The 501a doctors are employees -look about 2:44 into this video clip.
Reed (attorney), I call them 1099's, they're only 1099's if you contract with them. Yours are employees, so yours are still W2 employees under the non-profit medical corporation, they're still W-2 employees, they still have different benefits, they're benefits on that side rather than the hospital side. Now they do have a separate insurance policy... so some separate expense for that insurance policy
Reynolds: There's no significant cost for the 501a, other than the registration process but there's not a significant cost associated with maintaining the 501a. ... Particularly now that we've changed the benefits on the hospital side to where the employees are making a significant larger contribution to their health insurance and in our retirement plan, on the physician side of the 501a side, we pay the entire cost of the health insurance for the physicians and we also have a retirement plan which we participate in, so if they were to come over to the hospital, we'd have to reconcile those differences, particularly highly compensated on the health insurance. We'd have to figure out how to manage that piece of it.
Reed -Those are 2 pieces that you're not going to be able to reconcile. You can make exceptions on things like PTO but you're not going to be able to make their health insurance and retirement different. The health insurance and retirement that you do for all your employees is going to have to be exactly the same. So, you bring them over, they're going to have to be on the same insurance and retirement everybody else is on.
Reed: If you had an employed person, let's take that person on the left hand side, if they're an employee they're always going to be a W-2 person and they're always going to have hospital employee benefits. And that can potentially be, you get when you run the numbers, that can potentially be a problem if you put all your physicians under your hospital benefits. It isn't for everybody but you have to just run the numbers and see if it is for you or not. For some of our hospitals, it causes a problem because your physicians are at a higher income level and it causes retirement problems. It may or may not cause that problem for you guys. And also the benefits may or may not be where you want them to be. The other thing is that, as employees, they actually fall under your personnel policies. And so because they fall under your personnel policies, you either have to write policies for that specific class of employees for how they're handled for things like discipline because otherwise you have to, I mean, they have PTO like everybody else has PTO, and you have to track it like everybody else has PTO, or vacation time, or you have to somehow figure out how to treat that differently, which can be a problem. The main thing is when you make someone an employee, many of the employee things, people all have to be treated the same. And so, when you throw the physicians in there and you try to terat the physicians like all the other employees that can be a little cumbersome sometimes. Not always, and sometimes there's ways you can adjust that. Sometimes you can do contracts for them even though they're W-2 employees. And in the contracts you can separate out some of those issues in contracts. For example, you could give them a little bit different vacation time because you have a contract which would exempt them a little bit from the regular PTO system. And again you could make some adjustments in your personnel policy, ... that can be a real benefit because when a suit is filed against an employee under the Tort claims act, the employee has to be dismissed. And the suit is actually against the entity in the Tort Claims act. There is a benefit for having them as employees from that perspective.
Now if you look at the other side, I called them 1099's, yours are employees, right? So yours are still W-2 employees even under the non-profit medical corporation, yours are still W-2 employees, they still have different benefits, they're just benefits on that side, on the hospital side. Now they do have a separate insurance policy and there is a separate expense for that insurance policy.. registration process every couple of years but there's not a significant cost associated with maintaining the 501a.
Reynolds: There's no significant cost with the 501a. Kind of interesting on the benefits side, one of the things we've talked about , particularly now that we've changed the benefits on the hospital side where the employees are making a larger contribution to their health insurance and our retirement plan and all that where the physicians on the 501a side, we pay the entire cost of the health insurance for the physician, also they have a reitrement plan now, we participate in, so if they were to come over to the hospital, we'd have to reconcile the differences, particularly on the highly compensated on the health insurance. We'd have to figure out how to manage that piece of it.
Reed: Those are 2 pieces that you're not going to be able to reconcile, you can do things like, you can make exceptions like PTO, you can give them different PTO but you're not going to be able to make their health insurance and retirement different. The health insurance and retirement that you do for all your employees is going to have to be exactly the same, so if you bring them over, they're going to have to be on the health insurance and retirement everybody else is on.
? When I was at (CAC?) they wouldn't put their physicians on their benefits.
Reed: And they wouldn't, because it screws up the benefit plan if they're highly compensated, they probably didn't want all those highly compensated people on their benefit plan.
So, let's do an example. Suppose you have a blended family,ie, you have been married before and both your spouse and you have children that are not biological children. Your spouse says that she wants to provide some things for her child that will not go to the other children. For example, she wants to buy a car, spend money on a fancy apartment for her 18 year old daughter, and give her a budget to go eat out at expensive restaurants. It all falls underneath YOUR yearly budget, you're paying for both the fancy stepdaughter as well as the other children, but to keep closer tabs on what exactly you're doing for the SD, you make two categories for the children. One- Expensive SD, and other Rest of Children. Does it all, again, come out of YOUR budget? Yes.
Is it a fair assumption that part of the salaries of Ray Reynolds, etc are actually allocated in the 501a budget? Yes, according to the budget meetings that were held last year for this years budget.
From this clip
Reynolds: One thing I want to add, there's 25 percent of my salary and 25 percent of Becky and 25 percent of Ladonna is allocated over to the 501a.
Whitsitt-: Also PR.
Reynolds: We'll talk about that some more but there is an allocation here and that number comes out of
Whitsitt: as a purchase service
In fact, I called up today and spoke with both Ray Reynolds and Becky Whitsett regarding this splitout of Ray and others salaries, part of which is included in the 501a bucket. Ray said that the number in the original open records request, $149,000 includes also a part that is listed under the 501a, (ie, that number, $149k is a total that represents both account places) that he took a salary cut with the other employees during the Luminant tax crisis, and that's why his salary has dropped. I didn't ask what the numbers were precisely that are included under 501a, but Reynolds, as per above, has said that 25 percent of the salary is what is allocated there. If we assume 25 % of 149,000, that would be approx $37,000 in the 501a bucket. I also didn't ask, may at some other occasion, what the advantage is for not having the entire salary amount listed in one account but split. If it is, for example, that Ray et al provide services to the 501a, such as accounting. Ray said, at the budget meeting.
Reynolds: Certainly we provide services to the 501a, we provide accounting services, we do their payroll, and maybe I do some things too but that is an allocation .. how do you want to handle it? If you're really wanting the, I guess, the 501a to only absorb direct expenses, fine, we'll move it back to the hospital but it's not going to change the consolidated bottom line at all, just moving from one to the other. Our thoughts have been we would treat the 501a as if they were an independent practice and allocate expenses out to them. It really doesn't matter to us... we want to improve the look,
"Maybe I do some things too". That seems a little iffy that it is required to have part of his salary split out, but perhaps there is a detailed spreadsheet that would show a list of exactly what his billable hours and actions have been for the so-called 501a, rather than this ambiguity. Incidentally, I am unable to find that Ray Reynolds, employee, has been evaluated as required by the bylaws of the district-last time I wrote about this was in September 2016. If I have somehow missed this required evaluation by the Somervell County Hospital District since September of 2016, do drop me a note with the reference of the meeting date in which this was done.
I encourage anyone that also wonders about this to do open record/public information requests to the Somervell County Hospital District. They are accountable to YOU, the taxpayer.