Mendocino Coast District Hospital (MCDH) Chief Financial Officer (CFO) Mike Ellis has tendered his resignation. In a memo addressed to interim MCDH Chief Executive Officer (CEO) Wayne Allen, dated April 10, Ellis stated he planned to complete a draft budget for the coming fiscal year before his final day of work at the hospital on May 10, 2019.
Whether Ellis's departure has anything to do with the arrival of Allen on scene would be pure conjecture. It seems more likely that Ellis found what appeared to him to be greener pastures. When he first came to MCDH a year ago, Ellis was heard to say that he always packs light.
The unexpected resignation of MCDH's CFO came less than a day before Allen sent out this communication: “The Board of Directors of Mendocino Coast District Hospital has determined that the timing is appropriate to seek options regarding a potential lease or sale. The Board is committed to finding the right lease partner or buyer. The attached RFP [Request For Proposal] will provide a structure to evaluate responding organizations. The RFP has been sent to five health care entities.”
Those five entities are most likely Adventist Health, Sutter Health, Dignity Health (formerly Catholic Healthcare West), St Joseph Health, and a physician owned operation similar to the one that now provides medical care in Colusa. Readers may remember that Wayne Allen was hired as an interim CEO at Colusa Regional Medical Center shortly before its 2016 bankruptcy and closing.
Adventist Health, which has shown the most public interest in affiliating with MCDH, has the closest geographic tie with its facilities in Willits and Ukiah. It also maintains seventeen other hospitals in California and two senior living centers in the state.
Sutter Health consists of eight physician foundations, two dozen acute care hospitals, as well as cancer centers, regional home health and hospice organizations, long-term care centers, and research institutes within northern California. The nearest Sutter hospitals are in Santa Rosa and Novato.
Dignity Health is headquartered in The City. It is the official healthcare provider for the San Francisco Giants, if that means anything to you. Dignity runs dozens of hospitals in California, including Saint Francis Memorial in San Francisco, St. Elizabeth Community Hospital in Red Bluff and Mercy Medical Center in Redding.
St. Joseph Health runs Santa Rosa Memorial Hospital and St. Joseph Hospital in Eureka. One year ago Adventist Health and St. Joseph Health agreed to partner in order to integrate clinical activities and services through a new joint operating company. That partnership extends across clinics and facilities in Humboldt, Mendocino, Sonoma, Lake, Napa and Solano counties. The partnership is subject to regulatory review that is apparently still ongoing.
The Adventist affiliation remains the most intriguing for this reason, Howard Hospital in Willits is still privately owned by its foundation. Therefore the possibility of partnering only with Howard could be an intriguing one.
In this time of financial troubles for MCDH, one can see why time is of the essence in regard to a potential affiliation with a more solvent hospital or group of hospitals. However, Allen sent out the RFP without board approval, meaning there has been no formal board meeting since he was hired on April 1st. An action of this magnitude certainly merits public input, a full MCDH Board meeting with notice, and a public vote by the board members to go forward.
If the RFP was circulated to only some members of the MCDH Board of Directors that creates a problem of governance. If it was circulated among all, or even more than two, we may be into Brown Act violation territory. At this point the public is in the dark as to the precise genesis of the RFP. Was it strictly a Wayne Allen product? Is the RFP the work of one or more board members? Was legal counsel consulted before sending it? All of these, and more, are legitimate questions the public would have a right to ask at a public meeting of the MCDH Board before the RFP was send forth.
Looking back at the recent MCDH Board meetings, the topic of affiliation was broached publicly at the February 28th board meeting under an information agenda item. As part of that, Jason Wells, Adventist CEO for Ukiah Valley Medical Center and Howard Hospital made a relatively brief pitch before the board and the public. Later in that meeting, MCDH Board Vice-President Jessica Grinberg formed an ad hoc committee to look into the matter. Fellow board member Amy McColley was named that evening as another member of the ad hoc group. The March 28th board meeting contained no action concerning affiliation, but on April 11th, interim CEO Allen sent out the RFP with this language included, “After careful thought and deliberation, the Board of Directors of MCDH (the “Board”) has determined that the timing is appropriate to seek options regarding a potential lease or sale. The Board is committed to finding the right lease partner or buyer to ensure that exceptional local healthcare continues to be delivered on the Mendocino Coast and the surrounding area.”
One has to wonder where and when the MCDH Board exhibited that careful thought and deliberation.
The RFP continues with the following statement followed by nine bullet points, “In considering proposals, the Board is interested in identifying a partner having the following nine characteristics:
- A commitment to the continued provision of quality healthcare services to the residents of the Mendocino Coast and the surrounding area.
- A strategic vision for the future of MCDH.
- A demonstrated culture of quality and accountability.
- A proven track record of operational success to ensure the ongoing vitality of MCDH, as a stable and professionally rewarding organization for its employees and medical staff.
- Sufficient capital to allow MCDH to maintain high-quality care for its patients and improve its physical facilities.
- A system reputation that will add value to MCDH’s existing brand and reputation within our community and among physicians, consumers, and insurance plans.
- Capabilities, facilities, clinical integration, leadership, and strategies necessary to be well positioned for success in an era of healthcare reform.
- A commitment to transparency in dealing with all its constituencies.
- A demonstrated history of following through on its promises and commitments.”
The deadline Mr. Allen has imposed on any interested organizations is May 10, 2019. Coincidentally, that will be CFO Mike Ellis's final day on the job.
Reactions from long time observers of the MCDH situation ran the gamut from very positive to “Sorry to see this.”
Affiliation is the most likely way forward for the coast hospital. Nevertheless, given that liens on the hospital's assets may run as high as two to one against, that MCDH has not met two of the three bond covenants Cal Mortgage requires for months on end, that the institution only continues to run on its own with assistance from a Cal Mortgage waiver, any stable institution is going to take a long hard look at the coast hospital before sending out a financial lifeboat.