Late payments

Docs say Oroville Hospital owes them big bucks for employees’ insurance claims

CASHFLOW PROBLEMS <br>Robert Wentz, chief executive at Oroville Hospital, explains why the hospital owes local health care providers more than a million dollars and why hospital employees are often asked to pay cash for their own medical and dental treatment.

Robert Wentz, chief executive at Oroville Hospital, explains why the hospital owes local health care providers more than a million dollars and why hospital employees are often asked to pay cash for their own medical and dental treatment.

Photo by Tom Angel

Credit where credit is due: Oroville Hospital, a not-for-profit corporation, is run by OroHealth. According to accounting firm Dunn & Bradstreet, it lags an average of 54 days in paying its bills. The industry standard is about five days. OroHealth receives Dunn & Bradstreet’s worst possible credit rating and is reported to be late in paying its bills about 43 percent of the time.

What is going on at Oroville Hospital?

If you believe its administration, the hospital is a remarkable success story, fighting back from the brink of bankruptcy in the face of government and insurance company bureaucracies whose policies and practices have driven many a rural hospital out of business.

On the other hand, if you believe a host of local doctors, dentists and hospital staffers, Oroville Hospital is being run into the ground by an administration that refuses to fund its employees’ health and retirement benefits, ignores all criticism and spends more money than the hospital can make.

According to a dozen sources in the local health care community, the hospital’s administration has been stiffing medical practitioners out of insurance money owed to them for at least two and a half years now.

The hospital self-insures its non-union employees through its own Golden Valley benefits plan and thus is responsible for paying claims made by the doctors who treat those employees. In statements taken both on and off the record, local care providers accused the hospital’s chief administrator, Robert Wentz, of withholding payments. Many also said money that should have gone into an employee retirement fund had been diverted to pay other debts, although that claim could not be verified and is denied by Wentz.

Dr. William Abildgaard, a longtime Oroville dermatologist and self-described “thorn in the flesh” of Wentz’s administration, said he, for one, didn’t believe Wentz had deliberately done anything improper. He also said the quality of patient care at the hospital remained high. Nonetheless, he said, “There have been poor management decisions made at the hospital for more than four years,” resulting in a situation where “none of us physicians have been paid anything for hospital employees’ insurance since August, [and] the hospital has not funded its retirement fund for two years in a row.

“They owe money to every doctor in Oroville,” including himself, he continued. “The reputation of the hospital is besmirched by this. Everybody on the [hospital’s] executive board knows where I’m coming from. The hospital needs a new administration.”

Wentz said the hospital employs 1,200 people and accounts for a full quarter of the Oroville economy, making it simultaneously one of the region’s most vital and difficult-to-run businesses. Wentz also insists that the hospital is within nine months of paying off its debts. He blamed the criticism on a few malcontents and said the problems besieging Oroville Hospital are the same ones plaguing virtually every other rural hospital in the state—low state and federal reimbursement rates and failing contracts with health maintenance organizations (HMOs).

He also said that the employee health plan was being redrawn and that the hospital’s outdated computerized billing service was being upgraded, which should alleviate some of the hospital’s accounting problems.

But he doesn’t dispute that the hospital is behind on paying some of its bills.

“There are some people that aren’t getting paid as fast as they’d like to be, and they’re upset about that. [But] we’re also not getting paid by insurance companies, MediCal [and] Medicare.”

Wentz said the hospital was dealt a devastating blow in 1999 when it was forced to remove itself from a $6 million contract with the Pacificare HMO, a move it has been struggling to recover from ever since.

“It takes awhile to recover from [a loss of] $6 million,” he said. “I kind of think we’re doing a noble thing because we didn’t walk away from our suppliers. With all the hospitals going bankrupt and saying, ‘We can’t do it,’ here’s a hospital that’s rolling up its sleeves and doing it.”

Wentz credits his 14-year stewardship of the hospital with bringing in more patients, creating a medical laboratory that has become a source of income for the hospital, expanding patient services, and starting construction on a $10 million medical office complex that, among other things, will provide state-of-the-art treatments for cancer patients. That complex, he said, is being financed by doctors and private investors (Wentz himself put up about $40,000) without any hospital funding.

Furthermore, Wentz claimed to have reduced the hospital’s short-term debt to about $1.7 million (owed mostly to local doctors) and said the hospital’s long-term debt of about $26 million was a manageable sum. The capital-improvement projects he has taken on are an investment, he said, that will continue to bring in patients for years to come.

But critics charge that Wentz has funded those projects by raiding employee benefits and retirement plans. (Two different sources for this story spontaneously declared the situation to be the Oroville equivalent of the Enron fiasco.)

It is widely known around Oroville that non-union Oroville Hospital workers are routinely asked to pay in advance for their medical and dental care because most local doctors now refuse to take the hospital-administered Golden Valley benefits plan. This situation, which Wentz termed “regrettable,” leaves many hospital employees faced with the choice of paying cash for their medical expenses or simply putting off treatment indefinitely.

“We have had to prioritize our cash,” Wentz said. “Unfortunately, doctors’ payments took a lower priority. I wish more than anything we could pay this off all at once, but when you’re trying to dig out of a $6 million hole, you can’t do that.”

The hospital’s debt situation has driven at least three doctors completely out of Oroville, where they say it has become a struggle for health professionals to stay in business. One of those Golden Valley refugees is Chico doctor Whitney Dixon.

“It’s a lousy situation,” Dixon said. “There are [physicians’ groups] out a half-million or more. Lots of doctors are owed $50,000 or more. I pulled out because I saw the writing on the wall.”

Dixon, who lives in Oroville, said she was owed about $22,000 in Golden Valley reimbursements for work she performed over a period of about two years. She said she was paid about $15,000 when she threatened the hospital with legal action, but she has since given up hope of ever getting the rest. What’s more, some of the checks she did receive at that time were made out by the insurance company and backdated by up to eight months, bolstering other doctors’ claims that the hospital regularly receives payment for services but simply holds onto the checks instead of releasing them to their rightful owners.

Although many local health professionals confirmed that they were owed large sums of money by the hospital, only a few were willing to step forward and talk on the record about it because, in the words of one unnamed physician, “If I talk about it, I will never get my money.” That doctor claimed to be owed almost $50,000 and was said to be contemplating a lawsuit.

Wentz, who studied psychology in college and started his medical career counseling people in Southern California emergency rooms, insisted the hospital was only months away from gaining a secure financial footing. He questioned the motives of his critics and wondered why the media were even interested in the hospital at this point, saying it had completely ignored the Pacificare situation that he blames for the hospital’s present financial woes.

After guiding a recent hospital tour, Wentz said he was proud of the way he had managed the hospital and had nothing to hide, saying, “Oroville Hospital is golden compared to where we’ve been in the last three years.”

Waxing philosophical, he added, "We never know if the decisions we make are right or wrong when we make them. We just know if we made them for the right reasons. I think that’s what we have done here."