The Blind Leading the Ophthalmologists: Hospital Mulls $10 Bond (Or Tax)

by Mark Scaramella, June 28, 2006

There were four different official versions of the recent departure of Coast Hospital's Chief Financial Officer Jacob Lewis. Hospital Business Development Director Heather Paulsen described Lewis's departure as "taking on a new challenge." Lewis himself saw his departure as "a growth opportunity." The Hospital Board called it a voluntary resignation. And several Fort Bragg residents said he was finally fired, having never presented a set of hospital books that stood the test of time. The time, in this case, being about a month — every month.

Lewis's Fort Bragg home went on the market days before the formal announcement and word of Lewis's firing leaked out on the streets of Fort Bragg before the Board even made the official announcement.

Lewis was brought in by former Hospital CEO Bryan Ballard who also recently "resigned." The Ballard-Lewis (mis)management team — cheered on with unanimous votes all the while by the oblivious Hospital Board who gave Ballard and Lewis glowing reviews and raises over their five-plus year tenure — presided over the hospital's loss of about $1.5 million dollars every year since they were brought in. And that doesn't include the huge over-run of the still incomplete hospital expansion project.

The hospital's newly hired "interim CEO" Jon Baker said, "Jacob is a professional, very capable, and we at the hospital wish him all the best in this new opportunity." And don't let the door hit you in the ass on the way out, Baker should have added.

Lewis's numbers never added up. He discovered new losses almost every month (even while reporting bogus profits for a few of them), and, together with his (former) boss, CEO Ballard, he brought the Hospital to the brink of bankruptcy.

Lewis became a household word in Fort Bragg when he first came up with a suspiciously targeted list of "money-losers" at the hospital (as directed by Ballard, of course). Many people in Fort Bragg thought the term "money-loser" was a label for doctors and staffers Ballard didn't like. Among others, Lewis's "money-losers" included the hospital's popular and profitable ambulance service whose timecards (conveniently) didn't properly reflect the time they spent doing hospital staff work, making the ambulance appear to be a "money loser." Lewis's "money loser" list also conveniently left off his overpaid self and his boss who were losing over $100,000 every month.

But none of that inconvenient history stopped new CEO Baker from telling the Hospital Board last week that "Jacob Lewis did an outstanding job." Of course, board chair for the evening Camille 'Whatever The CEO Says' Ranker chirped her agreement. If what Lewis did to the Coast Hospital is "outstanding," we'd sure hate to see what a bad CFO would have done. The Catholic Healthcare West hospital in San Andreas where Lewis has lined up a new CFO job better pray to the Virgin Mary that they don't end up with the same fate.

At last week's Hospital Board meeting it was announced that there are four different applicants for new CFO, one of whom is considered a "possible candidate." The Board hopes to have a new CFO in place by early September. For his last report to the Board Lewis told them that May's operating loss was $265,000, which, he said, was better than previous years. In Lewis-Ballard world losing only $265,000 in a month is "an improvement." But, these are Lewis's numbers, so who knows?

For years ex-CEO Ballard told his captive board that all they had to do was raise hospital admissions — by bringing in more and more costly specialists — and the hospital's budget problems would miraculously disappear. During those same years the Hospital's expenses went up, the reserves declined and the admissions went down. Solution: bring in even more costly specialists.

However, as has happened in almost every month since Ballard started talking about increasing admissions, Lewis told the board in his final report that admissions were down yet again in May.

Baker says his new Hospital budget is now at a $185,000 deficit for the 06/07 budget year which would be substantially better than $1.5 million in the hole under the prior administration. But who knows? Next month Lewis will be gone and there will be new numbers and Lewis will be available as a convenient scapegoat. Lewis called the Hospital's new budget proposal "a stressed budget." CEO Baker called it "lean." There is no contingency or reserve in the budget. "There's not much of a safety valve on this one," said Baker.

According to Lewis, the hospital is running at a $1.4 million loss for 05/06. And it hasn't made a profit for years.

The Big Topic of the evening was whether to put a general obligation bond or a parcel tax on the November ballot to keep the hospital open. The latest reason for needing more cash (since the board can't admit to squandering it all) is that the Hospital needs upwards of $10 million to do a seismic retrofit and infrastructure improvements (new central boiler, insulated non-rusting windows, a new nurses station, etc.) — never mind that the last general obligation bond in the late 1990s was supposed to include seismic retrofit and infrastructure repairs. How this board came up with the $8-$10 million number is anybody's guess — they were only off by a couple mil on the last bond and even at that left much of the planned work undone. Hell, why not ask for a bond and a parcel tax? Go for the gold! As far as the Board is concerned, their sterling money-losing performances for the last ten years would easily convince a skeptical public to approve anything they want. Right?

A few nattering nabobs of negativity pointed out to the Board that their last attempt at a parcel tax failed miserably, and that a majority of Fort Bragg residents "distrust" the hospital administration and board. But no matter. The consensus of the always-positive board members and even some credulous members of the public is that the hospital is heading in a "positive direction" and that the problem is simply "a lack of communication" — an ordinary PR problem that can be easily overcome with... well, the same kind of financial mumbo-jumbo that has worked so well for them in the past. Dr. Kermen, the only board member to express even a hint of concern, said he wasn't sure the board's perception of a "snowball of positivity" wouldn't melt in the spring of next year.

Earth To Board: unless the billing is credibly straightened out, the financial numbers are stabilized and made public, all the board members who are up for re-election are replaced, and a credible new management team is in place, you don't have the proverbial snowball's chance in hell to get a bond or a parcel tax approved, no matter how shiny and positive the teensy snowball may be.

Board member Jim Hay announced that the Board was planning to bring in yet another round of costly new consultants to evaluate the bond-or-parcel-tax question. Some members of the public balked at this idea, saying that "grassroots communication" through hospital staff was better than bringing in outsiders. Trouble is, they tried that the last time the parcel tax was on the ballot. Ballard even sent out a memo to staff instructing them to promote the parcel tax because the staff's credibility was (obviously) better than the Board's. But few staff members took Ballard up on his lame suggestion and the parcel tax didn't get anywhere near the required two-thirds majority, and it didn't even get a majority inside Fort Bragg city limits, even though almost everybody wants to see the tiny hospital survive.

The board said they'd continue to discuss the issue.

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