El Paso Children’s Hospital
4845 Alameda Ave.
El Paso, Texas 79905
915.242.8600
May 19, 2015 Dear Physicians, Nurses, & Staff, Today the El Paso Children’s Hospital (EPCH) has filed for protection under US bankruptcy law. I would like to explain why we made this difficult decision and why we believe this is actually positive news for the short-‐ and long-‐term viability of EPCH in the care we provide to our patients. First and foremost, this action will not affect your day-‐to-‐day livelihood at EPCH. By seeking protection of the bankruptcy court, EPCH will be able to restructure its debts and emerge as a stronger organization and therefore, a stronger workplace. There will be no change in the quality of healthcare you or your colleagues are able to provide at EPCH. We are confident that our patients and their families will continue to receive the best services and treatments, knowing that the function of our doctors and healthcare professionals will go unchanged. The reasons we took this action are complex and the details are complicated, but the result we hope to achieve is simple: maintain a true, independent, freestanding children’s hospital that is not under the direction and financial control of an acute care, adult, county hospital. Since its inception, University Medical Center’s inflated cost and oppressive approach has not worked for EPCH. As most of you will recall, we entered into mediation with University Medical Center (UMC) in March of this year in order to reach an agreement for a change of control that would align our mutual interests and resolve our debt and operational structure. Both parties left that mediation with agreed to terms and a deadline of April 30 to complete a final agreement and transaction. After April 30 came and went, UMC failed to agree to a definitive agreement consistent with the mediated terms. EPCH repeatedly told UMC that our new and final deadline, because of many financial and operational reasons, had to be May 15. Since that mediation, UMC unilaterally changed the terms and submitted a wildly different term sheet to us on May 13. The manner in which UMC has navigated the mediation process has been unproductive and not in the best interest of the EPCH. It is our obligation to the residents of El Paso County to protect the independent operation of EPCH and more importantly, our mission, which is to care for the critically ill children in this region. Moving forward we are planning to restructure EPCH. That includes restructuring debt, financial dealings, insurance, partnerships, and other components that have consistently hindered our ability to operate a sustainable children’s hospital. In a sense, we are now going to be able to hit the “reset” button and start from a solid foundation. As a dedicated CEO of EPCH, I will commit every effort to keep you informed of our restructuring progress. All lines of communication will remain open and we will be honest and transparent with the information we provide. From our perspective, we are now where we should have been just over three years ago: a starting point that will not have operational burdens, heavy financial reimbursement agreements, and management interference. It will not be easy, but I’m convinced we can restructure and emerge as a children’s hospital for which you will be proud. EPCH has accomplished so much in 3 ½ years since its opening on Valentine’s Day 2012. Our emergency room treats more than 200 children and admits more than 77 children each week to one of our specialty units. This is all due to your dedicated service to our hospital. Seven years ago, El Pasoans had a dream of their own children’s hospital. Today that dream is a reality and in need of financial restructuring. Thank you for your continued support and for all of your hard work every day. Sincerely, Mark Herbers Chief Executive Officer