At a May 7 finance committee meeting, Mendocino Coast District Hospital (MCDH) interim Chief Executive Officer (CEO) Wayne Allen announced a tentative agreement between MCDH management and the hospital union. The terms of the agreement provide for a two year contract, retroactive to July 1, 2018, and running through June 30, 2020. Under the tentative agreement, all MCDH employees would receive a 1% retro pay raise for the July 1, 2018 to June 30, 2019 fiscal year and a 2.5% wage increase effective July 1, 2019, and extending through the next fiscal year ending June 30, 2020. The increases apply to all employees, union and non-union, who were on the payroll at the ratification dates. Ballots were mailed to the union membership in the first week of May. Voting continues through May 17. The agreement will become official if ratified by a majority of the union votes and if approved by the MCDH Board of Directors. The contract makes no changes in employee benefit packages or pension funding.
When Wayne Allen arrived on the MCDH scene, again, one of the first things he promised was a quick end to the labor negotiations that had lingered since the last contract ran out at the end of June, 2018. If the agreement outlined above is ratified, Allen will have fulfilled that promise. How did this relatively simple solution arise from negotiations that had failed to go anywhere for so long that an arbitrator had been called in to file a fact finding report?
Looking at that fact finding report, filed at the end of February, might provide insight into what's going on at MCDH. The arbitrator was called in after the hospital declared negotiations were at an impasse. About six weeks later the Public Employment Relations Board (PERB) appointed a “fact finder.”
The fact finder took note of MCDH's “precarious financial condition,” the times in the past when the union has made concessions based on those economic conditions, including the hospital's bankruptcy from 2012-2015, and the passage of the Measure C parcel tax. MCDH management wanted a three year agreement ending June 30, 2021. The fact finder recommended a two year agreement with a 1% retroactive wage hike for the 2018-2019 fiscal year and a 2% raise for the 2019-2020 year. Obviously, Mr. Allen agreed to an even better deal for the union with a 2.5 % raise in the second year.
The fact finder recommended that starting in July, 2019, full time employees would pay 7.5% toward the least expensive health care benefit plan available. Under the fact finders plan employees would pay a 20% premium contribution for dependent family member health care benefits, part time employees would pay a pro rata portion of their health care benefits, and the current $500 stipend for alternative coverage would be eliminated. The fact finder also proposed a reduction in holidays or paid time off for all employees starting in July, 2019 as well as lowering the amount the employer (MCDH) would contribute to employee pensions.
As evidenced by the short statement at the end of Mr. Allen's statement about the tentative agreement, none of those proposed changes were made to the benefits and pension plans. Why the switch from the fact finders recommendations to a more labor friendly agreement? Look no further than the Request For Proposal (RFP) Mr. Allen sent out ten days into his interim CEO job. Potential affiliating hospital groups like Adventist Health, Sutter Health, or any other don't want labor strife on the immediate horizon.
At that May 7 finance meeting, Allen also presented a projected budget for fiscal year 2019-2020. The bottom line: nearly two million dollars in net income losses as of July, 2020. Place that on top of about $800,000 in bottom line losses for this year, more than $1.2 million from last year, and the picture should be crystal clear for all but the most Pollyanna-ish of coastal folk.
If that wasn't enough economic gloom for you in regard to MCDH, the hospital will have to pay hundreds of thousands in interest on their Help II loan. That borrowing was done to assist in paying for mandatory repairs for multiple absolutely necessary ongoing maintenance projects that cost around $3.2 million dollars. Oh, yes, and there are $8.2 million worth of, as yet, unfunded maintenance projects looming in the near future.
Something else potential affiliating hospitals will want to see is a stable administration. On May 1, the MCDH Board held a special meeting to pick an interim Chief Financial Officer (CFO) from among four candidates. The choice was Steve Miller. He had served in the same post previously, for about nine months beginning in December, 2014. At the May 7 meeting, interim CEO Allen stated that Miller was asking for a contract that he (Allen) deemed too expensive. When asked if he wanted one of the three other May 1st candidates, Allen indicated that he didn't like any of them much either. Such a response makes one wonder why the other three candidates were involved in the May 1st proceedings at all. The whole situation would also make any reader question why Allen didn't get an estimate as to how much money any of those candidates, including Steve Miller, might ask if they were selected.