The Mendocino Coast is facing a crossroads decision about healthcare. That decision will be greatly impacted by fiscal realities and the input of people who read articles like this and let their opinions be known to those in positions to make the ultimate calls.
As of July 1, 2020, Adventist Health took over day to day operations of the hospital in Fort Bragg, calling it Adventist Health Mendocino Coast (AHMC). This was accomplished through a thirty year lease with the Mendocino Coast Health Care District (MCHCD). The MCHCD is comprised of the taxpayers and voters from Westport to the south coast of the county, approximately one-quarter of the county's population. We are represented by a five person board of directors (BOD) elected to four year terms of office. The BOD makes the important decisions such as the affiliation agreement with Adventist Health (AH).
That thirty year lease agreement with AH is a bit like a contract with a superstar in major league baseball. In such contracts, at the surface the deal may be for a decade or more in duration, but the player, being a superstar, often includes an opt-out clause. Adventist Health has an opt-out clause after the third year of its thirty year lease with we the citizens of the Mendocino Coast. If AH doesn't like how things are going they can say, “See ya,” on June 30, 2023. If AH likes what they see, presumably based on finances, they will re-up for the long term.
Thrown into the mix of how you as individuals or AH as a corporate supplier of healthcare see the impacts of Covid-19 on the economics of hospitals, there is another benchmark year hovering in the not too distant future. By 2030 all California hospitals are required to meet seismic retrofit standards or close their doors. The hospital facility in Fort Bragg is split into seven distinct buildings for seismic regulation purposes. Only one of those buildings meets the requirements needed to operate beyond January 1, 2030. The current seismic retrofit law would close the other six, including the main hospital building and all aspects of the emergency room (ER). To upgrade the coast hospital buildings to meet the legal standards set by the state of California could cost nearly $30 million. That amount would be borne by the taxpayers of the Mendocino Coast Health Care District (MCHCD).
Another option is building an entirely new facility. If one visits the mchcdorg.com website used by the healthcare district board of directors, you can click on “Retrofit Current Hospital or Build a New One.” Therein, one finds a plan devised by the Devenney Group for a potential ten bed new hospital broken down into costs per square feet, arriving at an estimate of $32 million.
Whether or not those dollar figures hold up remains to be seen, but those are some of the basic questions confronting anyone who lives on the Mendocino Coast. How much can we put Adventist Health's feet to the fire to commit to staying beyond the three year opt out? $32 million for a new ten bed hospital vs. nearly that much to retrofit a fifty-year-old existing facility appears a much easier question. Yet, things are not so simple in healthcare.
A much more difficult and long ranging question amounts to, should we be going down the path to expending thirty million dollars toward a new hospital? Let's leave aside the problem of wringing $30 million or more from the taxpayers, though that is in a sense already underway through current taxation. To fully understand how we got to this momentous decision-making point, we have to employ some of our history skills. In 1946 Congress passed the Hill-Burton Act that provided federal funding to build relatively small hospitals in rural America. Think of it as the GI bill for healthcare to provide access for all to hospitals.
In 1997, the onset of the critical access hospital (CAH) program provided more favorable government payments to rural hospitals, again under the precept of greater access to hospitals. Critical Access Hospitals have twenty-five or fewer acute care inpatient beds, are thirty-five or more miles from another hospital, maintain an average length of stay for acute patients of ninety-six or less hours, and provide 24/7 ER service. The coast hospital is a CAH.
Reimbursement from Medicare was set at cost plus 1% for CAHs in the early 2000s. However, in 2011, along came the Budget Control Act. Through the process known as sequestration, Medicare reduced its payments to hospitals by 2% as part of a goal to achieve $1.2 trillion in savings over a ten year period. The Bipartisan Budget Act of 2013 (That is the title!) extended the sequestration beyond its original end date of 2021 through to 2023. Further legislation has pushed the effects of sequestration into fiscal year 2028. The total reduction/loss of Medicare payments to hospitals over this period is estimated at slightly more than $73 billion. So, paying for a new hospital and opening it in 2029 or 2030 is not going to be happening in the time of financial windfalls in healthcare.
We are now living in a healthcare system in which Amazon and CVS offer customers tele-medicine. In the Zoom and Facetime world we are getting accustomed to during the Covid pandemic seeing your medical provider through a computer screen isn't as bizarre as it might have seemed two years. With or without Covid, the tele-med world was already coming. The coast hospital no longer has an abundance of specialists as it did a generation ago. Coast residents who need a specialist most often go over the hill (AH hopes it is to their Ukiah facility) or just as often to the plethora of specialists in Santa Rosa. Some travel to UCSF or Stanford. The point being, for the most part a patient is not seeing a specialist at the coast hospital at present.
I recently asked one of the people I rely on for outside objective views on the healthcare system in this county for an opinion on the current situation here on the coast. A key part of the response was, “the new paradigm is underway and I predict it will be very prevalent in 5 years or less. I call it 'The Healthcare Consolidation (THC).' [No, not cannabis]
“By its very definition, this consolidation will make 'access to healthcare' stronger and more solid via the grouping of technology & the highly skilled human resource staffing into concentrated delivery sites. Because the technology needs (property, plant & equipment) and the highly skilled human resources are finite resources, they can be maximized and effectively provided by consolidation. Furthermore, another driving force underway is the aging population and the demand for healthcare is increasing. This consolidation is the best delivery model to balance the demand with the supply of available finite resource. 'Access to healthcare' can be maintained and actually improved during the next 5 years of this transformation. Probably the biggest challenge as usual is people do need to understand what is happening and why.”
What is happening? Finite resources, meaning money and people to staff medical provider positions, is already a strain on healthcare facilities. Find a link to almost any hospital's job openings and you will find a large number of positions available. This is painfully true at AHMC, but it is an across the board reality throughout the United States. There exists an acute need for skilled nurses. The other crucial words and phrases in the quote are “concentrated delivery” and “consolidation.” Essentially, they lead to the same thing. Hospitals will inevitably consolidate. The legislation that brought on the CAHs program came as a reaction to the closing of more than four hundred rural hospitals in the U.S. during the 1980s and 1990s. Since 2005 almost two hundred more have closed their doors. The future is hospital centers in urban settings, not small hospitals in rural settings.
So the question may not be how to fund a $32 million new hospital, but why would we spend $30 million or more on a hospital that will not get that much use and thus not be financially sustainable. A further question arises considering the current shortage in medical providers. Before constructing a new hospital are we realistically prepared to staff it?
A short time before I most recently contacted the person who provided the quote about consolidation and concentrated delivery, I texted this to them, “When I really drill down to Mendocino coastal reality, I think folks here need to realize that in the near future healthcare is going to be much more of a tele-med proposition and what we think of as traditional hospitals will be urban-centric facilities like UCSF or UC Davis only. Coast residents can still have their particular service providers like dentists, optometrists, physical therapist, and others, but the days of going to a full fledged local hospital after you sprain a finger playing soccer are nearly over. It would be better for the coast public to spend some sort of healthcare tax money on a larger fleet of ambulances and vehicles to comfortably shuttle folks to appointments in Ukiah, Santa Rosa, or San Francisco. People here need to face up to the fact that we are living in a remote, tourism-centric place. A traditional hospital here in the future may be only slightly more unrealistic than finding one on the John Muir Trail or in the middle of Death Valley National Park.”
The person I quoted earlier responded to that with, “You are right on with the strategy...”
It may feel a trifle more hopeful to recall the tone of that earlier quote about healthcare consolidation. The speaker/writer said, “By its very definition, this consolidation will make 'access to healthcare' stronger...” Also, “This consolidation is the best delivery model to balance the demand with the supply of available finite resources.”
In short, many people hereabouts are already practicing this consolidation with trips to Santa Rosa or San Francisco for medical care. Your dentist, your physical therapist, your massage therapist are not likely to go away. The two big decisions are: How much of something resembling a hospital are you willing to pay to build? How much are you willing to pay each year to subsidize any potential financial losses from operations of that investment?