Wednesday, August 3, 2011

St. Rose Gets $3 Million Loan From Eden District After Billing Snafu

It was only months ago that St. Rose Hospital sought to save the Eden Township Healthcare District and San Leandro Hospital, now the Hayward facility needs a short-term $3 million loan to meet payroll after a software problem stopped it from billing Medicare for nearly a month.

The District Board of Directors unanimously approved the loan during a special meeting July 27 after the acting CEO of St. Rose, Mary Ellen Faria detailed a nearly $2.2 million shortfall that would soon prevent the hospital from paying its employees.

St. Rose CEO Michael Mahoney, the man who has spearheaded efforts for the facility to join the health care district to allow better flexibility in procuring federal funding for it and San Leandro Hospital, is out of the country, said Faria.

The problems began late last June, according to Faria, after the installation of a new IT system prevented numerous billing issues, including the coding of statements. Between June 22 and July 19, no bills were issued causing a shortfall of  nearly $3 million. Faria projects various vendors, the largest of which is Medicare, will begin paying the hospital for services rendered beginning in the first of August.

As of last week, St. Rose had three days worth of cash on-hand, according to Faria. During any other given time frame, the facility typically has around a months worth available.

"We understand you also have obligations," said Faria. "We don't want to impact anyone in the health care district."

The Eden Township's recent financial problems are well-known as it continues to fight Sutter Health in the court over the fate of San Leandro Hospital. As of June, the District has lost $5.2 million since the beginning of the year, including $571,000 in the month of June, alone.

Since the start of legal troubles with Sutter beginning in 2009, the District has spent over $2 million in legal bills. Last month, it also postponed community grants for 90 days with some directors citing the outcome of the pending litigation with Sutter as a concern.

"I don't think we can let St. Rose, at any stage, go down," said District Director Rajendra Ratnesar. "We don't have much of a choice."

Other terms of the loan with St. Rose include a return of one percent plus prime within 120 days. A representative from St. Rose believes it will take that long for the county to straighten out the software and billing snafu.


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