(Look again) The Chet Beedle interview:CFO part of problem? Part one.

UPDATE: Cal Mtg. here's your man, Beedle, attacking any employees in 2006 who weren't backing Measure M, the bond, that was to be used to build an extension onto the hospital, and the depreciation monies were to be paid to the debt. The plans were faulty and now again, here we are after another GOB. Funny, from what I understand we didn't go after a GOB until KVHD got into the HIGH RISK revenue bond deal which has been in default for 24 years and now they have a management company trying to cut costs so we don't have to keep getting lines of credit from Cal Mtg. to move to operations where we pay off our bonds.)

"They push me, I push back harder." Chet Beedle, CFO, KVHD (regarding the employees, not Cal Mtg.)

It was June of 2006, the year KVHD was making its move to decide whether to put a general obligation bond, Measure M, on the ballot for November. It was also the year the skilled nursing facility struggled under short staffing and mismanagement, being tucked away while elections were being decided.

Chet Beedle recently announced at last week's finance meeting, that the reserve for the bond debt has been depleted and likely, come this August, more or the rest of the reserve will be used to pay the state, Cal Mtg., putting us, the district, at risk of being in default. Which could cause this state agency to come in and force a management company in to solve our problems for us.
Well, Cal Mtg. sent BRIM, never really left, they left Chet Beedle behind who came on as an official employee in 2003.

Here's a partial transcript from an interview in June of 2006, when the CFO, Beedle, was explaining the bond, the debt, the general obligation bond needed for Measure M.

The hospital had two months to get paperwork ready to put the measure on the ballot. And it would be hiring a new Director of Nursing for the Skilled Nursing facility, named Gwen Hughes, so the hospital could concentrate on its efforts to land this bond the community would pay for in property taxes.

The Revenue Bond is borrowed on future revenues

Laura: any idea whether retrofit versus expanding?
Chet: we don't know yet, its got to be taken into consideration, a new roof, or get into asbestos or those kinds of things.

(Beedle went on to explain the debt.)
Chet: If you just put it on the market (the hospital), you would have got six or seven million for the whole hospital. So, when you borrow 21 million dollars the basis for what you're going to do just isn't there and actaully after that they relatively lost money almost every year and up into the late 90's. Four million in one year. (he said it was caused by a capitated contract with BFMC but the story changed many times much like Ott's did.)

...so the hospital was very close in 1999 to actually make the board think they had to take bankruptcy because they couldn't pay the bills.

(Is that what we might be thinking right now, again, because of the nursing center, Sycamore management contract, legal matters, penalties, traveling nursing expenses, etc.? Are we back to that time. Is Cal Mtg. here yet? Are we ready to tackle our own investigations and not fall aside to outside state and local agencies who have not helped at all in the past?)

Chet: When you take out a 21 million dollar bond, a 21 million, one part of that bond is one years worth of pricinple and interest, you're supposed to borrow that money but put it in reserve just in case anything should happen...they didn't pay their bond payments in 1999 at all. So, all this revenue was used up and the state guarantees these bonds, and the state was relatively speaking, gonna, could have, taken the facility because they have the rights to the assets when they do this, this insurance guarantee. So, what the state did was make them hire a management company for a period of time.
(Chet said the original company the state recommended was "too expensive" so they sought out another. Hence, BRIM, management, and consultant Chet Beedle.)
Chet: So, they didn't specify what firm they needed to hire, so they decided to look at other firms and one of the firms was BRIM, and they decided on BRIM.
Laura: What did BRIM do to help the hospital. what exactly did you guys do?
Chet: Again, we put in the policies and procedures that BRIM had on the finance side, I basically got them working in productivity, I actually negotiated an agreement with BFMC, a long term pay out, or actually a reduction of half a million and then a payment of the amount that they owed. then I kind of worked on the long term debt of plan where we would make a lot of long term debt payments and satisfy the state that this was going to be okay.

Laura: what changed the debt?
Chet: What changed is actually the hospital in 2003,, actually for almost a year what happened, when the CEO that was here who decided to go elsewhere, Dave Green, Pam applied for the job. She was interim about, I want to say, four months or so and then the board decided to hire her as permanent CEO, she actually worked on the side of revenue, I was here day to day on the expense side or the cash purchases and recievables side, and just tried to do a better job of collections and a better job of how we paid our bills and how we managed our cash and a little bit at at time, it takes a long time.
(Chet said the hospital began to get better and he came on as CFO in 2003. And BRIM left in 2004. He left out the part about having to acquire these loans he said we don't qualify for, to pay costs)
Chet: The board agreed, BRIM left, we went forward and actually from about July 2004 and on we made money every month.

MEASURE M: THE GOB BOND ON THE FAST TRACK

Laura: You have to declare the amount right for the ballot prior to the measure going on the ballot?
Chet: You have to to know what percent, the amount that goes on the ballot has to be based upon what you're going to recieve, the answer is yes.
Laura: But you'd have to have this all in by August, which would mean July willl be a very long month.
Chet: Very definitely. I'm not sure that the declaration on the 6th of August I think it is has to state all of the specifics, you have just have to tell them that you're to go on the November ballot, the specifics maybe able to come later if you know what I'm saying.
Laura: And you'll need the specifics right away, you've worked with an architect so far?
Chet: We have an architect we have been using, for, we haven't done a lot with them, but yes, uhhu.
Laura: Is that the one with the Rural Health Design Network, with the Yarboroughs?
Chet: uhu, that's the one we've been using. However, when we get ready to go for the bid on the architectural drawings, for let's say we're going to do a new building, or partial building, okay? Because it's greater than 25 thousand we actually have to go out for a bid, that's by statute, we will go out to bid with various architects out there. You have to get bids in after going over 25 thousand dollars.
(Well, amazingly, the contract went to the same architect firm associated with RHDN. They did drag in two other bidders, but Mr. Jamison, Mr. Armstrong, and Barbara Casas all saw that they should stick with Aspen Street Architects. Sticky board members and sticky organizations. Considering the final product, the plans, were of no use, except to have the hospital pay to have them drawn, it was a waste.)

Why do we need a general obligation bond?

Chet: The hospital could not really go out and borrow more money, we've just been through this long story that they probably borrowed three times more than the hospital is worth and that they paid for, so the situation is, no one at this point would lend the hospital more money on the hospital, even though our financials are good, we still have that big amount of debt already out there and so the simple fact is the hospital cannot go and borrow any money on its own. the only alternative is if it's going to do something as far as a construction project, I, any, whether its retrofit, whether it's new, whether, it doesn't make any difference it has to go through a tax obligation because that's the only vehicle that creates new money into the organization, you can't borrow that money okay?Yeah, there's enough money to pay that outstanding debt even though its extra high from before, and there's enough money for us to make a profit and pay our bills, but there's not enough money to do construction. So, that's the only way it could happen.
Laura: So, as of right now, you're able to make those yearly payments on this revenue bond?
Chet: Oh, yeah, we've done it all along, actually ever since 1991 they've been making all those payments except for one year. (According the contract the monies paid are supposed to be made from the earnings from the project. Paying from loans, shorting staff, trying to build a building quickly so he can use the depreciation to pay Cal Mtg. is not something he was sharing back then)
Laura: As far as the SNF goes they started out with 150 beds and I'm sure they made projections on filling up 150 beds...
Chet: you bet.
Laura: So, when they got into trouble and couldn't build that many beds, that's where the real trouble started for the hospital?
Chet: That plus the fact, that even the structure itself that they did build they probably paid twice what they should have paid, because all of the changes, because of the resizing, so they really spent 21 million on a 13 million dollar building if you really want to hear what I'm saying.
Laura: Yeah, I do. (Where the hell were you OSHPD and CAL MTG.?)

(Beedle speculated that they would have been able to utilize the money from the new building for expenses, and retrieve monies from Medicare for the depreciation. There was a lot of hope that this bond would go through.)

(However, the hastily thrown together 12.5 million dollar figure that was supposedly with a two million dollar buffer, was admitted to having been too little money anyway. The hospital would have been forced to come back to the community on it's original plans for another bond. But in the end the whole conception was incorrect. The plans were unusable. Former KVHD Chairman, Brad Armstrong, vehemently denies any wrongdoing on the part of his board quorum to this day.)

Forcing the Issue

August 2006, the board proceeds to move forward on the bond, which has a tentative price tag, and faulty plans. At the same time, things are not going well in the SNF, staffing was cut, nurses worked while sick and burn out, but the bond was going to the community.

And when the employees complained that there were internal problems, the CFO, CEO, CNO, and human resources set out to show down with their own staff by supplying quotes and human resources documents.

In a separate audio interview coming up, Chet Beedle said, "They push me, I push back harder." (employees)

Next up: going for measure M, employee intimidation, the loss, internal investigation