Gateway Regional Medical Center CEO Joe Ottolino sent a written response Aug. 28 to Rep. Nikki Budzinski, D-Ill., addressing the congresswoman’s questions about the Granite City, Ill., hospital’s payroll disruption, July 31 ambulance diversion and financial obligations to employees and creditors.
Ms. Budzinski sent an Aug. 24 letter to Gateway Regional and its parent company, Glendale, Calif.-based American Healthcare Systems, demanding answers after more than 600 employees saw delayed pay in late July and the hospital briefly went on ambulance diversion July 31. On Aug. 1, AHS CEO Michael Sarian and his wife, Evelina Sarian, personally loaned the hospital $1 million to cover payroll.
In his response, Mr. Ottolino wrote that Gateway’s financial challenges “predate AHS” and that turning around the hospital “takes years, not quarters.” He said the hospital’s former billing and revenue cycle management vendor had left Gateway waiting on money it had already earned, and that AHS recently brought in a new vendor to address the issue.
“Cash flow is already improving, and we expect significant progress over the weeks ahead,” he said in the letter.
Mr. Ottolino said that all Gateway employees have received all wages and health savings account contributions owed to them this year. He said a small number of paper checks issued July 31 were initially returned before funds from the Sarians’ loan cleared, but every check was ultimately honored in full. Every payroll since has been processed normally and on schedule, he wrote.
Regarding the July 31 ambulance diversion, Mr. Ottolino said the hospital’s emergency department was already at capacity when several staff members said they did not plan to come in for their shifts. The diversion, which lasted until 7 p.m. that day, was “driven by one concern: making sure every patient already in our hospital had the staff needed to care for them.” Gateway has since rewritten its ambulance diversion policy in consultation with the Illinois Department of Public Health’s Region 4 emergency medical services coordinator, incorporating the state’s diversion checklist. The new policy states diversion does not apply to any patient with an emergency medical condition or in a life-saving situation, and that Gateway will seek state approval before going on diversion. Staff training on the policy is underway, according to the letter.
Addressing questions regarding fund transfers between Gateway and other AHS facilities, Mr. Ottolino wrote that moving cash between a health system and its hospitals — including corporate covering costs and hospitals sharing administrative and support services — is “a matter of ordinary operations,” and that Gateway “has been a net beneficiary of it.” He said Mr. Sarian and AHS have put more than $4.8 million into Gateway and Vista Medical Center East, the system’s other Illinois hospital, since March to fund payroll and operations, on top of the $1 million August loan. “When this hospital could not cover payroll, the money came in, not out,” he wrote.
Regarding outstanding obligations to vendors, utilities and taxing authorities, Mr. Ottolino wrote that Gateway is working within Illinois’ hospital assessment program and that current assessments have been satisfied in full through the program’s payment process. Vendor and utility matters currently in litigation are being addressed through the normal court process, he wrote, and AHS will update Ms. Budzinski’s office once those are resolved.
Mr. Ottolino said a hospital tour and meeting with Ms. Budzinski is being scheduled.
“I look forward to walking you and your staff through Gateway Regional and answering anything this letter leaves open,” he said.
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