At a November 22nd meeting of the Mendocino Coast Healthcare District's Board of Directors (BOD) it took about two hours to come to a foregone conclusion. The Directors eventually voted 4-1 in favor of a resolution to affiliate with Stone Point Health, a subsidiary of Adventist Health (AH). A second resolution, by the same vote (Director Amy McColley dissenting in each case), sent the affiliation agreement on to the county clerk to place it on the ballot in March for a simple up or down vote.
The ballot wording will be similar to the following: "With no additional taxes to the taxpayers and to assure continuing emergency medical services, acute hospital inpatient services and outpatient services, with substantial investments by non-profit Stone Point Health to meet the needs of Mendocino Coast residents, shall the Mendocino Coast Health Care District enter into a lease agreement of Mendocino Coast District Hospital for up to thirty (30) years at fair market value to Stone Point Health, per terms approved by Resolution 2019-17 adopted November 22, 2019 YES ____ NO ____."
Changes have been made to the term sheet accepted by the healthcare district's board on November 8th. Notably, the rent to be paid by AH will rise from $1.5 million annually in the first three years of the thirty year lease to $1.75 million. After those three years the rent will rise to $2,950,000 annually. Director John Redding was commended by Directors McColley and Steve Lund for encouraging AH to up the rent ante. See the November 13th AVA for the basics of the original term sheet.
Under the same category of “Lease Terms,” the Mendocino Coast Healthcare District (MCHD) commits to making available two million dollars each year in repairs, upgrades, and equipment. AH maintains the right to prioritize which upgrades, repairs, and equipment get funded.
As discussed in that November 13th AVA piece the promise of AH to continue to provide existing services now has this qualifying language, “Parties may mutually agree at any time to change the service commitments.”
Another term sheet addition: “Adventist Health will have the right to terminate at three years with 270 days notice.”
In relation to the statewide laws coming in the year 2030, the term sheet now includes language that states, “Adventist Health will be entitled to liquidated damages in the event the District does not achieve seismic compliance by 2030 or fails to set aside the funds required for Future Development and Adventist Health terminates the lease. Liquidated damages will set at $10,000,000.” However, AH agrees that in the event construction or renovation becomes a necessity it “will use its corporate resources to support the planning and execution process.”
In addition, MCHD agrees to “fund into a Board Designated nontransferable (escrow) account funds in excess of operations to be used for a) Seismic retrofit, b) New hospital investment or c) other outpatient construction investments, as mutually agreed on by Adventist Health and the District.”
The term sheet runs about three and a third single-spaced pages. The fully detailed, final lease agreement will total out at around one hundred pages. At the November 22nd meeting, Director McColley seemed intent on picking through the new term sheet to the extreme with question after question, often punctuated by the phrase, “The devil's in the details.”
The rest of the board seemed content with the language of the newer term sheet. At one point, after a string of picayune queries and comments by McColley, Director Redding quietly stated, “It's a standard contract.”
McColley's rambling comments about particular parts of the agreement often terminated with her bemoaning that she, personally, feared some horrendously negative outcome for the hospital, its clientele, or the healthcare district's voters and taxpayers. After the fourth or fifth such doom and gloom, look at me wringing my hands, Board President used her voice to gavel an end to it by saying something akin to, 'We all have concerns.'
McColley's incessant questioning gave the appearance that she either hadn't read the new term sheet carefully or that she was incapable of understanding it. Neither is a good look for a director of a healthcare district.
Fairly late in the meeting, Director Jessica Grinberg and interim Chief Executive Officer (CEO) Wayne Allen engaged in a series of more cogent questions, comments, and answers. From these relatively brief exchanges the audience learned that in October the coast hospital came up a million dollars short in revenue compared to the same month a year ago. Allen also used the term “Zone of bankruptcy,” to describe where the hospital's finances are currently. Grinberg's questions and remarks clearly led Allen and anyone paying attention to the conclusion that MCHD is perhaps only a month or two away from being a total economic shipwreck, and that AH affiliation represents the only salvage ship left on the sea.
After the 4-1 vote to approve the affiliation resolution, Grinberg accurately noted that much is now in the hands of the community, meaning not just casting your ballot in March but that the public need not simply sit back and helplessly hope that AH straightens the financial picture. The local district can still be a solution provider in many areas of healthcare, including the topic that, continually, elicits the most wails of distress, the labor and delivery department (OB). As stated in these pages before, forward thinking approaches have already come to light in MCHD's Planning Committee. With no video coverage of most hospital meetings recently, a seat at the Planning meetings should be the go-to ticket of each month.