this. Of course, those responsible parties also are also accountable for financial disaster at ECRMC.  Perhaps the term responsible is not right term.