Despite problems with a concrete contractor, the new hospital being built on Capital Hills won't face any more delays than it already has.
That was the report given to the Tehachapi Valley Healthcare District board of directors by Stacey Pray, the project manager for the new hospital.
Pray said that the hospital project expected slowdown when the healthcare district terminated its contract with Lewis C. Nelson (LCN), the principal concrete contractor. LCN's contract had been terminated after its work did not meet specific code requirements.
Santa Clarita Concrete was selected as a replacement contractor during a special board meeting on July 9.
"We already have Santa Clarita Concrete on site starting to work on the project," Pray said. She said she is not foreseeing any schedule changes for that.
The new hospital was expected to finish construction in the third quarter of 2015, and up and running in the first part of 2016. With construction delays, however, the completion date has been pushed to the first part of 2016 and would not open its doors until the third part of 2016.
Pray said that roadwork for the new hospital has progressed, with the Magellan Drive entrance complete and the Challenger Dive entrance 50 percent complete.
However, the project is showing a deficit, mostly due to the difference of costs between Santa Clarita Concrete and LCN.
According to Pray's report, the concrete contractor snafu extended the project by 66 days and had an overall direct impact of $1.2 million.
"We are hoping to get that money back from LCN, whether it's legal means or whatever else," Pray said.
Change of auditors
The healthcare district board, in a 4-0 vote, approved a contract with TCA Partners, LLP for an audit of the fiscal year 2013-2014 finances. Mike Nixon, the board president, was absent.
Director Sam Conklin said that TCA has been a reliable auditor in the past, having performed the district's audits for seven years, whereas it has had difficulty with Moss Adams, the auditor for the 2013 fiscal year audit.
Director Duane Moats concurred.
"We made the move from TCA to Moss Adams because we thought Moss Adams might have some additional insight," Moats said. "In essence, Moss Adams has been dragging their feet and has wound up costing us three times the normal audit fee."
Moats, who is a CPA, noted that typically an auditing firm simply verifies the numbers turned over by the district's management team, but that did not appear to be the case with Moss Adams.
"Moss Adams has taken it upon themselves to stand as judge and jury when it is our records," Moats said. "They have made recommendations and we have implemented some of those, but we can't continue to drag out month after month."
He said audit closures are essential for the healthcare district to obtain additional lines of credit if the money is needed, and to funds necessary for the hospital.
Discount drug program not viable
Eugene Suksi, the district's new interim chief executive officer, provided an update on a discount drug program during his report to the board.
While Tehachapi Hospital is registered as an eligible hospital under the 340B Drug Pricing Program, which offers prescriptions at a deeply discounted price, Suksi recommended against the hospital pursuit it.
The drug program is a Congress-created project in 1992, allowing eligible hospitals and healthcare organizations to purchase drugs at a discounted price. Tehachapi Hospital qualifies because it is a critical access care facility.
"The 340B program could add some incremental revenue but it would also add incremental costs," Suksi said. "It would be break even at best and might not even break even."
Suksi said he was not willing to "jump headlong into it until we have a better handle on it financially."
Chet Beedle, the district's chief financial officer, added that implementing a 340B program required certain logistics, especially when it came to finding the right intermediary.
"What we really don't want to do is and doesn't make sense financially is sign on with companies that say 'come along with us, we'll save you money," Beedle said. "What they do is take the money first, take their cut off the top and it doesn't really work out very well."