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The High Cost of Labor & Delivery

On January 23, the Mendocino Coast District Hospital (MCDH) Board of Directors will hold a special meeting. It will entail a period for comments from the community, three minutes per speaker, followed by a “Study Session regarding the Future of OB Services on the Mendocino Coast.” That item is listed as “Information,” meaning no action will be taken at this particular meeting.

On January 3, Drs. Robin Serrahn and Zoe Berna hosted a full house at Fort Bragg's Town Hall at which citizens vented their thoughts on the possible closure of the Labor and Delivery Department, also called obstetrics or OB. Dr. Serrahn and Dr. Berna are part of the Medical Executive Committee (MEC) at MCDH. The Chief of Staff and head of MEC is Dr. William Miller. Early in January, Dr. Miller circulated a lengthy letter to the hospital's medical staff. Nearly four pages of the typewritten letter were devoted to the subject of labor and delivery (L&D).

Dr. Miller stated, “First of all, no one on the medical staff wants to close L&D or any other service at our hospital. Second, the medical staff is not driving the issue, the hospital's financial situation is. Third, that financial situation is becoming dire, regardless of claims to the contrary…

“Last month, the hospital was put on notice by several of our vendors that they will not be sending us more medical supplies (such as sterile gloves, needles, syringes, bandages and the like) unless we get current with what we owe them, and that is a sign that we are at risk of closing. Additionally, we have again drawn down our savings reserve to pay current bills, reducing the reserve to $3 million. This is another clear indicator that our financial situation is dire… Companies of our size are considered insolvent if they have less than 3 months operating cash at a minimum. We now have under one month.”

Dr. Miller went on to say, “It is the responsibility of the Board of Directors and Administration to address this challenge in the best way possible. Our role as a medical staff is a supporting role…” He goes on to cite interim Chief Executive Officer (CEO) Wayne Allen's estimate that closing L&D could save $2.1 million.

Continuing in that vein, Dr. Miller stated, “If the Board decides to close L&D, then the medical staff will work with nursing and administration to develop a transition plan as well as to develop policies around the alternative model of care, that being stabilization and transfer, which will address issues such as emergency c-sections, etc.”

Miller didn't mention the total length of time it would take to close L&D (OB). Presumably, we're talking months. He also didn't mention the possibility of Adventist Health (AH) making available an obstetrician for the coast hospital, possibly even before the public votes on affiliation. If L&D closes on the coast, obviously the closest option for hospital births would then be Ukiah. An additional obstetrician on the coast would enhance prenatal care, and an AH obstetrician should help smooth the transition to an AH facility in Ukiah. AH may also make additional family medicine practitioners available to the coast in the near future if the need and support warrants it.

Miller's letter also noted that the idea of closing L&D is not a new issue as some defenders, at all costs, would present the matter. The concept was formally vetted in a lengthy Ad hoc committee format three years ago. Dr. Miller also addressed another question that has come up for years in light of L&D continuing to lose millions of dollars annually. That question goes along the lines, why isn't the MCDH Board and/or its administration looking at closing other departments that lose money on a regular basis?

Miller responded to that query: “The emergency room [ER or Emergency Department] loses money in almost every hospital and ours is no exception. The ER sees as many patients in two days as L&D does in one year. Oh, and by the way, if we close the ER then we lose our license, the hospital closes and so does L&D…”

Another frequent comment: “What about in-patient services, every hospital loses on that department.”

Miller's reply: “[Y]ou can't have a hospital if you don't have any hospital beds. So again, there goes the license and L&D closes anyway.”

Miller continued with the refrain of OB defenders, that MCDH's clinic, North Coast Family Health Center (NCFHC), has net losses roughly equal to L&D. Miller correctly pointed out that NCFHC has tens of thousands of patient visits annually, which makes it a crucial feeder for other services at the hospital which do turn a profit. In addition, Miller noted, much of the so-called loss at the clinic comes in surgeons' salaries. Those surgeons make a large amount of money in the hospital's operating room, so that those clinic “losses” turn into money makers on the hospital's ledger.

Miller's letter also alluded to a bottom line fact. MCDH is now the largest employer on the Mendocino Coast. It infuses approximately $25 million into the local economy annually when measured only in simple salary dollars. The ripple effect of that payroll expands its effect.

Chief of Staff Miller's conclusion can be summed up in these five bullet points: “1. The medical staff is not driving closing L&D, finances are. 2. The medical staff is not demanding that L&D be closed, but we do expect the [MCDH] Board to fulfill its fiduciary responsibility to maintain a financially viable hospital. 3. The medical staff awaits the decision of the Board as to what direction it is going to take. If that direction is to close L&D, then we will work with nursing and administration to develop a transition plan and necessary policies around a new model of care that involves stabilization and transfer. 4. This is about keeping the hospital open and if you lose that, L&D not only closes anyway but you have a worse situation with no ER to perform stabilization and transfer of women in labor. 5. This is a tough position for the Board to be in and community members need to show their support to help the Board make such a difficult, but necessary decision.”

(Background information on affiliation, finances, and other MCDH issues reside in the AVA online archives and at


  1. George Hollister January 25, 2020

    There is a compelling essay in the WSJ this morning for having, if not L&D, obstetricians available for prenatal care, and a solid plan for L&D elsewhere. Does this mean all babies are born in Santa Rosa? That should be interesting.

    What seems to be happening, and nothing in medical care is ever clear, is a shift to focusing on medical services that make money, and away from more routine services, we all use, that are money losers for health care providers.

    • George Hollister January 25, 2020

      My MD sister did a stint in France as part of her training, about 30 years ago. Medicine is government run there. For delivering babies, back then, mothers followed a strict routine. At the first prenatal visit, a birthdate is determined. There was one day a week at the hospital for babies to be born. No Obstetrician getting up at midnight to deliver a baby. The process started early in the morning with all pregnant women getting induced, culminating with the last delivery some hours later. Cesarians were performed if needed. Everything was completed by lunch time. We might be going in the same direction in order to reduce costs. Other aspects of our healthcare may be headed down that same road.

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