1995 Washoe Med Grand Jury commentary
|"Washoe Med: This community has been snookered!"|
From a Reno Gazette-Journal contributed editorial
Med: Get rich quick at no money down
pirates go pop-eyed over Washoe Med
was necessary to destroy the workers to save them
Med: Ali Baba & the 40 Thieves fined $81,000
Med for the Nevada Con Job Hall of Fame
150: Profiting at taxpayer expense
Washoe Med: Get rich quick at no money down
Daily Sparks Tribune 11-5-1995
The Washoe County Grand Jury report on the giveaway of Washoe Medical Center provides provocative reading. Alas and alack, the grand jurors have caved to the idea that nothing can be done to reverse one of the top five ripoffs in Nevada history. I disagree, as you will see in a future installment of this series.
The grand jury decided not to request a complete audit because "the discovery of excess profits, unrelated business income or retained earnings by Washoe Med would not trigger the reversion clause" which would give the hospital back to its rightful owners, the taxpayers.
"The people of Washoe County were promised reduced patient costs, more efficient and effective health care delivery and deliverance from the financial doom that was predicted," the Grand Jury stated. The most effective cons are those driven by a true or false sense of urgency. There never was a crisis, the hospital was always profitable. The promise to reduce costs was the unkindest con of all.
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No one will ever know for sure, but I think I know where the idea to swindle local taxpayers out of their hospital was hatched. I think some insomniac executive weasel, watching a wee-hours TV show, bought a course on how to get rich in real estate with no money down.
He learned that you must create a sense of urgency and push for a quick sale before the sucker...er...seller has time to fully consider matters. The hospital con was accomplished in just about the same amount of time it's currently taking Gingrich and the Gougers to wreak their havoc on the un-rich, and with about as much darkness surrounding the usual devils in the details.
"Little or no effort was expended by Washoe County to ascertain the will of the public," the Grand Jury says. "The only real public hearing on the question of the transfer took place...essentially after it was already a 'done deal'...and there was virtually no possibility of rejecting the plan."
Grand Jury recommendation No. 1: "in the future, before consideration is given to conveying a major county asset or privatizing a major governmental function, the pulse of the public should be taken first."
With all the current talk of cost-cutting, privatization and consolidation of services, that's damned good advice.
When Ali Baba and the 40 Thieves went before the 1985 Legislature to weave their tangled webs of lies, Assemblywoman Joan Lambert (R-Reno) twice asked why anyone would want to take over a hospital in such financial jeopardy.
Washoe Med execs never answered.
After the health system's giveaway, U.S. taxpayer subsidies were used to further the scam. Washoe County taxpayers have by now paid four or five different times for the same health care system.
Because it was acquired in a no money down transaction where substantial free equity could be borrowed against, its capacity as a money machine should come as no surprise. At $8,272 per body, dead or alive, Washoe Med generates the highest net revenue per patient admission in the state. Worse, according to recently published state figures, Washoe Med's $773 profit per admission dwarfs the puny $12 earned by St. Mary's Regional Medical Center.
The Grand Jury's second recommendation involves changing the 1969 state law which still allows a hospital to be transferred for "book" value (original cost less depreciation and debts) rather than actual market pricing. The intent of the 1969 law was to enable a strapped county to find a buyer for a financially ailing hospital. Hence, the need for Ali Baba and the 40 Thieves to create the illusion that a financial crisis was just around the corner. Washoe and Carson air pollution reached all time highs because of all the blue smoke and mirrors.
On paper, the new non-profit corporation acquired Washoe Med and its substantial assets for $12 million, far less than actual 1985 market value of $53.7 million to $134.2 million. All for no money down. The acquired assets included a bank balance of $9 million. So the actual price was about $3 million, representing a discount of as much as 98 cents on the dollar.
The Grand Jury says the new pirate ship also assumed "$26.2 million in hospital debt previously funded by Washoe County through General Obligation Bonds." (In a letter to the Tribune general manager earlier this year, Washoe Med CEO Robert B. Burn puts the debt figure at $24 million.)
The Grand Jury added that "economic development revenue bonds (with tax exempt interest) were subsequently issued by Washoe Medical Center, Inc., to liquidate the existing debt and later to secure funding for system expansion and capital improvements to the non-profit portions of the Washoe Health System."
Cutting through the creative accounting, the debt was really not an issue at all, just more blue smoke. It served to make the hospital's financial condition seem worse than it really was. The debt further reduced the already artificially low on-paper purchase price. In fact, the no money down real estate deal included both a brimming bank account and plenty of free equity for additional financing of an always-profitable business.
Any debt moneys spent to improve the hospital's physical plant before the giveaway could easily have appreciated by the time of the sale or when appraised after the transfer. The whole is greater than the sum of its parts when you appraise a profitable, ongoing business. An enterprise running in the black is worth a multiple of its profits or cash flow, not merely a fraction thereof.
The debt was never analyzed in terms of adding to the true equity inherent in assets acquired at an obscenely low price. The pirates successfully created the idea that they were picking up a sinking hulk for salvage value at the sunk-cost scrapyard.
Adding insult to injury, the bandidos refinanced the old debt and acquired more with an attractive subsidy from the U.S. Treasury. Anyone purchasing new Washoe Med bonds paid no income tax on the interest.
How much borrowing power could be leveraged from the freebie equity Ali Baba and the boys got? "WHS carries an approximate $120 million in debt currently," the Grand Jury states.
Under oath, "WHS executives estimated the benefit to WHS from its tax-exempt status at approximately $9 million annually. No corporate executive, however, could identify that a given percentage of WHS income has ever been allocated to actually reducing patient costs, although all speculate that health care costs have risen less quickly since the transfer than they would have otherwise. It is clear to the Grand Jury that WHS's mission since the transfer in 1985 has been to utilize its tax-exempt status to accumulate and shelter great earnings and allow them be poured back into various aspects of the WHS conglomerate being developed, rather than any concentration on reducing patient care costs as was represented to the public and the Nevada Legislature in 1985.
"WHS executives said they plan the system's future by conducting image surveys and physician and patient satisfaction surveys. Such surveys would necessarily be limited, however, and answering individuals do not have the benefit of the comprehensive overall examination this Grand Jury has conducted. WHS executives testified that they thought it would be short-sighted for the Health System to focus on reducing direct patient costs, as opposed to providing a growing array of health care resources. Yet that is what was promised to the taxpayers when Washoe County's largest asset was sold," the Grand Jury concluded.
According to the Grand Jury, Ali Baba and the 40 Thieves have pretty much done the same thing for which conservatives always blast governmental bureaucracy: empire building, self-service rather than public service.
The Grand Jury's recommendation in this area rings very flat, because there seems to be no way to make the dastards remedy matters: "Washoe Health System could deliver on its promises to the public by reassessing its goals and redirecting its planning to include positive and definitive steps that directly reduce patient health care costs in areas where that is possible."
On a letterhead reading "Washoe Health System, It starts from the heart," CEO Robert B. Burn wrote to the general manager of this newspaper protesting some of my comments earlier this year. He stated that "in accordance with the transfer agreement and with Nevada state law, Washoe Medical Center continues to exceed its legal and ethical obligation to care for indigent patients."
Nothing could be further from the truth.
To promote the giveaway, the pirates created the false fear that Washoe County would go broke paying for indigent care. The Grand Jury report states "numerous Nevada statutes make Washoe County government responsible for the health care, or emergency care, of individuals who cannot afford to pay for it. One of the greatest concerns expressed to the Grand Jury was the commitment of Washoe Medical Center, and thereafter Washoe Health System, to continue in its previous indigent care obligation to the citizens of Washoe County.
"During legislative hearings on the transfer amendments, and in public statements in the media, hospital representatives constantly assured the public that no change would take place. Nevada Revised Statutes 450.500 specifically requires that the buyer of a county hospital must contract with the county to continue in that indigent care obligation and to charge the county at a cost 'that does not exceed actual cost of providing such care'...the hospital's own 1984 Feasibility Study predicted over a $1 million annual loss of hospital revenues if it had to charge the county under that formula. The Grand Jury has discovered, however, that it did not happen that way at all.
"Because hospital proponents recognized the significance of this development, they were able to get Washoe County to agree to re-define 'actual costs' from a common sense, statutory meaning to a new interpretation based on 'percentages of billing charges.' This essentially had the effect of maintaining the billing methods at pre-transfer rates...not only did the hospital not lose any money for indigent care, it has continued to increase almost yearly in the amount it recoups from Washoe County," the Grand Jury states.
The Grand Jury notes that a people's champion did emerge, but was soon squashed. "I remember screaming at those guys, saying 'you're trying to screw us over,'" says former Washoe County deputy district attorney Bill Baker, adding that the process was "pretty bitter."
His boss, now-Justice Court Judge Ed Dannan, pulled Baker off the case. Baker regrets his hardassed attitude, adding that had he kept his cool and stayed on the case, he might have won a better deal for the taxpayers.
Dannan makes no apology, telling the Reno Gazette-Journal "it was not the attorneys' position to argue the dollars and cents, that was the accountants' job. Our job was to draft the agreements, not to argue on the phone."
I couldn't disagree more. Mssrs. Dannan and Baker are lawyers, advocates. Their clients were us. Mr. Baker kicked butt, but Mr. Dannan caved in. We are all much poorer for Dannan's participation.
The Grand Jury report states "one deputy district attorney tried to push WMC to negotiate indigent payment rates more favorable to Washoe County, and in so doing, he offended the hospital's negotiator so was pulled off the assignment. Thereafter, the Assistant District Attorney for the Civil Division himself participated in the remaining negotiations and approved Washoe Med's redefinition of the billing method. Washoe County thereby lost whatever financial benefit it stood to gain from the transfer in the area of indigent care."
The con was complete when Dannan dove into the tank.
"The Grand Jury concludes that in 1985, County financial and legal staff were not diligent in discovering the predicted county savings on indigent care payments identified in the Feasibility Study. By agreeing to diverge from the 'actual cost' method stated in the law, Washoe County enabled the hospital to avoid its $1 million annual decrease in indigent care revenues and that savings was lost to the taxpayers."
Worse, the Grand Jury notes that in several years after the takeover, the corrupt commission intentionally overpaid Washoe Med for indigent care, but not other area hospitals. Some members of the commission at the time were receiving fat fees to attend Washoe Med meetings. Commissioner Diane Cornwall even ended up taking a highly paid executive position at the hospital years before she left office.
The commission even went against its own legal advice in overpaying Washoe Med.
"The State (of Nevada) considers it tantamount to the county paying for indigent care it otherwise need not pay for."
Other local hospitals were not so treated, a travesty which state officials consider quite improper. The Grand Jury further reported that Washoe gets its indigent care money upfront, but other hospitals have to wait to get paid. The Grand Jury recommended that St. Mary's and Northern Nevada Medical Center in Sparks receive treatment equal to Ali Baba and the boys.
READ MORE ABOUT IT, CHEAP: Office Depot on Plumb Lane next to Price/Costco continues to sell Washoe Med Grand Jury reports like beer at a UNR game. You can get one of your own for just $2.21 plus sales tax. (That's a lot better than paying $44 down at the courthouse.) I suggest you call ahead in case the good people at Office Depot need to run another batch. Dial 829-2582, ring to the business services department, and request a copy from the "Barbano Make-Ready" file. You'll need one as we move from the autopsy to the action phase of this outrage.
Raise hell and be well.
Blackbeard's pirates go pop-eyed over Washoe Med
Daily Sparks Tribune 10-29-1995
The recently issued grand jury report on the giveaway of the county's biggest asset to Blackbeard and his buccaneers will blow you down and make you pop-eyed.
A decade ago, Washoe Medical Center properly served the public as a profitable county hospital. It has now become "a virtual spider web of entities far broader in scope and complexity than what is usually portrayed to the public through annual reports and community meetings," the grand jury states.
Washoe Health System, keeping its profitable peas under many shells, "purposefully represents itself to the public as less of a corporate giant than it actually is, perhaps to distract the public from appreciating that magnitude of the system," said the grand jury.
In order to properly appreciate the grand jury report, you need to know how we got here. I can think of no better vehicle than the actual words of the pirates themselves, smoking guns, bad breath and all.
"What we're really saying is that health care is a business," stated newly hired Washoe Med CEO James Lamb in 1983. Washoe Med trustees added that Lamb was hired "to lead the hospital into the world of corporate model health care...in the hope that what he did in Chattanooga he can do in Reno and more."
Boy, did he ever.
Lamb's outfit talked out of both sides of its institutional mouth, but Washoe County commissioners let it slide. The commissioners were part of the action.
"If Washoe Medical Center continues to do business as usual, it could be out of business by 1987," said a Washoe Med consultant in March of 1984. "If you don't do anything, you're looking at a slow death," another Washoe Med minion uttered for public consumption in late November of that same year. But just ten days later, the hospital announced "a pretty healthy financial picture."
The Reno newspaper blared "Washoe Med in the pink financially."
Who's on first?
Blackbeard and the pirates went to the 1985 legislature for minor legislation to set up their scam. At a March 1 hearing, Assemblyman James McGaughey (R-Las Vegas) "asked where the concept for the proposal (to privatize the hospital) came from," according to legislative records.
"(Washoe Med lawyer Thomas) Collins said it began when lawyers got involved in trying to figure out how to beat the regulatory system requiring hospitals to obtain certificates of need to buy, for example, a scanner."
Certificates of need were cost controls once administered by the long-defunct Greater Nevada Health Systems Agency. In the early 1980s, its board turned down the original application to build Sparks Family Hospital, now Northern Nevada Medical Center.
Nevada human resources director Ralph diSibio, under heavy political pressure from Gov. Robert List's campaign contributors, over-ruled his own GNHSA board, granted Sparks Family's certificate, then promptly resigned and headed for the state line.
The under-utilized hospital has always operated in rough financial waters because there was not enough business to be had in this small area. Competition can be counter-productive in the health care game. Under-utilized hospital capacity, given the huge fixed costs, drives prices in the entire market ever upward. That's why power and phone companies operate as regulated monopolies. The recent closure of the Sparks hospital's world class birthing center is another symptom of a long malaise at a facility which should never have been built in the first place.
Washoe Med was given away to pirate...er...private enterprise in 1985. On November 30, this exchange ran in the Reno Gazette-Journal: "Washoe Med's chief financial officer, Roy Robbins, said the ($12 million purchase) price is based on a $35.6 million book value of the hospital building and equipment and $3 million in bond reserves. Subtracted from that are hospital debts.
"But Orland T. Outland of Reno said the hospital should be sold at fair market value instead. 'You're going to sell it for $12 million at $1 million a year that has got to be the bargain of the century,'" Outland said.
The statute allowing sale for book value rather than actual market value had been placed on the books at the request of Clark County in 1969. Washoe Med minions praised the 1969 law as "thoughtfully done" and "very perceptive in setting up procedures and policies by which counties would be protected if they chose to (privatize their hospitals)." They asked for no changes in that provision. Of course not. It allowed a corrupt commission to give the store away.
Down at the ledge, Washoe Med lawyer Tom Collins toasted the wonders of competition. Privatization, deregulation and untying the hands of business were all Reagan-era buzzwords which Collins burped like cheap champagne.
He also bewailed the need for public entities to do their business in public, whereas a private outfit could do things behind closed doors, just like Exxon and Dow Chemical.
Outland, a former GNHSA board member, was highly critical. He disagreed with closing hospital board meetings, which would be allowed under privatization.
"How can you have accountability on one hand if you are going to conceal something on the other?" he asked.
Legislative records note that Washoe Med executive Robert Cox told lawmakers "that any profit flows back to the public by way of stabilizing or lowering health care costs and assuring care of indigents."
This statement has proven overwhelmingly false. Monopoly pricing was the true goal.
"In answer to a question from Assemblyman Marvin Sedway (D-Las Vegas), Mr. Cox explained that competition in the hospital industry is such that it is necessary to form certain alliances in order to be competitive, i.e., a joint venture which would assure that physicians involved would place their patients in the hospital. He said that this kind of arrangement is not allowed under the law as it stands now."
The late Dr. Sedway, never one to pull punches, said such alliances smacked of kickbacks. He was, of course, correct.
Assemblyman Bob Craddock (D-Las Vegas) proved psychic when he warned that the new private holding company would have a choice "as to whether to use any excess funds to start up new ventures or to return it to the hospital by way of capital improvements or reduced operating expenses."
Perhaps the most incisive questions of the abbreviated 1985 debate came from Assemblyman Lou Bergevin (R-Gardnerville). Washoe Med execs went to the ledge only to secure approval of a community-based board which would purportedly oversee the new private entity. Bergevin wanted to know who would sit on such a board and "are there any safeguards against a small clique taking over?" according to official records.
Alas, the answer to the last seems to be not only no, but hell no. The grand jury called illegal Washoe Med's conduct in living up to the statute it requested.
The pirate ship got launched.
"As the buildings go up, so do patient costs," stated a 1989 Reno Gazette-Journal headline. "Has the community been snookered at Washoe Med?" asked a followup 1989 editorial, adding "it sure does look as if the hospital that couldn't survive without becoming an empire is now supporting that empire...bills have increased nearly 80 percent in four years, compared to an already horrendous 50 percent rise nationwide," the Reno editors wrote.
The Gazette-Journal devoted a lot of ink to the 1985 giveaway, pointing out that the sales price was seriously undervalued.
"In general, hospitals are selling for $100,000 to $250,000 a bed," an Arizona hospital administrator told the Reno paper in late 1985. This would place the actual market value of Washoe Med at between $53.7 and $134.2 million.
In a remarkable demonstration of doublespeak, Washoe Med financial guru Roy Robbins said "if we sell the hospital for fair market value, somebody's got to pay for the additional cost. It would be charged back to the community in additional rate increases. Essentially, you would have people in the community paying for the hospital twice."
It was necessary to destroy the county hospital in order to save it.
So the Washoe County Commission gave the hospital away at far below fair market value. The pirates then jacked up their prices, so the public has paid a third time every day since.
"State authorities want to know why patient costs are increasing rapidly at Washoe Medical Center while some of the state's other large hospitals have been able to hold them fairly constant or even bring them down." (Gazette-Journal, 1989)
"Sen. Don Mello (D-Sparks), said patient bills are subsidizing a web of financial transactions that a make a profit for hospital officials."
"In recent months, health cost regulators and state lawmakers have raised allegations that Washoe Med...may have raised patient fees to pay off millions of dollars in debt. Assembly Ways and Means Chairman Marvin Sedway said Nov. 2 (1989) the hospital is the state's most expensive."
In January, 1990, state human resources director Jerry Griepentrog "charged that about $2,000 of the average patient's bill goes into an acquisition fund."
Hoist the jolly roger, mateys. Rape and pillage, full speed ahead.
That's the historical background of the biggest Nevada ripoff this side of the Barrick Goldstrike Mine near Elko.
Next week, the grand jury report. See below for hell-raising aids.
BEATING THE SYSTEM: Information is power is time is money. Washoe Med was ripped off from the public by control of information in a compressed time frame. In other words, a squeeze play. They juiced the deal through in less than a year. Washoe Med execs controlled and shuffled the facts like cards in a streetcorner game of three-card monte. Whether or not anything could have made a difference with a pre-greased and corrupt county commission remains an open question.
The tradition of information control continues. Until last week, anyone wanting a copy of the 44-page Washoe Med grand jury report would have had to pay $44 at the courthouse.
I am pleased to report that Office Depot on Plumb Lane next to Price/Costco has been doing a brisk business in grand jury documents.
Roughly half a dozen people a day purchased copies last week. You can get one of your own for just $2.21 plus sales tax. I suggest you call ahead in case they need to run another batch. Dial 829-2582, ring the business services department, and request a copy from the "Barbano Make-Ready" file. Office Depot will make an honest profit, and you won't have to suffer the indignity of having to pay an exorbitant price to read how you were, and remain, robbed.
BEAT THE SYSTEM II: With Newt Gingrich, Barbara Vucanovich and Washoe Med all raping and pillaging the public on health care cost, what can we peasants do to fight back? Put the jockocracy to work, that's what.
A number of years ago, the Ault-Crowley administration at UNR shunted lots of money away from student health services to subsidize the college's minor league professional sports programs. Students did not riot, but they did picket in protest of new fees. Currently, if you take six units or more, you pay a mandatory $57 per semester for access to student health services. You cough up whether you use the service or not, regardless of any other insurance you might carry.
Students taking five units or less have the option of availing themselves of the student health service for the same $57 per semester plus a five-dollar fee per doctor visit. Therein lies opportunity.
Typically, casinos and other benevolent local employers will make you wait four to six months before you can even qualify to buy into some health plan. At the likes of local warehouses and Wal-Marts, you could easily labor permanently as a no-benefit part timer.
I suggest enrolling for one unit of education at UNR. It will cost you $61. Sign up for the history of rock 'n' roll. For another $57, you can avail yourself of the student health service. For just $118, you will have bargain health care coverage. At the same time, you will be boosting Wolf Pack sports, which caused the fee to be imposed in the first place.
Who knows, you might also be able to take advantage of discounted ball game tickets. Now that's a deal. Tell them you heard it from Barbano on the Barbwire, where beating up, beating on and just plain beating the system remains our favorite sport.
Be well. Raise hell.
It was necessary to destroy the workers to save them
Daily Sparks Tribune 3-19-1995
Should I live long enough to see Jay Milligan leave his posh job as boss of the Reno-Sparks Convention and Visitors Authority, I know where he will end up: Washoe Medical Center and its affiliated profitable peas hidden under various clandestine shells.
Jay the Inept is their kinda guy.
In last week's Barbwire, I broke the story of a wide range of new scandals concerning our former county hospital. The story was ably expanded last Thursday by Tribune reporter Kristin Storey. Apparently, the hospital's defense for failing to protect its workers from TB and Hepatitis B lies in its assertion of marching to a different drummer. Washoe Med says it worked under one federal standard while it was busted for violating another.
The fact is that hospital staffers were only provided with respirators after the state issued citations carrying $81,000 in fines for infractions committed in August.
"We wondered why all of a sudden we had to wear respirators starting in January," one employee told me. "Now we know."
The December 29, 1994, citations gave Washoe Med until January 30 to remedy the problem. I'm sure some lawyer told the boss that to put in respirators before a citation was issued would be an admission of wrongdoing, so dangerous employee exposure continued for six more months.
The hospital's bureaucratic defense was worthy of Milligan. He has survived more than a dozen years by always saying "gee, I thought we settled that," or "I was under the impression that (fill in the blank)."
Even if we can all have a good laugh at a hospital busted for nurses practicing medicine without a license, some serious facts are now on the record.
The joint was ripped off from Washoe County by a well-propagandized lie, that caring for poor patients would bankrupt the community. Washoe Med was always profitable and is now super-lucrative. It paid its CEO $261,438 in 1991, the most recent figures available. It took in more than $168,000,000 that same year. In the fiscal year ending June 30, 1992, it reported a net profit of $10.9 million on that level of revenue. Many hotel-casinos wish they could do as well.
Washoe Med's public-be-damned cynicism is further reflected in the fact that the state has charged it with willful failure to protect the health and safety of its workers. Even the less-serious allegations are scary.
"Where employees were exposed to injurious corrosive materials, suitable facilities for quick drenching or flushing of the eyes and body were not provided within the work area for immediate emergency use," one of the citations alleges.
Jay Milligan once allowed the Reno-Sparks Convention Center to illegally operate for 18 months without fire alarms, and still kept his job. Milligan and Washoe Med are made for each other.
WORKER PROTECTION, NEWT-STYLE. We, the great unwashed, should be thankful that Newt and his zootsuits are trying to help us by repealing nasty laws like the one requiring employers to pay overtime. In another spasm worthy of scalding coffee to the crotch, Rep. Dick Armey (R-Tex.) wants to give workers a bath by repealing the minimum wage law. Kinda the ultimate Big Mac Attack. Gingrich, Armey and the California monsoon should quickly make us quite competitive with the likes of Bangladesh.
Ah, but never let it be said that the Nevada legislature is not a major player when it comes to screwing over the little guy. A proposed "reform" to our on-the-job insurance system would "require that an employee file a written report of injury no later than the end of the work shift during which an industrial accident occurs, instead of the present 30 days." Hmmm.
Let's say you're working the high iron downtown. A passing crow knocks you over and only the lucky impalement of your leg by a sharp outcropping 30 feet down saves you from becoming buzzard lunch. Your broken and bleeding body is transported to Washoe Med where you undergo five hours of surgery which saves your life.
Are you covered by the Nevada State Industrial Insurance System? Sorry, Charlie. You didn't file the paperwork by the end of your shift.
I suppose you can come out of pocket for a $100,000 hospital bill, or Washoe Med can bill the taxpayers. Or maybe the hospital puts you out to collection and you have to take a second mortgage on your house. Can you pronounce bankruptcy? Should this particular proposal pass, every worker will need a secretary to facilitate the prompt filing of paperwork in case of injury.
I guess there's an upside. The reform will certainly create a lot of new jobs.
DON QUIXOTE IS ALIVE AND WELL, LIVING IN CARSON CITY. This Tuesday at 3:30 p.m., the Nevada State Assembly Committee on Labor and Management will hold a hearing on AB 260, Assemblyman Bob Price's biennial tilt at the gambling-industrial complex windmill.
When the Nevada Supreme Court legalized age discrimination in a 1989 case, it also ruled that a wrongfully terminated employee could not recover punitive damages from his former boss. Wrongful termination lawsuits are now almost non-existent in Nevada. All you can get is back pay and that won't even pay your lawyer.
For Price's trouble, the big boys mounted a monstrous effort to oust the North Las Vegas Democrat in the 1990 election. Gaming industry minions Jim Joyce, Richard Bunker and a cadre of hatchetmen went to work to oust him in the primary. Despite limitless opposition money, Price survived by 31 votes. His constituents found no good reason to fire him.
In 1991, the mild-mannered electrician introduced a bill requiring good cause for termination of employment. (Nevada is what's known as a fire-at-will state. Employers don't need a reason for canning you.) Price's idea is now up to bat for a third time. His goal is modest: a hearing before both houses. The bill has almost no chance of passage.
Nevada employers big and small should support it because it weakens unions. As the law stands today, without a personal services or union contract, Nevada workers enjoy only the right to not let the door hit them in their butts on the way to the unemployment office. Even in their heyday right after WWII, unions only represented about a third of the U.S. workforce, twice their share today. A bill such as AB 260 would grant some limited protections to 100% of employees and become an argument against the need for unionization.
Don't hold your breath awaiting industry support in room 321 at the Ledge this Tuesday afternoon.
LEGISLATIVE FRUIT LOOPS DEPT. Three or four different pieces of legislation are kicking around the Ledge which would finally give state workers the right to bargain as a group.
"State employees are the only workers in Nevada without collective bargaining rights," a union lobbyist preached to me last week.
"Wrong," said I, "state employees and prison inmates."
I gave him permission to steal the line for future legislative presentations.
Be well. Raise hell.
Washoe Med: Ali Baba & the 40 Thieves fined $81,000
Daily Sparks Tribune 3-12-1995
The Washoe Medical Center empire will fall. You and I just need to keep up the pressure on those scoundrels. I've been through several wars against renegade health care organizations. The only way such pirate ships ever shape up is when they have to defend themselves on many fronts.
Right now, our billion-dollar former county hospital, which was handed over to its current owners for 30 pieces of silver in 1985, has troubles to various degrees with the following:
Nevada Occupational Safety and Health Enforcement Section of the Dept. of Business and Industry. Late last year, this part of the Nevada Division of Industrial Relations found serious health and safety violations endangering hospital employees and ordered a levy of at least $81,000 in fines. (More on this next week.) I have been told that such citations must be reported to another outfit with which I have had intimate and acrimonious relations.
The Joint Commission on Accreditation of Health Care Organizations. This is the health care equivalent of the baseball commissioner's office or the motion picture rating administration, all industry-financed fronts that offer the robber barons political and regulatory cover while doing nothing to hurt profits. Professionals close to the investigation say JCAHO must review Washoe Med's accreditation when safety violations such as the above are documented.
"If I had known you wrote for a newspaper, I never would have returned this call," JCAHO investigator Carol Engle told me from Chicago. She immediately flipped me to a p.r. person who confirmed that Washoe Med was re-accredited by the outfit one year ago and is not due for evaluation again till 1997. However, unlike the past, JCAHO can now make unannounced visits. They're still smarting from critics like me who have chastised them for letting health care organizations know when they plan to show up. This results in a carefully staged dog and pony show for which I once hustled myself a ticket.
In 1982, back when it was called the Joint Commission on Accreditation of Hospitals, the Chicago-based outfit sent a guy to town to review the Nevada State Mental Health Institute in Sparks.
"JCAH is not an instrument of social change," a California health care professional had warned me. "They basically review paperwork."
I wanted to see the investigator to make him aware of some unsafe conditions for patients. He refused. No time. All booked up. Same old hustle. I had to threaten to sue to get an appointment. So, on an otherwise beautiful fall afternoon, I was admitted to an enclosed room at the institute and sat down with one Mr. Frank Mims. He immediately turned on his tape recorder and I fought fire with fire: I switched on mine.
I spent an hour imploring Mr. Mims to look into inadequate staffing which had led to patient injury and death. I especially asked him to cut short his paper shuffling and look into patient bathing procedures. In the past, I told him, patients had drowned or been cooked alive after having been left untended in bathtubs. I might as well have talked to a stone wall.
Three days after Mims left, another patient died, drowned in a bath tub. I looked like a sad psychic. JCAH immediately announced a re-opening of their accreditation proceedings.
What I learned in years of fighting such battles is that the institution can always outlast the advocates.
"We could never seem to get a handle on that place," former Assemblywomen Peggy Westall (D-Sparks) told me long ago. Mrs. Westall added that administrators always had the place re-organized between legislative sessions, so lawmakers were never able to compare apples with apples in the biennial rush to adjournment.
I find it highly ironic that just last Friday, Assemblywoman Jan Evans (D-Sparks) was defending another acrimonious re-organization at the same troubled mental health facility.
One thing stands out today: If the phony Joint Commission on Whitewashing Hospitals is even talking about serious action, something serious has happened and the shell game's in jeopardy.
The big boys have learned that you can smoke the legislature anytime you want. Meeting for only six months every two years, the Ledge has neither time nor staff to go into detail on anything.
It was just such a superficial review which led lawmakers to rubber stamp the transfer of Washoe Med into the hands of Ali Baba and the 40 Thieves. Dr. Robert Myles even admitted to a newspaper reporter at the time that he didn't want information in the hands of the public. The few health care activists who protested simply didn't have access to credible information to fight the giveaway of a huge, profitable asset, worth at the time as much as $134 million.
If you weren't here in 1985, you didn't bear witness to what has proven to be a carny show shuck-jive hustle. Washoe Med administrators put on a virtuoso propaganda campaign saying the county would soon go bankrupt paying for indigent care. Their solution: give the hospital away to a new private company formed by top hospital administrators. A corrupt and/or stupid Washoe County Commission publicly did the nasty on a 5-0 vote. Gene McDowall, Dick Ritter, Jim Lillard, Jim King and belly-up Belie Williams hung us out to dry based on a well-marketed lie.
Then, the new outfit went several steps further and started hiring commissioners. (And you thought Louisiana and Chicago follytix set standards for corruption.)
Eight-year commission veteran Diane Cornwall, whose only previous claim to fame came as an adversarial registrar of voters, was hired as a highly paid Washoe Med executive. Commissioner Gene McDowall, one of the original flaky five, was placed on unpaid but prestigious status on several subsidiaries.
McDowell and Cornwall were reportedly livid when the Nevada Ethics Commission told them to stop voting on Washoe Med issues.
While the Ethics Commission has all the whipping power of a wet noodle, Chairman Spike Wilson's writing packed a lot of sting. The brilliant lawyer and former 16-year state senator kept returning to one issue in his written opinion: the provision in the hospital giveaway contract calling for the county to be billed only at actual cost for indigent patient care.
Perhaps a good audit would prove contractual breach on that issue and serve as a knife to cut through one Gordian Knot of a deal. Plenty of other signs show that things are coming apart.
Washoe Med Employees. A few years after the transfer of title, Washoe Med delivery room nurses went public with complaints of understaffing and poor management resulting in danger to babies. Employee complaints of dangerous conditions led to the recent safety bust and the big fines. Employee unrest continues to this day.
The Washoe County Grand Jury. Although two of the most aggressive jurors have reportedly left for personal reasons, the denizens of the courthouse smell fresh blood.
A couple of weeks ago, I talked about Washoe Med's shell game, shifting costs from one shell and putting profitable peas under others. It's a game they learned from regulated utilities, which have long had a bad habit of using ratepayer money to fund deregulated, profit-making subsidiaries. Profits are not flowed back to the ratepayers, while as many costs as possible are hung against consumers.
Back in 1985, Washoe Med executives talked about flowing subsidiary profits back to the hospital to mitigate health care costs. Not surprisingly, a lot of that never made it into the final deal. Last year, I tried to call a lawyer who worked on the contract. I am still waiting for him to call back. Maybe he went to the same charm school as Carol Engle.
The Washoe County Commission, as of last November finally purged of the last of the flaky five, is showing renewed interest in looking into this old hornswaggle of a boondoggle. It's about time.
The Infernal Revenue Service. Rumbles in the dyspeptic, antiseptic jungle say the feds are giving Washoe Med a hard look for perhaps criminal as well as civil violations. At any rate, it's about time for a thorough audit of that shell game and the fearsome feds may be the only ones with the clout to do it. I have had reports that top hospital administrators are keeping routine financial data away from their own top-level, supposedly community-based board of directors.
Much more to come. Stay tuned and fax a friend.
Be well. Raise hell.
Washoe Med for the Nevada Con Job Hall of Fame
Daily Sparks Tribune 2-26-1995
Everybody knows the fight is fixed.
The poor get poor, the rich get rich.
That's how it goes.
Americans love con artists. Hucksters and shysters are our most beloved characters in both follytix and fiction. After all, devils are always much more interesting than angels. Nevada is a very interesting state because we exist as one big con job. A few years back, longtime Reno gambler Warren Nelson was asked the secret of success at enterprises such as his Cal-Neva casino.
"You've got to make people think they can get something for nothing," the honest gambler (no oxymoron intended) forthrightly and refreshingly replied. The old saying remains true, the only way to make money in a casino is to own one. No game at which the house might lose is allowed on the gaming floor. The small potatoes guys who think they can win get their pockets vacuumed. The publicity you see in the news about Megabucks winners is just bait. There will always be occasional, random, dumb luck winners. There will always be a few who can resist temptation and quit while ahead. Most can't, or won't, and don't. The con artists laugh all the way to the bank.
An environment saturated with cons breeds bigger bogus hustles spawned by guys in suits who think in Megabucks terms. Nevadans love to rail against stings after we've been stung, but grudgingly admire the enterprise of the perpetrators. One local casino was ripped off and driven close to bankruptcy while the owner lay seriously ill. He returned to a club ready to go under. His thieving underlings did him a "big favor" by taking it off his hands. Another group of con men were hired to manage a club by an aggrieved widow who couldn't run the store after her husband died. Guess who owns the whole place now? Admirable shysters, all.
Even out in the Cow Counties, Nevada is world class competitor in the rape and pillage Olympics. The foreign-owned Barrick Goldstrike mine near Carlin will take $10 billion or so out of U.S. ground, paying about $10,000 for the rights and a pittance in phony "net proceeds" taxes. A great con job, well-worthy of gold bricking into the Silver State Con Job Hall of Fame.
Here in Sparks and Reno, our entries are quite competitive. The Reno Redevelopment Agency has squandered many millions for many years trying without much success to un-uglify downtown.
The Reno-Sparks Convention and Visitors Authority has been mismanaged for more than a dozen years by former Sparks City Manager Jay Milligan. He's still there, royally screwing up, and will probably remain until he retires old and rich. World class shuck-jive and puppet show.
No discussion of the Nevada Con Job Hall of Fame is complete without honorable mention of the giveaway of Washoe Medical Center. However, Washoe Med may be the only inductee which can be ousted. There's a chance, a small one, that the con may be reversed, the sting un-stung, the bell un-rung.
Last week, Washoe District Judge Steve Kosach moved forward on a long-running grand jury investigation of the 1985 transfer of the county's hospital to a private corporation. I've read a big chunk of the documentation before the grand jury, and some justice may finally be done.
If you weren't here 10 years ago, here's a quick history lesson. A bunch of sharp guys, in control of the internal information needed to judge the truth, publicly made a case that Washoe Medical Center would go broke serving patients who could not pay. They took that shuck to the county commission and the state legislature. The hospital was then, and still is, quite profitable.
The current ownership got an asset worth at the time as much as $134.2 million for just $12 million. The day they took over, the hospital had $9 million in the bank. You go figure what the price really was.
Since that time, profits from the non-profit corporation have been siphoned off. Instead of reducing your health care costs and mine, the money has been poured into for-profit subsidiaries. They stole a gold mine and taxpayers are still paying for indigent care. Therein lies opportunity.
The grand jury is looking into whether or not the hospital is charging only actual cost for penniless patients. If not, the contract giving the hospital away may have been broken. Perhaps fraud has been committed. Perhaps the public can get its hospital back, or at least a little more control over that particular pirate ship.
Another potential loophole lies in the constitution of a board created to oversee both the transition and the new entity. Nevada law calls for its membership to be drawn from a broad base in the community. Notwithstanding the law, it appears to have been made up of insiders. The grand jury is reviewing an alphabet soup of interlocking, cross-pollinating, incestuous boards governing the various aspects of this now-huge enterprise.
The public was promised at least lip service to reduced costs by the new ownership. Instead, Washoe Med fees have skyrocketed out of all proportion to consumer prices or health care costs.
I wish the grand jury well in its investigation. In my three decades of Nevada muckraking, I have witnessed few worse breakdowns of government regulation (or lack of it) and abuse of the public trust. The county commissioners who promoted this con at the time were either corrupt or stupid. Some were both.
Then-assemblymen Len Nevin (D-Sparks) and the late Chuck Bourne (D-Reno) were among the few who questioned the deal. There was no organized public opposition because no regulatory body had purview and no citizen had access to inside information needed to torpedo the deal. Even if the information could have been liberated, no non-wealthy citizen could have mounted effective resistance.
Looking at high-paying jobs and a major piece of the action, Washoe Med executives retained high-priced experts to reinforce their own bogus point of view. The head of the dying Nevada Health Systems Agency took over as Washoe Med's chief operating officer. The hospital's own public statements at the time remain damning to this day. The grand jury has before it doomsday scenarios given simultaneously with rosy financial projections.
Other than its status as a billion-dollar ripoff, the Washoe Med deal achieves world-class distinction for a better, truly Nevadian reason: it was the most artful demonstration of hiding-in-plain-view ever perpetrated in these parts. Better than three-card monte on a New York City street corner or blackjack at the Cal-Neva.
Money for nothing and the kicks for free.
Be well. Raise hell.
NEW! Health Care War Room
First time online: Washoe County Grand Jury Report detailing the scandals and skullduggery which resulted in the theft of Reno's public hospital
AFL-CIO leader asks affiliates to pressure management
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Andrew Barbano is a 38-year Nevadan, editor of NevadaLabor.com and a member of Communications Workers of America Local 9413/AFL-CIO. As always, his opinions are strictly his own. Barbwire by Barbano has originated in the Daily Sparks (Nev.) Tribune since 1988.
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