Fort Defiance hospital aims to go under '638

Administrators at the Fort Defiance Indian Hospital hope to move from under the IHS shadow within the year and become a private nonprofit corporation along the lines of the Tuba City Regional Health Care Corporation.

However, with that hope comes a slew of questions and concerns over what that actually means. Employees and patients alike are afraid such a move could mean significant changes in services and benefits, possibly not for the better, they say.

"The majority of the employees don't want to go (private)," said Karen Littleman, chief steward with the Labors International Union of North America Local 1376, which represents the hospital's employees. "They'd rather keep their government benefits they have earned over years of service."

All agree the tribe does not have the resources to effectively manage the hospital itself, but the union members fear the hospital could lose its federal funding if it incorporates under P.L. 93-638, the Indian Self-Determination and Educational Assistance Act.

Employees will be laid off, they worry. Such are the complaints that employees hold regarding the change.

However, administrators say such concerns are unfounded and that the move to privatize the hospital could only benefit the community.

"Every Indian tribe has that inherent power to exercise sovereignty," said Leland Leonard, an ex-officio member of the Fort Defiance Indian Hospital Board. "This can lead to operating an innovative and creative practice."

The process of privatizing a federal hospital under P.L. 93-638, or "the '638 process," would mean workers would no longer be federal employees. Operation of the hospital would be transferred from IHS to the tribe or to an entity recognized by the tribe.

In this case, the council's Intergovernmental Relations Committee voted Aug. 3 to recognize the Fort Defiance Indian Hospital Board Inc. as the operating entity. The board is made up of 10 members, each selected by a chapter located within the hospital's service area. 

Under the '638 process, IHS, which has for generations managed the medical services for tribes per federal law and treaty provisions, would transfer funding to the board.

"It's the same as when the law was passed," said Henry Dodge, acting director of the Office of Indian Self-Determination in the Navajo Area IHS, which monitors implementation of the '638 law. "The Indians had been telling the government that they can do a better job at running their health care."

That is exactly what the Fort Defiance board believes, Leonard said.

Ready to take over

Among the changes Leonard and the Fort Defiance board foresee are quicker turnaround times for payments, hiring and ordering new equipment, he said.

No longer would the hospital have to wait as requests go through the lengthy procurement process. He has heard tales of a travel reimbursement request taking as long as one year to result in payment.

"With our own corporation, we can have our own financial system," he said. "We could do it on the spot. There's no need for that grief and frustration."

Board members would be elected by the chapters in the hospital service area. Each member would go through a federal orientation process to thoroughly familiarize him or her with the IHS and '638 systems, said Wilfred Jones, chair of the Association for Indian Self-Determination board of directors.

The Fort Defiance board has submitted a memorandum to the regional IHS Office of Self-Determination, declaring its intent to file for '638 status. Next, the hospital must create and submit a master contract detailing its proposed plan of operation.

The hospital has significant leeway in drafting its contract and once '638 status is approved, IHS provides minimal oversight in a hospital's operation.

"You run your own programs under your own policies," Dodge said. "We can't say, 'You're not following how we would run this program.'"

IHS does, however, keep tabs on annual audits to ensure the federal money granted to the '638 corporation is spent properly. The audits must be completed annually by an outside, independent firm, Dodge said.

Leonard said the Fort Defiance board hopes to submit its master contract by December. In the best-case scenario, the hospital could go private by July, he said.

There are currently three hospitals on the Navajo Nation that have incorporated under '638, all in 2002. They include Tuba City hospital, the Winslow Indian Health Care Center Inc., and the Utah Navajo Health System Inc. in Montezuma Creek, Utah.

In the case of Tuba City and Winslow, the move was met with controversy by community members and employees who feared the shift would lead to instability in both health care quality and employment.

The Utah Navajo Health System did not see much controversy because it was a new facility and was never fully under the IHS program, though it did briefly contract for federal dollars.

Such fears were likely similar to those aired during a community meeting at the Chinle Chapter House in August, where the local hospital board is considering going private under '638.

Chinle Chapter voted against it - and one "no" vote is all it takes to stop the change. All the chapters in the Fort Defiance service area supported the privatization of their main health care facility.

During chapter meeting in Chinle, one community member said taking IHS out of the equation would be the start of by the federal government sliding out of its treaty responsibilities to provide free healthcare to the tribe.

"They're trying to get us to get money on our own," said Eugene Tso. "Then the BIA just sits back and doesn't do anything. Before you know it, we'll be just another state."

No loss of funding

Joe Engelken, CEO of the Tuba City hospital, said he understands the public's reluctance.

"These are very normal fears," he said. "It's very human nature that the hospital and employees would have concerns."

However, neither Tuba City nor Winslow have seen any decrease in federal funding. In fact, overall funding to both hospitals has increased significantly.

Once IHS is out of the picture, that automatically frees up about 30 percent more funding that would otherwise go to pay administrative costs, said Donna Singer, CEO of the Utah Navajo Health System Inc.

"Those savings go directly to patient care," Singer said.

According to figures provided by TCRHCC, Native Americans rank last in the list of federal health care spending per person. The feds fund health centers based on patient visits.

Under this formula, Native Americans - that is IHS facilities - in 2005 received about $2,130 per patient, per year. Spending on federal prison inmates is nearly double that, about $3,985 per patient, per year. Medicaid, Medicare and the Veterans Administration pay up to $7,600 per patient, per year.

However, IHS hospitals have to follow very specific funding rules. This prohibits the centers from seeking additional funding from all outside sources, Singer said.

In total, the Tuba City hospital increased its funding from about $28 million in 2003 to nearly $50 million in 2008. The Winslow hospital increased its funds from about $14 million in 2003 to about $36 million in 2008.

Utah Navajo, which operates three satellite clinics in addition to its main facility, increased from about $6 million to nearly $16 million during the same time period.

In addition, all three nonprofits have reported significantly increased their employees and patient visits. For instance, Winslow has seen its workforce grow from 179 to 300, and the number of patient visits increase from 65,000 to 115,000, said CEO Sally Pete.

However, Fort Defiance employees are still concerned that leaving IHS means losing all the benefits they've accrued as a federal employee. They can, however, vote to keep the same contract and union representation.

The Fort Defiance hospital employs about 720 people. Most of those employees, about 630, are represented by LIUNA. The union offers comprehensive benefits to its members, including intervention with the hospital when employees are transferred to new units. This is in addition to standard representation against wrongful terminations or pay interruptions.

There is a chance that a good percentage of employees could lose these benefits as a hospital enters into '638, should they not vote anew to unionize.

High-ranking staff like doctors can choose to remain with IHS but still work for the new nonprofit hospital via an Intergovernmental Personnel Acquisition. Technically, these employees are still federal, but the feds bill the '638 hospital to recover the salary and benefits paid out to them.

Less than 300 of the current Fort Defiance hospital employees would qualify for an IPA contract.

Employees who do not qualify for an IPA can vote to remain under LIUNA, though it would require a lengthy process, said Steve Miller, business manager of the IHS National Council of LIUNA.

"By no means is it guaranteed that employees we represent, if the hospital becomes a tribal entity, would be able to regain representation," Miller said. "We will certainly do everything we can to extend that opportunity to them."

Leland Leonard, with the Fort Defiance board, said the board plans to review benefit and retirement packages to ensure the '638 hospital offers similar or improved benefits to employees. The hospital will encourage employees to keep and roll over eligible savings plans.

The three CEOs from the '638 hospitals are quick to offer advice to Fort Defiance. Simply enough, they say: Communication.

"Keep everything open," Engelken said. "From the staff to the community, spell everything out."