IRS filings offer clues about Children's Hospital finances

2011 and 2012 returns now filed

EL PASO, Texas - Recently filed tax returns reveal new information about the precarious financial situation at El Paso Children's Hospital.

The returns show the hospital posted an operating loss of $23 million dollars in the 2011 fiscal year and another $13 million in 2012.

The hospital was only open for about 7-1/2 months of the 2011 fiscal year. During that reporting period, its liabilities rose from about $38,000 to more than $55 million dollars.

 Children's Hospital reported spending more than $21 million on employee compensation and $49 million in other expenses in FY 2011 for a total of more than $70 million, but its revenue was just $47 million, for an operating loss of more than $23 million.

The picture improved significantly in Fiscal 2012 with no start-up costs account for. In its first full year of operation, Children's reported liabilities only grew an additional $10 million dollars, for a total of $65 million.

Employee compensation rose to more than $34 million, and other expenses grew to $69.5 million for a total of nearly 104 million in FY 2012. Revenues were $90.5 million. The operating loss was nearly cut in half, but still more than 13 million dollars.

Recently resigned Chief Executive Officer Larry Duncan was paid salary and bonuses of more than $380,000 both years.

A spokeswoman for the hospital declined to comment on these numbers, but the hospital's auditor attached notes to the returns expressing doubt about its ability to continue operations.

Moss Adams, the Albuquerque firm which audited Children's Hospital's financial statements, stated that the hospital's finances, and uncertain conditions regarding its debt to University Medical Center, "Raise substantial doubt about the hospital's ability to continue as a going concern."

The Moss Adams notes include details about the nature of Children's Hospital's debt to U.M.C.

At the end of the 2012 fiscal year, on September 30, 2013, the debt was $53million. It included $18.5 million in facility lease fees, more than $28 million in administrative services and about $7 million in other expenses including equipment leases and software, The debt has since grown to more than $65 million.

ABC-7 has been approached by members of the local medical community who allege the hospital's previous administration hired too many specialists and is paying them more than the market rate.

The station wanted to examine records to see if that's true, but Children's Hospital reiterated its position this week that it is not covered by Texas's Freedom of Information law.  ABC-7 reiterated its position that as the recipient of $120 million in taxpayer-financed start up funds, Children's Hospital meets the state's definition of a government entity, and should therefore comply with public information requests.

The station is now preparing a request for Attorney General Greg Abbott's assistance in gaining for the taxpayers of El Paso County details about the true financial condition of El Paso Children's Hospital.

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