Published: September 06, 2007 03:18 pm            

In the end, everybody claims they were the winners

In the end, an observer of the East Texas Medical Center vs. Henderson County hospital feud might be tempted to ask, “Couldn’t all of this have been worked out over a cup of coffee?”

Actually, no.

What you had here were two upstart politicians challenging a proud and deeply entrenched hospital establishment, telling long established players who were proud of their accomplishments for the community that they weren’t playing by the rules.

Such challenges rarely lead to coffee talk.

The predictable name-calling and the public disrespect for the positions of the other side was bound to lead to litigation, or what lawyers like to call, job security.

The alleged contractural defaults against the hospital, and the relative ease with which they were dispensed once a judge forced the two sides into mediation, were accomplished by some creative thinking and a sprinkling of compromise.

It didn’t hurt that a federal judge denied the hospital’s request for a continuance of its suit against the county until next April.

He told them to be ready to go to trial by Sept. 4.

Once negotiations began, threats melted quickly.

For instance, when the hospital sued the county, it had accused its players of “tortious interference” with a contract ETMC had with the Authority Board.

“Defendants, through the unauthorized and unlawful notice of default and their inaccurate claims that ETMC Regional Hospital System has breached its contractual obligation, have intentionally interfered with the contractural relationship,” hospital lawyers argued.

That one went away in mediation too, as did the hospital’s claim that Owen and Holstein committed business disparagement against ETMCRHS.

“These defendants have published disparaging words about ETMCRHS’ economic interests which were false and were published with malice and without privilege. The disparagement caused special damage to ETMCRHS,” according to the suit.

Poof. That one evaporated just as quickly.

As did a claim by the county that any buildings ETMC built in the county, like the ETMC Athens facility, belonged to Henderson County, even if they were paid for by the hospital without county bonds.

The county backed off on that one just as quickly.

Truth be known, neither side expected to prevail on these issues in a federal court trial. They were negotiating ploys designed to bring about a settlement.

Still, the long-delayed cup of coffee came about years and hundreds of thousands of dollars later in the form of court-ordered mediation.

That egos were at play on both sides goes without saying. The ETMC System, especially ETMC Athens, and a county-created Authority Board that never seemed to say “no” in 20 years to its tenants (ETMC), inspired the challenge from the upstarts. This led to the Authority Board members having to re-apply for their board positions.

Because of it, the upstarts were looked upon much as one looks on a pair of obnoxious chihuahuas, snapping at the heels of some annoyed veteran mailman, and getting kicked away for their trouble.

Like most chihuahuas, the upstarts came right back, making threats that suggested they might bring out the big dogs, if the hospital boys weren’t careful.

ETMC, they warned, might one day get kicked out of the hospital it built in Athens but didn’t own.

Without such language flying past each other, both sides got what they wanted, though each continues, even now, to spin a strikingly different story.

ETMC’s Austin Attorney, Dean Davis said after the settlement the hospital had won on every point, with the possible exception of not being awarded punitive damages.

If that had been true, the hospital would have stuck with its “tortious interference” claims and its “business disparagement” claim.

Like the county on the building claim, those issues went the way of the wind.

In the end no money was awarded to anybody, nobody was declared in default, nobody was “interfering” and the rest will be left up to a higher court— the court of public opinion.

More interesting at this point is the way each side got what it wanted.

Take the malpractice insurance claim that the hospital wasn’t putting back enough money to assure that at some time in the future, a medical catastrophe wouldn’t come back on the county, costing its taxpayers zillions of dollars.

Once the two sides were in mediation, it was quickly decided that if the county would keep its nose out of the hospital’s business, the hospital would in turn “indemnify” the county against such financial perils.

It sounds like a county victory, but the hospital boys will be quick to tell you, the county has never suffered a dime of liability because of the hospital, and that it never will.

Nevertheless, the county boys will sleep better at night for the next 60 years, knowing they’re covered.

The biggest dispute may well have been the indigent care issue. The county boys told the hospital boys they were supposed to take care of all indigent care in the county.

All means all, the county boys said.

Ridiculous, the hospital boys said. They were not going to pay for indigent costs absorbed by rival clinics or other facilities.

Read the sublease agreement, the county boys said.

“Ridiculous,” the hospital boys said, again.

Before a trial could decide the issue, the two sides worked out an agreement, which, in an odd way, will indirectly cost the hospital.

But since the county withdrew the claim in negotiations, the hospital won.

Get it?

It’s really not as complicated as it sounds, thanks to the annual tobacco settlement which results in annual stipends similar to this year’s $472,000 check from the state.

Thanks to a “gentleman’s agreement” worked out years ago when Tommy Smith was the County Judge, the hospital has been getting about 90 percent of this money to help reduce its indigent healthcare costs.

It’s just a small amount of what ETMC pays, but 90 percent of $472,000 isn’t exactly chump change.

The 10 percent the county kept, on the other hand, was falling well short of meeting its annual indigent care costs.

As was quickly pointed out when the settlement was reached, the county could have been keeping all of this money all of these years if it chose to do so.

Not any more.

The “gentleman’s agreement” has been shelved in favor of a “contractural agreement.”

Here’s what the county must now do:

• Use part of the tobacco money to pay the indigent care costs it was trying to get the hospital to pick up.

• Once that’s accomplished, the rest of the money now has to be turned over to the hospital.

Bad deal for the county?

No way. The bad deal here is for the hospital.

In the past, the taxpayers of Henderson County have had to pick up the indigent health costs that the hospital didn’t.

Under the new agreement, the county will take all the money it needs — $162,000 last year — to pay its portion of the indigent care.

That’s fine with the hospital, because, remember, it’s not their money, anyway. The county probably should have been handling this problem this way all along.

Then again, “gentlemen’s agreements” can sometimes be stronger than contractural agreements.

But a person doesn’t have to think long about this to realize that the hospital will now be “shorted” by this proverbial $162,000 each year.

And if the hospital boys don’t get it, the money, not the concept — their own indigent health fund — will automatically be the same proverbial $162,000 less than what it would have been under the old “gentleman’s agreement.”

That’s probably fine with the hospital, which claims it spent $21 million on indigent care last year, anyway.

But we haven’t looked beneath the smoke and mirrors yet. When we do, we find that even though the hospital doesn’t have to pay those extra county indigent healthcare costs, they’ll be out the same amount of money it would have cost them, if they’d just gone ahead and paid it.

They may say the tobacco money isn’t their money anyway until they’re blue in the face. Still, without it, their annual costs for indigent care will forever be lowered by the amount of money they’re giving up.

It’s almost as if they’re telling the county boys to keep what would have become theirs and to use it to pay the disputed indigent care funds.

Got it?

The county’s paying, not the hospital.

Which brings us to Holstein and his Excel software doodling.

It’s already been reported by the press that by using solid economic factors, the $162,000 the taxpayers don’t have to pay any more will save them $800 million in the next 65 years.

Holstein was popping off at the time, but he still defends his estimate of county taxpayer savings as being logical and based on solid economic factors of our time.

Actually, his numbers, using 9.9 percent annual medical inflation, plus an anticipated five percent growth, comes out to $1.6 billion and change, not $800 million.

Why the “conservative” estimate? “Let’s just say I’m off by 50 percent,” he explained.

Sixty five years is a long time. Better give yourself a pretty good economic cushion.

Then too, Holstein Math can also be applied to the hospital.

After all, the same proverbial $162,000 that the taxpayers will save is the exact amount the hospital will be shorted each year.

Therefore, using the same economic factors and anticipated growth, in 65 years, this shortage will cost ETMC Athens $1.6 billion in tobacco settlement funds.

Or $800 million worth of tobacco settlement funds, if you want to factor in the county judge’s margin of error.

The hospital boys will probably call this kind of thinking “pie in the sky thinking.” Make that tobacco pie.

One other point. The settlement calls for both sides to pay their own attorney fees.

That’s what will happen, but not before the county is able to take advantage of a one-time tobacco stipend — this year’s stipend.

For this year only, the county will keep 60 percent of the tobacco funds and the hospital will only get 40 percent, i.e. 50 percent less than it would have received in the old days of gentlemanly behavior.

With the money, for this year only, the county will be able to pay its $162,000 indigent care costs, and have plenty left over in its 60 percent to pay for the legal costs absorbed in dealing with this suit.

Sounds almost like the hospital found a way to pay the county’s legal fees.

After this year, the county will only be able to take enough out of the check to pay those indigent healthcare costs.

The hospital gets the rest, but it probably won’t ever be 90 percent again.

So there you have it. In spite of it everything, the county-hospital dispute has disappeared.

Thanks to lawyers, everybody can say they won.

The hospital can go full speed ahead on its expansion plans.

The upstarts can try to get re-elected.

Or not.

And no one got bit by a chihuahua.

        

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