Press Release: ECRMC is Back in the Black

After five years of continuous financial setbacks, controversy, and restructuring, the El Centro Regional Medical Center sees a glimpse of hope as they experience a profitable fiscal year from July 30, 2023, to June 1, 2024.

City of El Centro Councilmember and ECRMC Board of Trustees Tomas Oliva believes there is hope for the hospital. “There is evidence of a revival at ECRMC,” said Oliva in a recent ECRMC press release.

In a recent interview with The Desert Review, ECRMC’s Chief Executive Officer Pablo Velez answered questions pertaining to the profitable year, the recent zero-interest loan of $28 million, ECRM’S debt, and his views about California’s recent trend in healthcare consolidation.

Velez explained about the different factors contributing to the profitable year and with the changes and adjustments the hospital made to cut costs and become profitable.

“Last year our staff worked very hard in terms of looking at our financial situation, and then making many improvements to ensure our financial stability,’ said Dr. Velez.

Dr. Velez explained that for the past 15 months, the hospital has undergone financial examination to understand the intricate details of the hospital’s expenses. He said that one of the actions the hospital took this past year was the “rightsizing” of the organization.

Rightsizing is a business term that refers to restructuring a company to increase efficiency and profitability. Rightsizing is a strategic and proactive process that businesses use to enhance results, and this is what ECRMC has been doing for the last year according to Dr. Velez.

He mentioned that a part of the rightsizing process was going back and looking into previously established contracts and other costs to reduce expenses.

“The staff looked at contracts and renegotiated contracts,” Velez said. “We looked at the supply chain, medication spending, and the amount of dollars spent outside the hospital.”

Despite last fiscal year’s success, Mr. Velez emphasized that his administration is searching for different ways to make the hospital more profitable. Overall, Mr. Velez believes that the efforts of his entire team laid a foundation to continue profitably into the future.

Another question that Dr. Velez tackled was about the recent $28 million, zero-interest loan from the State of California that ECRMC received as part of California’s $300 million disbursement to distressed hospitals initiative last year.

“When the distressed hospital loan was provided to the two hospitals down here [in Imperial Valley], we were required to outline how we were going to spend those dollars. I can tell you that we have utilized those dollars to complete the building that we're sitting in, which was part of becoming compliant with the latest earthquake regulation,” Dr. Velez said.

He added, “We built a state-of-the-art pharmacy that will be able to compound medications for the Imperial Valley community. We have also built a new sterile processing area, because the old processing area that we had was no longer fixable, and then we opened a new cafeteria with new nutrition services for our patients. That was part of bringing our hospital into compliance with the latest regulation.”

Transitioning the conversation over to the debt that ECRMC finds itself in, Dr. Velez was not shy about explaining the hospital’s financials. He stated that every hospital built before the 1970s is mandated by the state to be retrofitted to withstand major earthquakes.

“We have a debt for the bonds that we took on. So, that's a $123 Million,” he said. “We have paid two debts that we owe the state, and we're making a final payment in December of $5.6 million, and then we are going to pay back the $28 million.”

“So, we have debts, and we are paying our debts,” he continued. “We don't deny that, and we used those dollars to improve the infrastructure of our hospital and provide services to our community.”

The conversation shifted to the recent trend in California healthcare systems of consolidating care, in similar fashion to what has taken place here in the County.

“I think that the days of standalone hospitals are going to be obsolete. I mean, when you look at the cost of providing health care, it's very difficult for standalone hospitals [to survive]. When people hear the word consolidation, it's not always a bad thing. I think consolidation is bringing the resources that are available to make sure that we're providing better care to the patient population down here…so consolidation is a good thing.”