There are two dramatically different views of the Mendocino Coast District Hospital's financial problems. The administration, lead by CEO Bryan Ballard, says that it is operating too many "money losing" programs and that if the District's residents won't tax themselves to the tune of $96/parcel to fill the gap, the Hospital will be forced to cut several essential hospital services.
The other view is that the Hospital Board, under the thumb of their high-paid CEO, are running the District into the ground by hiring too many expensive specialists, failing to insure that billings are done effectively, proposing cuts which will not help, and might make matters worse, and using numbers which don't accurately reflect the district's true financial situation for their rushed decision-making.
Critics also note that Hospital administration and the Board have mysteriously neglected to include "hospital administration" itself on its list of "money losers" which must be cut.
Another little noticed aspect of recruiting specialists is the practice of giving newly hired doctors "free" perks like transitional motel/hotel/B&B stays and meals at tony local restaurants, etc. In other words, the hospital gives hard-to-come-by money to the local innkeepers who support the hospital — a quid pro quo that ends up costing the hospital even more.
After the defeat of Measure R, the $96/parcel tax measure, last month, Hospital administration and the board are finally being forced to deal with the small hospital's financial crisis. The small Coastal hospital provides a broad range of medical services to the residents of the Northwest Corner of the County as well as many South Coast residents and many in Deepend of Anderson Valley. It also serves a number of "out of district" patients for certain medical procedures.
Several people in Fort Bragg have told us privately that the Hospital's sales pitch for Measure R bordered on a threat — which a significant number of people took as an empty threat — and voted against Measure R out of spite, not because they don't support their hospital.
The Hospital says it's losing $1.2 to $1.5 million per year — and a staggering half a million dollars a month since May — and must cut "money losing" programs to avoid being financially unsustainable in 12 to 24 months.
Ballard says that the huge loss in May was "an unpredictable blip — just very low activity, surgery, and admissions." Ballard added that June was looking similarly bad, calling both months "a deviation." Ballard didn't mention that since the Hospital's financial difficulties began, more and more patients are moving inland either because the Hospital's underfunded facilities are not suited to the patient or because some doctors prefer to shift their patients inland.
Both before and after the failure of Measure R, there have been several long articles in the local Fort Bragg paper which faithfully reported the position of the Hospital Administration, without the slightest hint of skepticism, critical analysis or alternative views of the situation.
On Tuesday, July 5th, the Hospital's planning committee met in public session to discuss what is to be done. It was heavily attended by up to 50 hospital staff and interested community members and got a fair amount of local publicity.
On July 6th, however, a second — and unpublicized meeting — of the medical staff also addressed the District's grim financial condition. That meeting has not received any publicity.
Much of the blame for the District's financial crisis is being placed on five "cost centers" that Administration says are losing significant amounts of money. The administration claims, without providing numbers to back it up, that the overhead at MCDH is lower than any other hospital of its size in California, but that MediCal and MediCare payments are not covering the costs of providing services to patients.
In both meetings last week, the hospital board and the administration (primarily in the form of their $150k/year CEO), acting in concert, presented four possible plans for dealing with the crisis.
The first plan involved cutting services that are "losing money," including the ambulance service, occupational medicine, Caring for Women (primarily pre-natal services and the inpatient obstetric/nursery service), abortion services for "out of area" women, hospice, and the "hospitalist" service. (Hospitalists are doctors who are in charge of daily medical operations at the hospital, making sure that patients are properly seen, monitored and treated and released as soon as they are ready.)
The second possibility discussed was conversion to a Critical Access Hospital (CAH).
The third, more drastic option, was sale of the hospital to a chain such as Sutter, Adventist Health Systems, or Catholic Health Systems.
The fourth possibility was to look at increasing revenue, for instance, another ballot measure or a sales tax of some kind.
Although not explicitly listed, another area being mentioned is the Hospital's "swing beds." Swing beds are the ones where people who require continued hospitalization are held for recuperation while they're monitored to make sure they're really recovering. Some people think the swing facility could be converted or farmed out to a Skilled Nursing Facility (SNF). Shifting the swing beds to a skilled nursing facility might bring the Hospital down to the number of beds which would qualify it for a "Critical Access Hospital" status.
The Tuesday public planning meeting was especially somber as the board discussed the need for cuts and emphasized the desperate financial straits the hospital is in. Many in the room were in tears as the board pounded home their view that the situation was nearly hopeless. The board felt that the community "was not passionate about the hospital" which provoked an emotional outburst from one audience member. That meeting is available on video from MCCET coastal cable access and is being covered in some depth in the Fort Bragg Advocate-News.
The Wednesday meeting with the medical staff was also intense. CEO Ballard opened by reprising the points made at the planning meeting the night before and then opened the floor for discussion of the response to the financial crisis.
Before the discussion began, Dr. Vicki Soloniuk, a pediatrician who practiced in Fort Bragg previously and is hoping to return to the community, stated that she had been talking with a number of community members and that there was not only a financial crisis, but a crisis of confidence in the board and in hospital administration. This statement was seconded by several of the other physicians in attendance. Board Chair Charlene McAllister responded with her usual "don't blame me" attitude: "I can't help what the community thinks."
Of course she can. And does.
The long-overdue medical staff discussion on Wednesday produced a number of good points that should have been discussed with the Board long ago. Board Chair McAllister's claims that somehow the Brown Act prevented the board from having meetings with the medical staff were viewed very skeptically.
In discussing programs to be cut, concerns were raised about the effect the cuts would have on the coastal community.
The District's ambulance service is vitally important to the Coast and other outlying areas. In addition to providing ambulance services and transport, the EMTs and paramedics also work in the hospital between calls, drawing blood, starting IVs, transporting patients to and from radiology, helping with registration, and more, thus greatly increasing efficiency and decreasing hospital personnel costs.
Ballard and the Board are considering spinning the Ambulance off to a separate Ambulance district, or even selling it to a private inland ambulance company. Medical staff noted that an outside agency would be much less responsive to county or district concerns. The Ambulance EMTs who are experienced and understand Mendocino County's medical needs and its history would likely be replaced by cheaper, inexperienced EMTs. In addition, one hospital board member commented that if the decision is made to terminate the ambulance service, Ballard would immediately give 90 days notice to the County and terminate the service abruptly on the 90th day. It is unlikely that the County could have another service in place in that period of time, leaving the Coast and some inland areas uncovered by a hospital ambulance service.
Options for increasing funding of the ambulance services were discussed.
The medical staff on hand noted that billing for ambulance services, like hospital billing in general, is inefficient and could be optimized. The hospital needs to be more aggressive in pursuing payments from government agencies, insurance companies and private parties who have the ability to pay. In addition, a review of billing — perhaps by one of the senior clinic administrators in the County — could identify ways to increase the levels of reimbursements the ambulance service now gets.
There was also discussion of a parcel tax for only the ambulance service. At the Tuesday night meeting, the board said they would need $96/parcel to cover the Ambulance's financial shortfall. However, those figures were questioned since Measure R itself was for $96/parcel. The Board then changed the Ambulance parcel tax estimate to $26/parcel. One board member objected to a parcel tax only for the ambulance stating that then the Hospital would be unable to go back for more money later if it was needed.
"It's regrettable that a stellar program like the Ambulance would have to be cut," said Ballard, "but we are getting inadequate funding from the feds and the state."
There was some discussion of Occupational Medicine which is also said to be losing money. For now, Ballard seems to want to retain it, but the medical staff seems willing to let Occupational Medicine go completely or at least be transferred to a private provider.
Obstetrical care was said to be a big money loser, also. But again the medical staff believes that the hospital's billing and management problems are big contributors to the problem. There was also a great deal of concern expressed about the safety of pregnant women if there was no prenatal or obstetrical care available in the area. From Fort Bragg or Mendocino, it can be over an hour on winding mountainous roads to the next nearest obstetrics unit in Willits. Pregnant women would then show up at the Emergency Room in labor or with complications of pregnancy that would have to be dealt with in the Emergency Room which may not be prepared for such problems. Once a woman is in active labor, hospital regulations make it very hard to transfer her. One bad outcome could result in a lawsuit that would wipe out all the supposed savings from closing the obstetrical unit.
Solutions for keeping prenatal care in the community were discussed. It was suggested that Mendocino Coast Clinics might be interested, though Dr. Brent Wright, the obstetrician on staff at MCDH, told his colleagues that the Clinic was not interested when he approached them in 2003.
Out of area abortion procedures, aka "TABs," were also vigorously discussed, according to several attendees. Dr. Eric Gutnick, a local gynecologist who is a member of the planning committee, told the group that Coast Hospital was the only local provider of abortion services, adding that he had asked Chief Financial Officer Jacob Lewis for figures supporting the (inflated) loss numbers initially presented two weeks ago and had not yet received them. Lewis finally gave some figures to Dr. Gutnick half-way through the Wednesday staff meeting, but Dr. Gutnick took one look at them and saw that they were uninterpretable and did not contain data which addressed his questions about costs. Dr. Gutnick further stated that CEO Ballard's figure of 90% of TABs being women from "out of area" was simply wrong. Mr. Ballard agreed that he had misread the numbers. Dr. Gutnick stated that it was closer to 50% and that most of those were women who lived in Mendocino County, not "out of the area."
Without good numbers on the out of area abortion procedures, it was difficult to make good suggestions. In fact, good numbers are becoming increasingly difficult to obtain for all the so-called money-losing areas being discussed.
TABs are part of the surgery department — an area which, by most accounts, is making money. However, Dr. Keevan Abramson, the local gynecologist, pointed out that often the operating room (OR) staff, who are required to be on duty full-time by law, would be doing nothing many times if the TABs weren't scheduled. Surgeon salaries will not decrease if TABs are not done. There was also concern that the hospital is targeting women's services, especially services for poor women. The medical staff also felt strongly that the administration should not be targeting specific procedures, because if they get rid of one, they might decide that there are other procedures they would rather not do and where would it end?
Some observers think that although out-of-district abortion services may lose money in a narrow sense, they are a way to bring in new families/patients who end up using the hospital for other more reimbursable services at a later time. According to them, cutting abortion services will end up costing money because fewer patients will be attracted to the already under-utilized hospital.
Dr. Gutnick also raised the issue of the legality of doing procedures for some patients while turning others away. He said that Mr. Ballard had told him that a lawyer had said it was legal but Ballard would not say which lawyer or what law allowed it. The medical staff felt that it was likely to be illegal and, if not, it would still be unethical to treat some patients and exclude others.
Hospice care was discussed only briefly on Wednesday. The comments were limited to expressions of shock that — yet again — the services were not billed for as MediCare will certainly pay for them. On both nights, the response of the board and the administration — i.e., Ballard — was, "We will look into that."
The hospitalist service was discussed more thoroughly on Wednesday. Prior to relatively recent initiation of the hospitalist service which provides for a dedicated (not scheduled in the office) on-call/on-premises physician to deal with all adult inpatient medical admissions, nurses would often spend hours on the phone trying to find out who was on call to admit adult patients and patients would sometimes go for more than a day without being seen by a doctor, thus increasing nursing costs and making the hospital unable to bill for those inpatient days on which the patient was not seen. In addition, patients often stayed longer than they needed to. Since the hospital is paid by diagnosis rather than per day for acute admissions, the hospital was losing money on that, too, as stays stretched out but reimbursements were fixed.
Last year, when the hospitalist concept was first implemented, Ballard said it would save a lot more than it cost. Now Ballard says he no longer thinks that the hospitalist are saving money, calling his previous remarks "probably in error." But the hospitalist position is certainly important to patients as they are seen more quickly, the nurses have their questions answered quickly, and, if there is an emergency, the physician can respond immediately rather than having to finish with the patient he is seeing before coming to the hospital.
The consensus of the medical staff is that cutting any of the hospitalist positions is a false economy — each hospitalist (there are four on staff) is worth much more than the $5K/month the hospital is paying for it. Without it/them, many of the physicians in town would be reluctant to keep admitting their patients at Coast Hospital and the hospital's costs would again go up. The medical staff further believes that the hospitalist position is being targeted solely because of personal animosity on the part of Bryan Ballard toward one of the physicians who acts in that capacity. (Rumor has it that hospitalist/physician Dr. Sacks-Wilner, another well-respected coast physician, is on Ballard's shit list because he has a tendency to speak his mind.)
Another possibility discussed was conversion to Critical Access Hospital (CAH) along the lines of Howard Memorial in Willits. Critical Access Hospitals were created in the late 90s to improve rural hospital access and to decrease rural hospital closures. CAH's qualify for higher reimbursement rates, particularly from MediCare. The information presented by the board and the administration so far has seemed negative, with the implication that CAH status would result in fewer beds for them to administer. But the medical staff seems favorably disposed. When CAH was being discussed at the Wednesday medical staff meeting, Board Chair McAllister said she didn't have much information on this option — an amazing admission given the hospital's financial problems.
Dr. William Bowen, a senior orthopedic surgeon at Howard Memorial, a CAH in Willits, is very familiar with the CAH concept. Dr. Bowen was invited to be present at the Wednesday medical staff meeting to discuss this option based on Howard Hospital's experience. Howard Memorial's CAH is managed by Adventist Health, as is the much bigger Ukiah Valley Medical Center in Ukiah.
The medical staff's many questions were calmly answered by Dr. Bowen giving the staff even more interest in the idea. Bowen told the group what they intuitively already knew: studies show adverse outcomes increase in financially strapped hospitals — which is part of the reason certain patients and doctors are choosing to go to inland hospitals rather than risk admission at the cash-strapped Coast Hospital. After Dr. Bowen left, the medical staff suggested that the board look into Critical Access status quickly rather than waiting until after any major cuts as the Administration seems ready to make.
Sale of the hospital was also discussed by the medical staff. Some doctors and nurses said they were concerned about whether an entity outside the community would be as responsive to the needs of the community as a local board. This position, however, falsely assumes that the District's board was responsible to anyone but CEO Ballard as it is. Dr. Bowen, who is widely respected by the medical profession in Mendocino County, said that Howard has had no problems with being affiliated with Adventist Health Services. He also said that any such option would require that the District shop around and be very specific about what the hospital and the community need and want before putting the place up for sale.
The medical staff again urged that sale of the hospital be investigated before making any drastic early cuts as the board intends.
Increasing hospital revenue and access to cash was also discussed. Suggestions including cutting something serious like the ambulance service then going back to the community for a parcel tax that would pass because they would know the board was serious about cutting essential services in the wake of the parcel tax failure. Several physicians at the Wednesday staff meeting suggested that threats of cutting essential services were not a good idea and might further alienate the community or be perceived as a kind of extortion. Others on hand argued that these were not threats but facts and a vigorous discussion ensued.
Several staffers noted that Coast Hospital's charges are low in comparison with other similar sized hospitals and a suggestion was made to simply raise the charges which in turn would increase percentage-based reimbursements. The medical staff also asked about how much help the Hospital's fundraising foundation could help.
More than one medical staffer at the Wednesday meeting noticed that someone had brought a case or more of expensive wine, wondering, If the hospital is so broke, why were there so many bottles of wine at the staff meeting? Maybe Ballard thought the wine would lubricate the conversation, maybe the wine was donated — but nobody knew who would donate several hundred dollars worth of wine for a doctors' confab.
It is frustrating for many members of the Hospital's medical staff that the Administration can't provide them with the proper financial information to evaluate which cuts should be made or how the cuts should be made. And, if, as is widely believed, the Hospital isn't billing for things like hospice services and support, they think the Administration should not make any permanent or large cuts until they tighten up the billing and give the staff good numbers.
In addition, Administration has only now started listening to its top medical staff who think that a CAH like Willits would help a lot more than making the large permanent cuts administration is currently planning.
And if, as Board member Don Tucker says, "Nothing is off the table at this point. Every suggestion deserves a further look," then the Board and Administration should 1) prove to the staff and the public that they're managing the hospital properly and 2) put their own administrative costs and the expansion project over-runs onto the table before they cut any essential medical services.
There will be another Board planning meeting on July 19 at 5:30 in the new hospital addition. It is open to the public.
The District's "restructuring committee" plans to bring its financial recommendations, with an implementation time line, to the August 25th board meeting.