Watsonville (Calif.) Community Hospital expects to meet its October payroll obligations, CFO Julie Peterson told Becker’s, but the hospital’s August board executive summary warned of difficulties in forecasting how it will meet future payroll and payable obligations beyond the near term.
The summary, which was included among materials for Watsonville Community’s Sept. 30 regular board meeting, said the hospital had $11.4 million in approved, outstanding accounts payable at the end of August, with 79% of the invoices more than 30 days old. Invoices not yet received or approved were excluded.
Watsonville Community Hospital has multiple payment plans with vendors and prepay plans to continue receiving goods and services, but the summary said it’s a “difficult way to manage a hospital” where patient care and physician supplies are required to provide services.
“With delayed approvals at the federal level of the Intergovernmental Transfer Program and unknown timing around [California’s Hospital Quality Assurance Fee Program 10], as well as the state funded Distressed Hospital Grant program, it is difficult to forecast how the organization can meet its payroll and accounts payable obligations in the future,” the board summary said. “The current cashflow challenges are being discussed at the board level and staff will bring recommended actions related to growth and service line changes for further discussion and board approval.”
Ms. Peterson said Watsonville Community is waiting on CMS’ approval for the Intergovernmental Transfer Program funding, which is more than three months delayed. The hospital is also waiting on the California Department of Health Care Access and Information to provide the Distressed Hospital Grant Program outline and application, which is targeted for an October release.
“The organization has actively advocated with our state legislative offices, our local congress office, our county officials and many others,” the summary said. “We have sought available funding, obtaining short term loans, a $4M line of credit, 20 HQAF advances and 20 payment plans with DHCS. We are not alone in the challenges we are facing as a result of federal actions on the healthcare industry. “
In a Sept. 22 board meeting, Watsonville Community’s interim CEO, Tim Moran, said the hospital might not be able to sustain operations beyond the next six to 12 months without financial changes. The hospital is also facing an $85,000 daily cashfall shortfall.
“With action, we believe that Watsonville Community Hospital can be financially viable and continue its tradition of serving this community,” Mr. Moran said during the meeting. “However, in the absence of any action to prioritize stability financially, we don’t believe that the hospital will be able to maintain operations past the next six, potentially 12 months.”
