Ventura County Grand Jury • 2019-2020

Financial Relationship between Ventura County Medical Center and the Ventura County General Fund

Published: April 02, 2020 22 pages
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Findings and Recommendations 32 findings

F01
Each county in the State is obligated to provide medical services to its citizens who cannot financially provide for their own medical care, or are incompetent to do so, and whose family, or a State or private hospital, is not doing so (Safety Net Population). (Ref-07)
No recommendations for this finding
F02
The Board has established an enterprise fund, known as the Ventura County Medical Center, to provide health care services.(Ref-08)
No recommendations for this finding
F03
The County delivers medical services to the Safety Net Population through the Medical Center which is composed of two hospitals and 28 clinics. The majority of the Medical Center’s patients are participants in Medi-Cal. (Ref-09)
No recommendations for this finding
F04
The State enterprise fund authorization statute defines an enterprise fund as a fund which accounts for services furnished to the general public and is financed primarily by charges for such services. Each board of supervisors is required to make available such amounts as are necessary to establish each enterprise fund and to maintain the fund’s financial viability. (Ref-10)
No recommendations for this finding
F05
The General Fund is used to account for all revenues and expenditures necessary to carry out basic governmental activities of the County that are not accounted for through other funds. (Ref-11, Ref-12) Financial Relationship Between the Medical Center 3 2019–2020 Ventura County Grand Jury Final Report
No recommendations for this finding
F06
The County is required to account for the Medical Center as an enterprise fund, separate from the General Fund. (Ref-13)
No recommendations for this finding
F07
Reciprocal interfund activity represents assets transferred between a county’s general fund and its enterprise funds with a requirement for repayment. Nonreciprocal interfund activity represents assets transferred between a county’s general fund and its enterprise funds without a requirement for repayment. (Ref-14)
No recommendations for this finding
F08
The CAFR does not characterize these interfund transfers as either reciprocal or nonreciprocal. (Ref-15)
No recommendations for this finding
F09
Periodically the General Fund provided, as required, interfund transfers to the Medical Center to meet its cash requirements. (Ref-01)
No recommendations for this finding
F10
The Board has not assessed interest on these interfund transfers, nor has there been any repayment schedule established. (Ref-01, Ref-02, Ref-03)
Related Recommendations (1)
R02
The Grand Jury recommends the Board not refer to the General Fund transfers to the Medical Center as “loans” rather than “advances.” (C-03, C-04, C-05)
F11
The Board, the Medical Center and the relevant County agencies have referred to these unreturned interfund transfers to the Medical Center as “loans.” (Ref-01, Ref-02, Ref-03)
Related Recommendations (1)
R02
The Grand Jury recommends the Board not refer to the General Fund transfers to the Medical Center as “loans” rather than “advances.” (C-03, C-04, C-05)
F12
The definition of “loan” in the Merriam Webster, Cambridge and Investopedia online dictionaries all provide that, as to money, it is something that is furnished to be returned with interest. (Ref-16, Ref-17, Ref-18)
Related Recommendations (1)
R02
The Grand Jury recommends the Board not refer to the General Fund transfers to the Medical Center as “loans” rather than “advances.” (C-03, C-04, C-05)
F13
The CAFR states that “[t]he General Fund extends long-term advances, when needed, for cash flow purposes, to funds outside the General Fund that receive funding on a reimbursement basis. Repayment is expected when available cash is in excess of that needed for operations.” (emphasis added) (Ref-19)
Related Recommendations (1)
R02
The Grand Jury recommends the Board not refer to the General Fund transfers to the Medical Center as “loans” rather than “advances.” (C-03, C-04, C-05)
F14
When the Medical Center had cash in excess of that needed for operations, the Medical Center has returned funds to the General Fund.(Ref-19) (Att-03)
No recommendations for this finding
F15
At Board meetings the outstanding balance of the funds provided by the General Fund to the Medical Center have been the subject of exchanges among Board members. (Ref-01, Ref-02, Ref-03)
No recommendations for this finding
F16
During the public comment session of a Board meeting, a speaker asked why unrepaid advances do not bear interest and why there is no repayment schedule. In raising that issue they asserted that “… no lending agency in the world would offer loans with those terms [no interest and no required repayment].” (Ref-01) 4 Financial Relationship Between the Medical Center 2019-2020 Ventura County Grand Jury Final Report
No recommendations for this finding
F17
On July 31, 2019 the Ventura County Star published an article reporting these discussions at the Board meeting and referred to the above quote. (Ref-04) Consistency In Financial Projections
No recommendations for this finding
F18
The Ventura County Health Care Agency (VCHCA) operates the Medical Center.(Ref-20)
No recommendations for this finding
F19
At the August 7, 2019 meeting of the Medical Center Oversight Committee, VCHCA reported it now estimated a $6 million profit. Earlier it had estimated a $19.2 million loss for the fiscal year ending June 30, 2019.
No recommendations for this finding
F20
After the above meeting, the Auditor-Controller’s Office said this projection included payments due from the State from prior years which have nothing to do with (financial) operations this last fiscal year. “I would venture to guess if you took out these one-time dollars, the hospital broke even or still had an operating loss.”
No recommendations for this finding
F21
On August 10, 2019 an article in the Ventura County Star published the above statements of both VCHCA and the Auditor-Controller’s Office. (Ref-21) There were no prior discussions between the Medical Center or VCHCA and the Auditor-Controller’s Office with respect to the financial projections referenced above.
No recommendations for this finding
F22
Board policies exist which require the review by or with the Auditor- Controller’s Office with respect to certain matters, including but not limited to: 1. Requests for an item to be placed on the Board agenda that has a fiscal impact (Ref-22) 2. Rates and fees to be charged for services by an enterprise fund in the budget process (Ref-23) 3. Revenue projections that will not meet budgeted sums (Ref-23)
No recommendations for this finding
F23
No written policy exists requiring an enterprise fund representative to involve the Auditor-Controller’s Office before making public statements as to the financial performance of that fund. Financial Relationship Between the Medical Center 5 2019–2020 Ventura County Grand Jury Final Report Efforts of the Medical Center to Collect Medi-Cal Incentive Program Funds
Related Recommendations (1)
R03
The Grand Jury recommends the Board adopt a written policy/procedure requiring an enterprise fund, such as the Medical Center, to consult with the Auditor-Controller’s Office before public disclosure of any projected financial information. (C-06) Responses Responses Required From: Ventura County Auditor-Controller (C-01, C-02, C-03, C-04, C-05, C-06) (R-01,
F24
Approximately 75% of the patients treated by the Medical Center are Medi-Cal patients.
No recommendations for this finding
F25
Medi-Cal does not fully compensate the Medical Center for the direct cost of services provided. (Ref-24)
No recommendations for this finding
F26
The Medical Center receives additional payments through various Medi-Cal incentive programs. While some of these Medi-Cal incentive programs make payments on a formula basis, others make payments from a pool of funds where a particular hospital’s entitlement is based on its comparative performance with respect to other participating public hospitals. (Ref-24)
No recommendations for this finding
F27
The Medical Center has submitted extensive paperwork in connection with its efforts to obtain payment under these Medi-Cal incentive programs.
No recommendations for this finding
F28
The final amount to be received by the Medical Center under those programs cannot be calculated or paid until all audits of public hospitals in the State have been completed and all appeals have been resolved.
No recommendations for this finding
F29
As of January 31, 2020 the sum calculated by the Medical Center to be paid to it by the State under the Medi-Cal incentive programs was $215 million. Some of these funds are due from as early as the end of the 2008 fiscal year. (Att-02)
No recommendations for this finding
F30
VCHCA has made numerous attempts to expedite payment from the State of the amounts to be paid to the Medical Center, including a meeting in Sacramento in an attempt to obtain a payment of at least $50 million. VCHCA received a letter from the California Department of Health Care Services that it expects some of the funds from these programs would be received by the end of fiscal year 2020. (Att-01)
No recommendations for this finding
F31
From June 30, 2014 to June 30, 2019, the amount of the advances from the General Fund to the Medical Center increased from $18.6 million to $125.5 million. At January 31, 2020, the outstanding balance was $117 million. (Ref-19, Ref-25) (Att-03)
No recommendations for this finding
F32
The Medical Center is a member of CAPH, comprised of the 26 California public hospitals and five University of California medical research hospitals. All are experiencing the same inability to obtain full payments due them from the State under these Medi-Cal incentive programs. Financial Relationship Between the Medical Center 2019-2020 Ventura County Grand Jury Final Report Conclusions C-01. The Grand Jury concluded the State’s lengthy process to make full payment of the amounts owed to the Medical Center under the Medi-Cal incentive programs has been the underlying factor in creating the need for advances from the General Fund. (FA-01, FA-02, FA-03, FA-04,
No recommendations for this finding

Conclusions 2

Commendations 4

Agency Responses 6

Government agencies' official responses to this report's findings and recommendations. Click on a response to see the structured breakdown.

No Responses Found 2

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Ventura County Auditor-Controller Elected County Office
Ventura County Board of Supervisors Elected County Office