Ongoing Trouble at Coast Hospital

by Malcolm Macdonald, March 22, 2017

On March 16th Mendocino Coast District Hospital (MCDH) abandoned all plans to convert to a “Hospital Fee Structure” when it became clear that there was no money to be gained by such a conversion. In fact, in a financial impact estimate presented by the hospital's Chief Financial Officer, Wade Sturgeon, MCDH would actually lose $50,000 annually under the “Fee Structure” compared to current revenues brought in by intergovernmental transfer (IGT) funds, Assembly Bill 915 dollars (medical provider reimbursement), California Senate Bill 239 (quality assurance fees), and the “Prime Project,” which by itself brings in $750,000 this year.

The failure of the “Hospital Fee Structure” program to benefit the financially struggling hospital appears to be mere background to concerns surrounding the hospital's top administrators. Almost immediately following the disbanding of the ad hoc committee dedicated to the hospital fee plan last Thursday, the MCDH Board of Directors met in closed session to consider one item: a performance review of their CFO, Mr. Sturgeon.

Readers may recall from articles in the March 1st and 8th editions of the AVA that in the fall of 2016 Mr. Sturgeon downplayed the seriousness of billing and coding errors made by the newly contracted Emergency Room (ER) provider in his official reports to the hospital's Board of Directors and its Finance Committee. In addition, both the CFO, Sturgeon, and MCDH Chief Executive Officer (CEO), Bob Edwards, ignored internal warnings to add employees in order to sort out the billing and coding mess.

There are also creditable indications that a personnel claim, that has been referenced in an ongoing series of MCDH Board closed sessions, involves workplace harassment complaints made by the hospital's most recent chief human resources officer, complaints directed at Sturgeon and possibly CEO Edwards as well. The March 16th performance review of Sturgeon lasted just under an hour and a half, with Sturgeon in the room for a majority of the session. The remainder of the time the five MCDH Board members consulted with their legal counsel, John Ruprecht.

At the conclusion of the session, without Sturgeon present, Board Chair Steve Lund called in the only members of the press in attendance, yours truly and Marianne McGee from Mendocino TV. Lund stated that the Board would be conducting further interviews with MCDH staff before rendering any decision on Sturgeon's performance.

At that point comments from the community were allowed. I read the following questions, which were additionally submitted via email the next day to the five MCDH Board members and legal counsel Ruprecht:

Is it true that fourth quarter (Oct.-Dec.) 2016 professional fees, from Medicare, were not paid to two North Coast Family Health Center (NCFHC) physicians in anything resembling a timely fashion? Reports are that this was an ongoing problem as of Monday, March 13, 2017. A problem not reported by the CFO to the Board or the Finance Committee of MCDH.

Is it true that Rural Health Clinic (RHC) claims from NCFHC, approximately fifty days worth, dating from mid-November into Jan., 2017, had not been billed for as of March 13th?

In relation to the first question, is it true that last autumn NextGen [a provider of electronic health record sytems] refused to release the updated ICD-10 codes to this hospital, alleging that MCDH had not sent out its invoice to NextGen?

At the Jan. 4, 2017 Finance Committee, the CFO, Mr. Sturgeon, stated that issues associated with the clinic's (NCFHC) billing had been fixed or would be fixed by the end of January. Yet the issue of professional fees cited above still existed at the beginning of this week (March 13, 2017).

Is it true that last summer the CFO informed third party payers with contractual agreements that MCDH prices would rise by an average of 5% on August 1, 2016, when he should have known that such increases would not be implemented? It is alleged that as a result of the CFO's letter to this effect Blue Shield reduced payments by 5% in response, as they are contractually allowed to do. Is this allegation true? [All of the questions to this point are based on fact/data based research on my part. Much of this information was not known by the MCDH Board of Directors because CFO Sturgeon chose to withhold it from them.]

When the CFO was accused of workplace harassment, why was the accuser/victim of the harassment placed on administrative leave instead of the accused CFO?

Does MCDH have a clear written policy regarding whether the accuser or accused in harassment cases is placed on leave? Is there a policy that allows for both to be placed on leave? [Where appropriate answers, or best guess responses to these queries will be provided to readers. Indications are that the answers to these two particular questions are: No and No.]

There are allegations that the CEO has in effect been an enabler of the CFO, essentially ignoring serious complaints directed at the CFO and participating in coercive actions, including behavior aimed at humiliating accuser(s). Has the Board fully investigated this aspect of the current administration at MCDH? [Most likely answer: Not yet.]

It has been reported that the CEO obtained the results of a study regarding OB (obstetrics) risk assessment (in the case of MCDH closing the OB Dept.) as early as Feb. 21, 2017, yet failed to release those results to the OB Ad Hoc Committee for use at its final meeting. Has the MCDH Board investigated this matter? [The answer is: No, meaning the CEO, Edwards, has not shown these results to the MCDH Board either.]

It has been reported that the Hospital Foundation donated a significant amount of money in late 2015 for the purchase of infant warmers. The money, under the charge of the CFO, seems to be unaccounted for. Has the MCDH Board completely investigated this matter? [The key word is “completely.”]

Have Compliance Officers been allowed to speak to the MCDH Board, in closed session, without the CEO or CFO present?  Has the Chief Human Resources Officer been allowed to speak to the full board without the CEO or CFO present?  [Most likely the answer to both questions is: Yes; however the MCDH Board might want to re-interview them along with other department managers as well.]

Was the chain of command altered when the current CEO took an extended sick leave? Prior to that time it seemed that the Patient Care Services Manager would have been in charge in such a situation; however, when the CEO did go out on sick leave the CFO was suddenly in charge. Was this chain of command altered by the CEO alone, by the Board of Directors, or by the board at the behest of the CEO? Is there a clear policy in place to cover such situations?  [The third option is most likely.]

Is the MCDH Board of Directors aware that a significant number of hospital employees, from manager level on down, are on the side of the person who recently filed a personnel claim (another ongoing closed session matter)? Many employees believe in this person, and, though relatively silent in public, are hoping that they will not have to continue working with the current CFO. [The most likely answer: until the point was raised a majority of the Board members were unaware.]

Has the MCDH Board of Directors hired any outside investigative services concerning the CFO's performance or the personnel complaint that is ongoing? [Most likely answer: Yes.]

The motivation for the string of questions came from reports earlier in the day (March 16th), indicating that Sturgeon's performance review would conclude with nothing more than a proverbial hand slap and that no connections whatsoever would be made to CEO Edwards' role in these matters.

However, the fact that the Board of Directors will conduct more interviews with staff puts things in a more hopeful light for the numerous hospital employees who, as cited above, have grave questions about the top two figures in MCDH's administration.

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