The Hospital Authority failed to disclose $9.4 million in federal CARES Act funding to Mayor John Cooper’s administration in fear that its operating subsidy could be reduced, according to documents obtained by the Tennessee Lookout.
Finance Director Kevin Crumbo, one of Cooper’s top aides, blasted the Hospital Authority for not keeping the administration in the loop about the federal COVID-19 relief funds in an email chain with the authority’s board chairman Joel Sullivan.
Crumbo said the finance department has weekly phone calls with the Hospital Authority, but the federal funds never came up in recent calls.
Nashville General Hospital, which is run by the Hospital Authority, received the money last week. According to Crumbo’s email to Sullivan, the authority’s chief financial officer Bruce Naremore and general counsel Marc Overlock were afraid the federal funds would impact the operating subsidy during Metro’s tight budget year.
Crumbo said that Nashville General Hospital moved the federal funds from its regular bank account to an investment account. Crumbo said the hospital had disclosed two previous CARES Act grants for much smaller amounts.
The total General Hospital subsidy from the city is $43.1 million.
“Bluntly put, Naremore and Overlock reported that NGH did not make any effort to collaborate on this receipt so that these monies would not be considered during the Metro Council’s deliberations of the Fiscal Year 2021 budget during the week of June 15th,” Crumbo said in his email on Thursday to Sullivan. “Specifically, it was NGH’s belief that consideration by the Metro Council may lead to a reduction of the budget subsidy appropriation for NGH.”
Crumbo also blasted General Hospital’s leadership for not revealing the grant and said by keeping the money a secret, the hospital deprived the mayor and council the opportunity to weigh in on whether the federal funds would impact the regular operating subsidy.
“I don’t know if knowledge of this receipt would have influenced the outcome of those deliberations, but NGH’s actions denied Metro Finance and elected officials the opportunity to consider it,” Crumbo said.
Naremore, in a late afternoon response to several councilmembers, called Crumbo’s statements “inflammatory.”
The CARES Act dollars the hospital received were specifically restricted for use in COVID-19 related expenses and revenue losses due to the pandemic, Naremore said. Those funds cannot be used for regular operations, he said.
Naremore said the hospital received the funds June 15 and “barely new what restrictions were associated because the prior 2 fund distributions were less than 10 percent of that amount,” he said.
Naremore said the funding was omitted from weekly cash flow schedule and teleconference because it “was simply not relevant to the discussion of meeting regular operating expenses.”
In an email to his fellow Hospital Authority board members, Sullivan said he also did not know about the $9.4 million grant.
“I was more surprised to receive the call from Mr. Crumbo stating the information he received from the call that afternoon. At no time was I notified by the hospital of the $9.4 million,” Sullivan said in his email.
According to Sullivan’s email, Naremore said he waited to disclose receipt of the funding until he knew how the money could be spent. Some federal CARES Act funds have strings attached. For instance, Metro schools and WeGo public transportation department also received direct appropriations, whereas most federal money went straight to Metro.
“Mr. Naremore believed that it was best to delay the announcement of the receipt of the money until the consultant was hired,” Sullivan said in his email to the board. “A contract has been created and is hoped to be voted on at the June 25 Board meeting. The same consultant Metro is using was chosen to represent the hospital as well. Mr. Naremore thought it would help having the same consultant represent both sides so the full picture was seen.
“Mr. Naremore stated that it was his decision not to share the information until he had more details. He said there was no intention to not share the information at all. In fact, he planned to share the information on today’s weekly call and get the contract approved for the consultant on Thursday at the Board meeting. The money would also show up on the balance sheet in the June financials.”
Metro Councilmember Bob Mendes, who chairs the council budget and finance committee, said he wants to see “what all the facts are, but my first reaction is that it wouldn’t have made a difference in the budget process last week and that we should be glad to have additional federal relief funds to help Nashville get through the pandemic.”