Suzette Prue, who resigned last year from the John C. Fremont Healthcare Board of Directors, was back last week, and she delivered a fairly ominous message.
“I am sounding the alarm again,” said Prue, who has repeatedly warned the board about the hospital’s precarious finances.
“Consider this a five alarm fire,” she said.
The financial numbers released last week are not in dispute, and it appears some alarm is warranted.
JCF has only $6.9 million in unrestricted cash on hand, but it’s burning through that cash at an accelerating rate. The hospital lost $2 million between February and March.
“At your current cash burn rate, you will be broke in three months,” Prue warned.
Prue said $7.9 million in payments this fiscal year from the IRS for the Employee Retention Credit were making the financial picture appear more palatable.
“Without that IRS money you would have closed the doors. And even now you appear to be headed toward bankruptcy or closure,” Prue said.
Prue spoke during a public comment portion of the board’s April 22 meeting.
The board directors and hospital executive staff did not address Prue’s comments during the meeting.
The board had few probing questions about the hospital’s finances during the financial presentation from CEO Stacey
Kuzak.
In the last nine months, JCF generated a $5.7 million loss. Revenue is $1.3 million below the prior year during this period.
JCF continues to be hampered by declining and delayed reimbursements from private insurers as well as Medicaid and MediCal.
Kuzak, who has held the top job for five months, has discovered billing cycle problems, such as mismatched identification numbers, that has led to claim denials leaving millions on the table.
In a request for comment about Prue’s alarming predictions, hospital spokesperson Zach Peckinpah said in an email, “We understand the concerns raised during the meeting and take them seriously.”
“Leadership and the board are actively evaluating underlying drivers and implementing corrective actions to strengthen operations and support long-term sustainability. We are committed to transparency and will continue to share updates as they are available,” Peckinpah said.
Kuzak has mentioned there may be some positive news on the horizon for the hospital. If so, it can’t come soon enough.
Since Prue’s resignation from the board last September, after a clash with board members and former CEO Fred Vitello, she has continued to follow board meetings remotely and in person.
Last year, board members would roll their eyes when she spoke.
No one is doing that now. And that may be the biggest tell that this time is different.
“You need action and very large cash collections during the next several months to keep from closing,” Prue said.
As if her warning wasn’t severe enough, she suggested that the directors could be on the hook as individuals.
“When you go home tonight research the word misfeasance and your legal liability. And remember your D&O coverage is limited.”
Misfeasance is the unintentional mishandling of a duty, unlike malfeasance which involves intentional harm.
D&O coverage, shorthand for directors and officers liability insurance, protects the personal assets of corporate directors and officers in the event they are sued as individuals.
Prue’s message was clear. Board members could theoretically be held individually responsible for not fulfilling their fiduciary duties.
What happened next, may or may not have been coincidental.
After the financial presentation, Wendy Ryder-Priola announced she is stepping down as chair of the Board of Directors after three years. By the weekend, Ryder-Priola said she was leaving the board altogether.
Rose Fluharty will be the new chair of the board.
Director Craig Burchfiel tendered his resignation from the board on Monday as well. Burchfiel was appointed to the board six months ago.
(See related story about the resignations on the front page.)
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