Lawyers for the Brotman Medical Center were scheduled to appear in a federal court in downtown Los Angeles this morning to learn whether a judge has decided to accept their strategies for freeing the hospital from the constraints of one full year of bankruptcy.
Restoring official respectability feels close on the campus of Culver City’s hospital whose rescue formally began at the end of October of last year when Chief Executive Officer Stan Otake was hired with that express mission.
Month-by-month, he often has said, Brotman has grown increasingly stabilized.
Mr. Otake is not quite ready to exult. But he sounds optimistic that the long night of going broke is nearly over.
Meanwhile, he talked about feeling squeezed by the companies Brotman does business wirth, and unable to do much about it at the time.
Asked to define the phrase “quitting bankruptcy,” Mr. Otake said it has at least two strong implications.
“This will mean will mean the lifting of a stigma both commercially and psychologically — for the staff and the governing board of Brotman,” he said. “For my hard-working employees, there has been a burden of coming to work at a place that carries the stigma of being a bankrupt enterprise. When that changes, it will be a relief for them. While there is not a BK sign in front of the hospital, it clearly is the stigma we have been operating under.
“On the commerce side,” Mr. Otake said, “we have been dealing with vendors who, I feel, have been putting a gun to our head. In the healthcare business, we put out a bill , and it is not a cash-type transaction like other business enterprises where you are receiving services such as when you are leaving the hospital and you pay cash for services provided. We bill a patient’s insurance company, whether it be Medicare with the federal government, MediCal with the state government or private insurance parties for the services provided. The average time frame for getting reimbursed is anywhere from 45 to 60 days.
“Yet, during this bankruptcy period, vendors have held a gun to our heads, requesting COD-type payments or, even, payments prior to the actual deliveries of their actual products, wire transfers even before they ship merchandise over.”
Question: Mainly what kind of vendors?
“Large ones, like McKesson, the pharmaceutical vendor, people we rely on to deliver our operating room supplies and have similar business arrangements with Brotman. As things have stabilized the past year, we have asked certain vendors to work with us. A lot of them have stepped up and said ‘yes, we will work with you. We will give you 30-day terms.’
“In my 25 years in the healthcare industry, the number of days a hospital averages to pay a vendor is equal to the number of days it takes to collect money. That is how business traditionally has transpired in the hospital community. To have COD relationships that are in the majority, with some vendors getting 15-day terms, has been helpful. Some give 30-day terms, others 45. Our main medical supply vendor over the last two months has extended its terms to those similar to other hospitals, 45, even 60 days.”
Question: Have the more generous vendors been motivated by marked improvement in Brotman’s financial health?
“Clearly,” Mr. Otake said. “They see some stability. Certain doctors coming in here continue to perform cases because they have seen stability in the sense that the checks we have provided have not bounced. I can say that after one year, things have returned to normal.”
Question: Describe the stability vendors are seeing.
“I can’t speak for them personally, but two things mainly. I believe what they see is stability in personnel. Although there is transition in the Purchasing Dept., for the most part, it has been stable for the last 12 months with the same leadership. Financially, our vendors see commitments the hospital has taken on come through,” giving the future a feeling of solidity.
