Fallbrook Healthcare District seeks way to financially assist hospital as a result of losses in first six months of 2013

FALLBROOK – The Board of Directors of the Fallbrook Healthcare District (District) is actively seeking a way to provide temporary financial assistance to Fallbrook Hospital Corporation (FHC). In late September of 2013, FHC reported that they had sustained substantial losses, nearly $2 million, in the first six months of 2013 in specific service areas referred to as “Core Services” and requested financial assistance from the District.

Since receiving the FHC request, the District has actively communicated with the hospital CEO and has engaged a financial consultant to analyze and review data made available by FHC to verify the extent of the financial difficulties related to Core Services. The District, in November 2013, presented a proposal to FHC that would provide significant short-term financial assistance to the hospital operators in return for financial considerations related to the end of the Lease term in 2028; and a commitment by FHC to implement measures designed to improve the hospital’s financial performance.

Fallbrook Hospital Corporation is a for-profit entity that has operated the hospital for fifteen years under a voter approved thirty year lease from the District. The District is a local government agency fully accountable to the community and operating under the laws of the State of California.

Terms of the District’s proposal are consistent with the California State Constitution and laws governing Healthcare Districts. These laws do not permit giving public funds to a for-profit corporation. The District proposal presents a means by which the District can provide funds to alleviate the current financial circumstance of FHC while ensuring a fair market value return of funds as a credit to the District at lease end. It would allow the District to appropriately manage assets apportioned from property tax revenues of this community while providing financial support to FHC to address operational issues. A win-win outcome – beneficial and of value to both FHC and the District.

FHC asserts that the District, under language of the lease, is allowed to reimburse FHC for losses in Core Services. The lease required FHC to provide Core Services for the first ten years of the lease; it has done so. The lease also provides FHC with the right to discontinue one or more Core Services after November 2008 under certain circumstances. As an alternative to FHC closing an unprofitable Core Service, the lease provides an option for the District to reimburse FHC for financial losses upon written request from FHC with reasonable backup to support the claimed losses.

“As a public entity, the District is charged with prudently managing its’ revenue for healthcare service and programs for the people of this community now and in the future,” said Board President Steve Abbott. “We are aware of and committed to acting within governing laws of the State Constitution and those governing Healthcare Districts. We are seeking to provide temporary support to Fallbrook Hospital Corporation while ensuring that the District receives tangible value in return for up-front financial commitment. We will continue our efforts to determine a workable solution. To that end, we will work to develop and implement a collaborative strategy that supports Fallbrook Hospital and its valuable service to this community.”

5 Responses to "Fallbrook Healthcare District seeks way to financially assist hospital as a result of losses in first six months of 2013"

  1. Justwondering   February 26, 2014 at 4:29 pm

    Isn’t the hospital owned by CHS a corporation?

  2. Not a problem   February 26, 2014 at 10:30 pm

    The game has significantly changed since this agreement was made. Check it out. Obama Care Section 1342 requires the taxpayers to bailout health insurance companies for all their losses. I would suggest to Mr. Abbott that he look into designating the FHC as an insurance company and then just passing all these losses onto the Feds. Think about it, the FHC can now double salaries and give everybody in the hospital free services and still not loose a dime. Why would they be looking at our local property tax money when the Feds are just itching to give away money?

  3. BB   February 27, 2014 at 5:08 pm

    be wary of generalizations. ..1342 does compensate insurers, for a 2 year breakin period only, against "excessive" losses (not all losses). Losses are considered excessive if they exceed actuarial norms due to a disporoportionate number of high need patients enrolled. Double salaries and perks would not qualify for compensation.
    If single payor had not been banned from the discussion we would not have to induce these companies to bear the risk of our collective health problems, but that is water over the dam.

  4. BailingOutaBillionaire?   February 27, 2014 at 7:11 pm

    To JustWondering: Community Health Systems, Inc. is one of the largest publicly-traded hospital companies in the United States and a leading operator of general acute care hospitals in communities across the country. Through its subsidiaries, the Company currently owns, leases or operates 206 affiliated hospitals in 29 states with an aggregate of approximately 31,000 licensed beds. The Company

  5. Lee   March 1, 2014 at 7:55 am

    Show me the money, baby.


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