On May 26, 2016, ATERF was notified by the Arkansas Health Department that our contract with them for the upcoming state fiscal year would not be renewed. In addition they directed ATERF to immediately suspend any activities related to the present 2016 fiscal year contract.
This notice, as you would expect, has been very difficult for all involved with ATERF. We have taken a great deal of pride in our partnership with the Health Department and our place within the Arkansas Trauma family. In such a short period of time, this Trauma family has worked together tirelessly and passionately to help create a statewide trauma system that is becoming a model for the entire nation. Our efforts have resulted in a dramatic reduction in preventable mortality for our friends, family members and fellow citizens of the State. This reduction is, in no small part, a result of the increased awareness and education for all providers who care for the trauma patient. ATERF has taken our responsibility to bring the highest quality educational offerings to you, the healthcare professionals, who care for the trauma patients.
In an effort to share with you the reasons, as we understand them, for this change by the Health Department, I would like to share with you some background information regarding our contract. When ATERF was awarded the contract in our first year we went to the Health Department leadership and sought instruction on how to submit invoices for courses and work done by ATERF. In an effort to ensure proper understanding of the process we sent staff to the Health Department to work with their staff on how to properly document and provide all invoices necessary to meet Health Department contractual obligations. At that time we were instructed to submit course rosters for each course and we would be paid as a fee for service contract the negotiated rate for the courses performed. Actual receipts would be submitted for overhead expenses.
Of course, we complied and were meticulous in our record keeping. All invoices were delivered by hand to the Health Department and paid by them in a timely manner with the documentation they requested. We have performed this contract this way for the past 5 years without any comments, concerns or requests for additional information from the Health Department. Each year the Health Department and ATERF would work together on a yearly budget to negotiate the price for courses for the following year and maintain the budget amount or justifying any increase in budget. Once satisfactory and approved we would execute a new contract signed by both parties, and proceed with the administration as we agreed in year one.
Then this year as we were working with the new budget, it became apparent that things might be a little different. The Health Department proposed an approximately 50% reduction in ATERF’s funding for fiscal year 2017. As you might expect we were somewhat taken back by the amount of cut and especially the proportion of cuts that ATERF represented in the entire Trauma System budget. When members of the Finance Committee and the Governor’s Trauma Advisory Council saw these disproportional cuts they passed a new budget that restored ATERF to full funding. The Health Departments Board of Directors then approved the budget as did the Arkansas General Assembly.
During this time it seems the Health Department was looking at all their outside contractors and when looking at the ATERF contract the Health Department discovered that they had been administering the ATERF contract in a way that was contrary to the written contract terms. The contract, as written was for the reimbursement of actual expenses only with an administrative fee component to cover overhead.
This creates a significant change in the interpretation from how the contract had been administered over the previous five years. As an expense reimbursement contract there should have never been any money left after a course was performed to accomplish the other activities that ATERF has accomplished (purchase of new equipment, production of educational materials, payment of additional staff necessary to meet student needs, maintenance of sufficient cash reserves to pay bills in a timely manner, production of the Arkansas Trauma Update and the Trauma Leadership meetings, etc). Based on this change in interpretation, we were deemed in violation of the contract, they asked for our books and they are presently auditing them to see how much they think they have overpaid us.
This interpretation of the contract is being made by new administration and new leadership at the Health Department from our contracts first year. We have talked to the previous Trauma System leadership and it is quite clear that they got all proper authorizations from leadership to administer the contract as we were instructed. This went through the Contracting and Procurement sections at the Health Department for approval prior to the first dollar being spent in the first year. Unfortunately, the original language of the contract was never amended to reflect this change. Given the flawless administration of the contract as we were instructed, this amendment was never pursued.
We are presently still working with the Arkansas Department of Health to resolve this difference of interpretation. We are still trying to convince them that in fact we were asked by them to perform the contract in this manner. Additionally the course of dealings with the Health Department clearly indicate that this was the manner in which they interpreted the contract. We currently have outstanding invoices that are being held by the Health Department that total over $314,000 which the Health Department says they do not intend to pay. Their current intent is to complete the audit process and use the value of these invoices to offset any money ATERF is determined to owe the Department based on this new interpretation of the contract. Almost all of this money owed ATERF is for classes performed prior to the Health Departments notification of any concerns. Additional expenses included above are for the Trauma Update which occurred after we were made aware of their concerns. The Health Department required a copy of the budget for the Trauma Update to approve prior to the meeting and they authorized reimbursement.
With the Health Department’s unwillingness to pay ATERF for work already performed on their behalf and the exhaustion of our financial reserves with no payments from the Health Department since March, and our inability to generate sufficient income to pay the outstanding obligations which have accrued we have been forced to take drastic actions. We have laid off 70% of our staff and we have notified our building manager of our intentions to vacate our present office space. We have outstanding bills payable that far exceed our ability to pay without reimbursement from the Health Department. It is with very heavy hearts we will have to totally cease ATERF operations, but this is now the reality of our present situation. We have been diligently attempting to work with the Health Department to identify a way for us to continue to serve you the trauma healthcare providers in the state. We offered to look at options of writing a new contract, continue the previous contract with some modifications, and other avenues that preserved our ability to provide trauma courses. We have been open to any suggestions from the Health Department to work out this situation but so far there has been no success. We are saddened and frustrated by this reinterpretation of the contract in the middle of its performance and the Health Department’s reluctance to attempt to work toward a solution in the best interest of the trauma system.
At this time we continue to work toward any reasonable solution we can with the Health Department and will keep you informed of any developments as they arise. I would like to thank you for your passionate support of the Trauma System and especially your support of ATERF. We hope we can find a way to survive this process and continue much as we were before. If that is not possible, we will reinvent ourselves with a new model and continue to provide educational offerings for trauma to the best of our ability. We are committed to our motto of “Improving the Delivery of Care to the Trauma Patient” and hope that you will support us in our efforts to remain a valuable part of Arkansas’s Trauma System.
Sincerely,Michael Sutherland, MDArkansas Trauma Education and Research FoundationChair, Board of Directors
First, I would like to thank all of you who have reached out in support of ATERF and our mission within the Trauma System. Together we have improved the care of the trauma patient and will continue to do so into the future.
I would like to address some questions, which have come in from you about this dispute in the contract that has led to our current situation. ATERF is a non-profit organization and must use all proceeds from its activities toward the mission of the organization. Our mission is to promote quality trauma care, reduce the number of preventable deaths, improve outcomes from trauma injuries, and minimize economic costs created by traumatic injuries in Arkansas. This was accomplished through advanced trauma education for health care professionals and ongoing research. ATERF’s efforts have been integral in the ability to improve trauma care in our State, to what is now considered one of the finest systems in the Country. The health department has looked back at five years of contracts with ATERF and determined that we were paid on a fee for service basis throughout the contract period. This means that ATERF submitted a budget and a fee schedule for courses during the budget process. The Health Department approved the budget and fee schedule every year, and when ATERF taught a course the health department paid us the agreed upon price. The Health Department has now re-interpreted the contract as being a reimbursement contract where we should be paid for actual expenses associated with the courses. While there is language in the contract that indicates this, we were taught by the Health Department how they wanted to administer the contract and used their guidance to submit invoices under this fee for service basis. This made the accounting for the Health Department much easier and allowed ATERF flexibility when coordinating courses. The agreed upon fixed price for the courses included retained earnings, which varied from course to course. In some instances ATERF lost money on a course and in others we had more retained earnings. On the average ATERF built in 10-15% retained earnings for these courses, consistent with most State contractors and at the advisement of the department.
The retained earnings were used for various activities to improve the care of the trauma patient.
Additional income to ATERF has come from grants for research and other activities which provided us with the financial ability to perform other activities which were not included in the contract, but which are re-invested into the educational mission.
The discrepancy we are facing is the reinterpretation of the contract. After five years of performing work in a fee for service manner, the Health Department has reinterpreted the contract and is holding us accountable to this new interpretation retroactively to the beginning of the contract. Once this decision was made ATERF was never offered a meeting to sit down with the Health Department and discuss their concerns and findings so that we could work toward a remedy. Our first official communication after we were informed of their interpretation and our delivery of our records was the letter of termination.
We are continuing to work toward a resolution in this matter with the Health Department. ATERF is committed to our mission and to you the hard working members of the Trauma Community.
You can reach out to your legislators by going to http://www.arkansashouse.org/ and http://www.arkansas.gov/senate/ to find your representative and senator. Call or e-mail them to let them know the good work that ATERF has done and how it has impacted your practice, patients and community.
There is information being given to the legislature by the Health Department that is not accurate and they need to hear from you how important ATERF is in your community. There are indications that the Health Department has informed them of their findings of the audit of our records but neglected to share the fact that they taught us and told us to treat the contract as a fee for service contract for the last four and a half years. The legislature needs to hear from you, the citizens they represent, the other side of the story. ATERF has been a proven, valuable resource to the Trauma System and the ability to maintain this level of educational preparedness is essential to continued reduction in mortality. The benefit that ATERF has afforded by providing low cost education close to home is unique nationally and responsible for the incredible penetrance of courses. Loss of this resource will diminish the level of trauma specific education, increase by 10X the cost, of most courses, and limit the availability of courses to the central Arkansas region.
Please continue with your support, Facebook accolades and personal advocacy on behalf of our program. We hope to resolve this soon. We want to continue our role as the educational arm of the Trauma System. We have offered to work with the Health Department toward a mutually agreeable positive resolution where the patients and health care providers continue to benefit from our exemplary educational programs.
I will continue to keep you informed as more information is available.
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