Maverick County Hospital District sells medical equipment to UMC at a loss
By: Jose G. Landa
Copyright 2013
The Maverick County Hospital District (MCHD) Board of Directors approved to sell some used medical equipment to the United Medical Centers (UMC) at a loss to the local hospital district at a special Board meeting held on September 4, 2013, according to the minutes of the September 4th Board meeting.
At an earlier regular Maverick County Hospital District Board of Directors meeting on August 28th, the item on the sale of the ear, nose, and throat medical equipment which the Hospital District leased to the United Medical Centers at $1,750 per month was brought up for action but Board of Director Ricardo E. Calderon questioned Hospital District Chief Executive Officer Elcira Bares and Chief Financial Officer Terri Contreras on why the Board had not been provided copies of the documents being discussed on this item such as a copy of the lease agreement between the Hospital District and United Medical Centers and the financial numbers on the lease agreement between the two entities in order for the Board members to make an informed and intelligent decision on behalf of the Maverick County taxpayers. Board member Joaquin L. Rodriguez concurred with Calderon and made a motion to table the medical equipment sale item until a future Board meeting, which was seconded by Calderon and approved by the Board. CEO Elcira Bares advised the MCHD Board at this meeting that UMC CEO George Kypuros had approached her and written a letter to the MCHD that UMC was interested in purchasing the medical equipment being leased from the MCHD. MCHD Board member Humberto Duran did not participate on this agenda item because he has a conflict of interest as he is an executive manager of a UMC medial clinic on Eidson Road in Eagle Pass and removed himself from the Board room and discussion. Duran abstained also from voting on this item at the August 28th meeting.
A special meeting of the MCHD Board was called and held on September 4th for the sole purpose to address the sale of the medical equipment to the UMC. MCHD Board Chairman Juan Manuel Farias requested MCHD CEO Elcira Bares to provide the Board more information on the sale of the medical equipment to UMC. Bares explained to the MCHD Board that the ear, nose, and throat medical equipment and a booth had been leased to the UMC at $1,750 per month. Bares then asked MCHD CFO Terri Contreras to provide financial information regarding the medical equipment. Contreras told the MCHD Board that the medical equipment had been originally purchased by the MCHD for $99,484 and that $68,401 of the purchase price had already been depreciated. Contreras explained to the Board that after the depreciation, the value of the medical equipment was $19,082 in the MCHD financial books and the equipment was in good condition and still valuable.
Contreras added that she had spoken to the medical equipment vendor and they had recommended to the MCHD to sell the medical equipment at 50 cents to the dollar value, therefore netting $12,200 to the MCHD. Contreras advised the MCHD Board that she recommended the Board to sell the medical equipment to UMC for $19,082. Contreras noted that the UMC was leasing the medical equipment from the MCHD at a monthly lease payment of $1,750 and had already paid $37,500 in lease payments, leaving a balance of $12,200. MCHD CEO Bares recommended to the MCHD Board that the sale price of the medical equipment be sold to UMC for $12,200. Bares and Contreras advised the MCHD Board that UMC was delinquent for three months of lease payments (July, August, and September 2013) to MCHD for the total amount of $4,250.
Chairman Juan Manuel Farias introduced and welcomed George Kypuros, Chief Executive Officer of UMC. Kypuros asked the MCHD Board that they should give UMC for free the medical equipment and forgive the $4,250 lease payments owed to MCHD for the good of the community. Kypuros told the MCHD Board that with the purchase price, the depreciation of the medical equipment, and the lease payments paid by UMC to MCHD to date, the MCHD had already gotten its value’s worth. Kypuros told the MCHD Board that Dr. James Fowler, an Ear, Nose, and Throat Physician Specialist with UMC was the only ENT in Maverick County and needed the medical equipment for his practice.
MCHD CEO Bares advised her Board that if the MCHD would sell the medical equipment to a third-party outside in the market, it would be for $12,601. MCHD CFO reminded the Board that UMC still owed three months lease payments totaling $4,250. Kypuros then proposed to the MCHD Board that they sell the medical equipment to UMC for the sum of $4,000 instead of giving it to them for free, including the delinquent lease payments. Bares reminded the MCHD Board that they had to consider the delinquent UMC lease payments totaling $4,250.
MCHD Chairman Juan Manuel Farias suggested that the sale price be for $6,000 including the $4,250 delinquent UMC lease payments. Board member Joaquin L. Rodriguez motioned that the MCHD sell the ear, nose, and throat medical equipment and booth to UMC for the price of $6,000 including the delinquent $4,250 UMC lease payments and seconded by MCHD Vice-Chairperson and Maverick County Treasurer Rito Valdez, III. Board members Joaquin L. Rodriguez, Rito Valdez, III, and Chairman Juan Manuel Farias voted in favor of the $6,000 sale price to UMC. Board member Ricardo E. Calderon was absent at this special meeting due to a scheduling conflict. Board member Humberto Duran, an Executive Manager of a UMC medical clinic, was also absent at this special meeting.
The net result for the MCHD is that they sold the ear, nose, and throat medical equipment and booth to UMC for $6,000 when it was worth minimally $12,601 in the market and the UMC owed it $4,250 in delinquent lease payments totaling $16,851, thus sustaining a financial loss of $10,851. Maverick County Hospital District Taxpayers will have to foot this $10,851 loss on the sale of the medical equipment.
It is not a surprise that if the MCHD Board sells used medical equipment at a loss of $10,851, the MCHD suffered a $1.6 million loss in its 2012-2013 fiscal operating budget requiring the local hospital district to have to make a capital contribution of $1.6 million from its reserves to keep afloat its budget deficit. For the 2013-2014 fiscal budget, the MCHD Board, except Board member Ricardo E. Calderon, approved another $1.6 million budget deficit requiring that the Hospital District dip into its reserves again to operate its annual budget deficits. Calderon voted against a deficit budget in defense of Maverick County Taxpayers.
The Maverick County Hospital District Board of Directors include Chairman Juan Manuel Farias, Vice-Chairperson Rito Valdez, III, Humberto Duran, Joaquin L. Rodriguez, and Ricardo E. Calderon. MCHD CEO is Elcira Bares and MCHD CFO is Terri Contreras-Patlan.
