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UMC, Children’s Hospital reach agreement on operating plan

In two releases sent minutes apart Wednesday evening, officials with University Medical Center (UMC) and El Paso Children’s Hospital (EPCH) confirm that both sides have agreed to the Joint Plan/Final Settlement agreement. The agreement now has to be filed with the Bankruptcy Court and the court must sign off on the agreement.

The proposal ends nearly nine months of on-again, off-again negotiations, dueling releases and lawsuits. Below are statements from both hospitals, in their entirety.

UMC Statement:

Today, University Medical Center of El Paso, El Paso County Commissioners Court, and El Paso Children’s Hospital, reached final agreement on a settlement and joint plan that will reshape the 3-year relationship between the two hospitals. The joint plan will now be filed, which will begin the process the hospitals hope will culminate in its acceptance by creditors and approval by U.S. Bankruptcy Court Judge Christopher Mott.  In reaching an agreement on a joint plan, UMC and EPCH ended 8-months of intense on and off again negotiations, contentious litigation, and several aborted efforts to reach an agreement.

The joint plan provides for EPCH to remain separately licensed, with a separate board and CEO. It also will facilitate the exchange of services between the hospitals and focus on maintaining and growing patient volumes. “This has been an extremely long road for all of us, especially for the people of El Paso,” said Steve DeGroat, UMC Board of Managers chair. “While there were many obstacles along the way, everyone stayed positive, hopeful that we could find a way to preserve and maintain the vision of a separate Children’s Hospital. With this joint plan, I believe we have accomplished that. Up until literally the very final moments, our legal and management teams were negotiating the terms of and working to finalize the joint plan. We’re ready to present it to the public.”

As part of the agreement now incorporated in the joint plan, UMC has deposited $7 million in the U.S. Bankruptcy Court registry to satisfy EPCH’s creditors, giving the hospital a boost of stability as it begins anew. UMC also suspended its efforts to file a separate plan with the Bankruptcy Court, while EPCH agreed to halt the lawsuits pending against UMC and El Paso First. Those lawsuits will be dismissed upon approval of the joint plan.

The joint plan and settlement, if confirmed by the Bankruptcy Court, should result in a much stronger and more financially stable EPCH upon its emergence from bankruptcy – targeted before year-end, with new, experienced management. The joint plan will be made publicly available after it is filed with the Bankruptcy Court. The Bankruptcy Court, at its most recent hearing, thanked EPCH, UMC, and El Paso County Court of Commissioners and their representatives involved in the process for their efforts to come together on a joint plan and encouraged everyone to continue to work to get the case “over the goal line.”
   

EPCH Statement:

Today, El Paso Children’s Hospital, University Medical Center of El Paso, and El Paso County Commissioners Court, reached a global resolution on a settlement and joint plan that will reshape the relationship between the two hospitals. The joint plan filed with the U.S. Bankruptcy Court will begin the process to culminate acceptance of the plan by EPCH’s creditors.

EPCH, UMC, and El Paso County Commissioners made significant progress in doing the right the thing for El Paso, the taxpayers, and our children. In reaching a global resolution on a joint plan, all parties found the common ground needed to settle differences fairly while keeping the best interests and well-being of the children in the forefront.  

“When we began this bankruptcy process, EPCH sought protection from the U.S. Bankruptcy Court to restructure its debts and emerge as a stronger organization.  We made a promise to our community, staff, physicians, and the families and patients that we serve, that there will be no change in the quality of healthcare provided at EPCH and that our Board is committed to maintaining a separate licensed children’s hospital.  EPCH has not wavered in this promise and has reached a resolution that will allow us to emerge as a children’s hospital for which you will be proud.

We knew this process wasn’t going to be easy and we are humbled by the continuous support we have received from our community, the patients and families we serve, as well as for the unwavering support from the local pediatricians who trust us to care for their patient.

The dream the voters approved became a reality when El Paso Children’s Hospital opened.  Today, that dream remains alive and full of hope for the region this hospital serves. We know that there would have to be compromise from everyone if there ever was going to be a global resolution. We realized we were close, and it did not take long for our legal teams to work to get us where we are today.  With this plan, our hospitals will work much more closely together, while making the best use of our resources, and keeping intact a separately-licensed hospital that continues to provide excellent pediatric healthcare to the critically-ill and injured children of our region”, stated EPCH CEO Mark Herbers.

The joint plan and settlement, if confirmed by the U.S. Bankruptcy Court, should result in a much stronger and more financially stable EPCH upon its emergence from bankruptcy – targeted before year-end.  The joint plan provides for EPCH to remain separately licensed, with a separate board and CEO, and allows El Paso County Commissioners to approve any increases or decreases in EPCH services, and pays EPCH’s creditors in full.  It also will facilitate the exchange of services between the hospitals and focus on maintaining and growing patient volumes.

As part of the agreement now incorporated in the joint plan, UMC has deposited $7 million in the U.S. Bankruptcy Court registry to fund payments to EPCH’s creditors, giving the hospital a boost of stability as it begins anew. UMC also suspended its efforts to file a separate plan with the Bankruptcy Court, while EPCH agreed to halt the lawsuits pending against UMC and El Paso First. Those lawsuits will be dismissed upon approval of the joint plan.

The joint plan is publicly available with the Bankruptcy Court.

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