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Postponing the Piper

The Board of Directors of Mendocino Coast District Hospital (MCDH), at a May 1 special meeting that lasted approximately three hours, named Steve Miller as interim chief financial officer (CFO). Miller served in the same role from December, 2014 through the late summer of 2015, bridging the gap out of bankruptcy and into the beginning months of Bob Edwards' tenure as Chief Executive Officer (CEO).

Much of the three hours appeared to be taken up by closed session interviews with four candidates for the interim CFO post as well as discussion within the board afterward. The board voted in open session on a motion from member Steve Lund to give the job to Miller. John Redding seconded. The vote to approve Miller ended 4-1 in favor. Board member Amy McColley had praise for all four candidates interviewed, but announced that she would have preferred one of the others rather than Miller.

Also in open session, interim CEO Wayne Allen acknowledged that former Bob Edwards has made a public records request for emails from the current MCDH Board members as well as similar communications from members of the board that preceded them. In addition, Edwards is asking for the emails of certain officers and managers within MCDH. In addition, Allen disclosed that coast newspaper editor Chris Calder has filed a public records act request for the current board's emails.

Allen also announced a tentative agreement with the hospital's labor union. No details of the agreement were released pending a vote on the matter by the full union membership.

A look at where MCDH was financially when Steve Miller finished his nine months or so on the job in 2015 and where the hospital is presently can't be completely fair and doesn't reflect on Mr. Miller's short term performance. However, if one glances back at some of the key economic statistics then and now, something basic pops up. Comparing a typical thirty-one day month from 2015 to one from 2019 shows that while total operating revenues have risen as much as a million dollars per month, so, too, have operating expenses. The hospital was losing money four years ago, it is losing money now at relatively similar rates. Same old, same old. That is the problem.

Unless the result of that labor negotiation is a net gain of about $2 million annually the rest of the stats on the monthly financial reports are going to fluctuate mildly month to month, but the same old same old won't work. MCDH must (do I need to capitalize MUST to capture your attention?) procure a second consecutive waiver from Cal Mortgage in order to continue opening the doors for the second half of the 2019 calendar year. Cal Mortgage is the part of state government that provides loans to healthcare entities. Cal Mortgage owns the rights to most of MCDH due to continued indebtedness.

Cal Mortgage gave MCDH its first waiver essentially because of the passage of Measure C, a parcel tax which has brought in about $1.5 million this fiscal year. Yet, even with this new tax money MCDH's bottom line is about a half million in the hole. That can't be all that inspiring to the folks at Cal Mortgage as they ponder whether or not to grant another waiver for MCDH to continue to exist.

Of course, finances are not the only consideration when it comes to hospitals. First, let's slightly backtrack to emphasize that the economic structure of a hospital is not the same as a typical business. One can't judge individual departments at a hospital on the same criteria. Obstetric (OB) and Emergency Room (ER) departments are not going to rake in profits like surgeries will. Clinics can't be judged purely by the in and out the door numbers, there are peripheral monetary benefits. So blame for financial losses or plaudits for gains cannot be easily assigned by department or modalities within departments. Secondly, the bottom line at a hospital is never going to surpass or even approach the break even point for a significant amount of time when the quality of service is sub par or is perceived to be sub par by the community it serves.

There are hardworking employees at MCDH. There are some good doctors and nurses still providing above average care at MCDH. However, the overall quality of service at this hospital is inconsistent. That might be a charitable assessment.

Given the current overall economic situation on the Mendocino Coast the chances of recruiting doctors and nurses, who would provide a significant upgrade to the quality of service, remains somewhere between slim and none. Combine student debt of young doctors and nurses to the exorbitant cost of housing, and the lack of affordable housing, and we are left with dim prospects of replacing the aging physician population in this area.

This leads to a bigger socioeconomic issue. Statements like, “This community can't survive a hospital closure,” were used as propaganda scare tactics during the campaign for passage of Measure C and one can hear similar phrasing thrown about quite often at hospital committee and board meetings. A corresponding propaganda tactic is the canard that property values will collapse if MCDH closes. There needs to be a special quadrant in Hades for those whose first concern about a hospital is the real estate value of their property and for those who have and continue to use that excuse to prey upon people's fears.

The coastal side of Mendocino County is no longer the province of fishermen. It barely supports a greatly diminished logging business. The Mendocino Coast survives today on a tourism economy. When someone goes to Yosemite or Yellowstone they don't travel based on whether or not there is a thriving hospital in the town of West Yellowstone or in Yosemite Valley. They are going to play in a park. And that is what the Mendocino Coast has become, a playground or park. 

Increasingly it is becoming a playground for the economically well-heeled. The high cost of housing is testament to this. The wealthy are buying up property in coastal Mendocino County environs and have been for decades. Look at the town of Mendocino. How many people who wait on your tables or clean the rooms of bed and breakfasts or clerk the stores actually live in the town, let alone own the property they live at. The only ones I know of are a tiny handful who have hung on to houses or properties they inherited. The Mendocino Coast is week by week becoming the playground for the wealthy. If MCDH closes, the people with more money than sense will scarcely notice as they flit back to the Bay Area and on to their other vacation home near Tahoe or Aspen or Jackson Hole. The property values will not drop, they'll continue to rise as the even filthier rich buy it up to possess their chunk of paradise. The ultra gentrification of the Mendocino Coast will be complete when the super rich have forced out the hardworking mechanics, plumbers, construction workers, etc. No problem, they will simply fly in their own plumber, mechanic, and personal physician.

At present we are living in a time when many of the retiree property owners living on or near the Mendocino Coast spawn from the slightly upper middle class. A lot of them spent decades at bureaucratic jobs, toiling at government work for a county, state, or the feds, perhaps at a college or university. They rely on MCDH as a kind of healthcare security blanket, but when they get a serious malady or two they go to Santa Rosa, Davis, San Francisco, or Stanford to see specialists. There were generations of retirees like them before, cycling through coastal homes from the 1970s on, slowly but surely driving real estate prices ever so genteel-y upward. The latest generation is aging out, the ungodly rich are starting to buy up their property, not as a decade or two of retirement, but as a plaything. Those bureaucratic retirees still here are frightened because their security blanket of a hospital, whose financial survival they pretty much took for granted, is very much endangered. The small handful of these bureaucratic retirees who actually attend hospital meetings apply what they learned to the problem. They call for long range strategic plans, accompanied, of course, by a well-paid outside facilitator of their choice. Meanwhile Cal Mortgage is coming with a foreclosure notice right frickin' now.

There are those who think with a new version of an electronic health record system and some belt tightening this hospital can continue on an independent financial future. That same show has been playing, with ever so slightly different musical riffs for interludes, at MCDH for a decade and a half.

We're pretty much down to painting the sow and calling it a cow. But how do you get beef prices for pork at the county fair?, you might rightly ask.

Back to the subject of real estate. Location, location, location. MCDH already performs minor affiliations with Adventist Health as its geographic neighbor in Willits and Ukiah. Adventist Health might be the partner with deeper pockets MCDH requires to survive and the Adventists already possess an affiliation of their own with the UC Davis Medical Center, which could be useful as a means of infusing young doctors into MCDH.

Another player lurks in the hospital affiliation mix. That is Sutter Health. Geography plays a role in this equation as well. Raise your hand if you knew that Sutter operates medical facilities in Lake County as well as in Crescent City. They might want to triangulate and plant their healthcare flag in Fort Bragg while giving the straight arm to Adventist at the same time.

The current MCDH Board of Directors has two members with direct and/or indirect knowledge of Sutter and Adventist's operations. While living in Fort Bragg Amy McColley works part of the week with Sutter in San Francisco. Jessica Grinberg's orthotics business has offices in Fort Bragg as well as Willits, where she works with orthopedist William Bowen. Dr. Bowen is not a direct employee of Adventist Health, but an independent contractor. Naysayers, and believe you me, there are strategic naysayers, might claim that McColley and Grinberg's interests are conflicted, but a more reasonable outlook might well view their situations as opportunities that give them unique insights into the inner workings of Sutter and Adventist. Such insights may prove invaluable in a potential affiliation scenario.

Of course, we will have to wait until the end of June to officially know if any other hospital group has interest in MCDH. If no affiliation partner arises then somebody better throw so much coin and paper from the clear blue sky onto the deck of the Titanic, so that the weight from the profits forces the good ship onto a new course free of icebergs.

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