At a February 3 zoom forum, Jason Wells, the former Chief Executive Officer (CEO) of Adventist Health (AH) for Mendocino County and current leader of the AH Community Board for the coast, made it clear that AH will not be constructing a new twenty-five bed hospital here. He flatly stated that building the equivalent of Howard Hospital (completed in Willits during 2015) would not be possible in the near future. Howard cost about $65 million to construct. Wells estimated an equivalent structure on the coast would cost over a $100 million.
So where does that leave the residents of the Mendocino Coast Health Care District (MCHCD)? Pretty much in a box in which the future is the past and the present, meaning the present hospital. However, not quite as is. There is the state requirement to seismically retrofit the existing hospital by 2030. There is and has been talk for years that the legislature would move that date back.
Right now, in the 2020s, there exists an important part of the lease agreement between Adventist Health and the healthcare district. “No later than January 1, 2025, Landlord [the Mendocino Coast Health Care District] shall prepare, to the reasonable satisfaction of Tenant [Adventist Health], a committed plan to achieve Seismic Compliance for the Improvements. Landlord must achieve Seismic Compliance no later than January 1, 2030, or on the date required by Law, whichever occurs later.”
Perhaps the watch word or catch phrase for the next five years for the healthcare district is “stay flexible.” The District will do well to conserve its cash amid record inflation while avoiding investing too heavily in major capital intensive projects. This should allow the District to be ready and able to adapt to the changing environment in the medical/healthcare world as we approach that 2030 benchmark year.
That seismic compliance must be dealt with however. The MCHCD Board should first be examining the costs to retrofit the Emergency Department (ER). These buildings do not require the costlier expenses of structural rebuilds like the rest of the hospital. They must meet only “anchorage” standards. The district will need to employ civil, mechanical, and electrical engineering to find out precisely what must be done and how much it will cost. Current estimates run in the $2-3 million range.
A soil science study may also be needed.
Once that is accomplished a similar procedure can be followed for the remainder of the hospital. There is one exception, the “imaging” room already meets the 2030 seismic standards.
Beyond the seismic compliance plan, the MCHCD Board of Directors needs to get its house in order in some basic ways. First, they need to provide the public with monthly financial reports. Within these reports, the public needs to see what dollar amounts the district possesses in its different bank accounts (there are several) along with its Local Agency Investment Fund (LAIF), which acts like a reserve.
The District needs to create separate accounts for the Measure C parcel tax money, for the regular tax dollars beyond Measure C funds, an account for its Improvement Fund.
Section 7.1 of the lease: Landlord [MCHCD] shall make Two Million Dollars ($2,000,000) (“Improvements Fund”) annually available to fund (i) the Improvements Schedule projects and (ii) any repairs, improvements or replacements of Existing FF&E [furniture, fixtures & equipment] and/or procurement of new FF&E for Hospital operations), a separate account for its Restricted Capital Fund, and make sure that AH funds are not commingled with any MCHCD accounts. Currently, it appears that this commingling is a problem that Adventist Health needs to help rectify...
In regards to money and the lease, there is a potential $2.4 million problem. In years four and five of the AH lease, the rent payment to the district will go up from $1,750,00 annually to $2,950,000, with this caveat: “If the total earnings before interest, taxes, depreciation and amortization (“EBITDA”) from the Medical Business is equal to or greater than five percent (5%) of the net revenue for the immediately preceding twelve-(12-) month period prior to the annual anniversary renewal date.”
Given the vagaries of Covid and financial matters in general, it is possible that the EBITDA may not exceed the 5% threshold. If that turns out to be the case for both years four and five of the lease, the district will be $2.4 million short on any monies to be used for a retrofit (or any other large project). The District should request from AH an annual accounting of the EBITDA.
The “Finance Report” prepared by Board Treasurer John Redding also has questionable entries that should not be accepted at face value. In 2021, the District paid approximately $135,000 into the Intergovernmental Transfer (IGT) system. In October, Redding estimated this money would return ten fold (“10 x”) to the district. In his January accounting, he stated the return would be about $500,000. Obviously, this significant difference needs to be scrutinized.
Beyond finding out precisely how much MCHCD has in each of its bank accounts, the district board needs to come up with a clear set of bylaws and/or policies and procedures to curb the dysfunction within its own operation. In addition, the MCHCD Board needs to produce minutes of key board meetings that have gone missing for nearly a year and a half in some cases. For instance, there are no minutes nor a zoom recording to document when the current bylaws were approved by the board of directors (Likely at an early November 2020 meeting). Clearly, the MCHCD Board needs to hire, through the proper process, an office manager and/or administrative assistant to assist in these matters and to take the burden of day to day functions off the shoulders of the Board of Directors.
An additional item that could require prioritization is the matter of a skilled nursing facility (SNF). Sherwood Oaks is a private SNF in Fort Bragg. It has apparently been rescued from closure by a new owner, SerenEthos Care, headquartered in Hayward, CA. Due to pandemic restrictions Sherwood Oaks' capacity has been reduced from a daily census that used to reach into the seventies down to approximately half that number of patients cared for at this valuable skilled nursing facility. MCHCD Board member Jessica Grinberg played a role as a medical provider and private citizen in helping facilitate the rescue plan that eventually led to new ownership. At a special board meeting on February 17, Grinberg spoke to the need for more than the skilled nursing facility (SNF) at Sherwood Oaks. She outlined possibilities for assisted living, RCFE (Residential Care Facilities for the Elderly), and other smaller sized facilities that can benefit residents of the coast. These types of facilities help to keep relatively minor physical health problems from glutting emergency rooms and help diminish the number of calls our firefighters have to respond to for simple “lift assists.”
If you would like to know more about how to start or participate in coastal assisted living, RCFE, or similar facilities, contact MCHCD Board member Grinberg at jgrinberg@mcdh.org.
The long term success of Sherwood Oaks will depend on how fully the new ownership team can staff the facility. The problem of staffing in healthcare is a nationwide one, with a dramatic need for nurses evident everywhere. In a 2021 survey, hospital CEOs labeled workforce shortages as the most important problem in healthcare. 94% of the CEOs pinpointed the lack of registered nurses (RNs) as the number one issue within the personnel shortage crisis.
At that February 3 forum, Adventist Health Mendocino Coast CEO Judy Leach stated that the coast hospital had 72% of its needed staffing, which means that on a given day AHMC is lacking more than a quarter of its workforce.
California has the most RNs, but it has the lowest number of registered nurses per capita in the United States. This takes us back to the AVA piecefrom the first week of January and the trend in healthcare toward consolidation of services. Crucial sections from that article include, “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.”
And this: “Hospitals will inevitably consolidate. The legislation that brought on the CAHs [Critical Access Hospitals such as the one on the Mendocino Coast] 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 will be hospital centers in urban settings, not small hospitals in rural settings.”
Building a new hospital or a new SNF on the coast will be an effort in futility if those facilities cannot be fully staffed by medical professionals.
Long range strategic planning certainly has its place in any type of operation. However, the coast and its healthcare district must address some very basic needs first. If you like your items in relative bullet point fashion:
• Seismic Retrofit of a. The Emergency Room, and b. the Remainder of the hospital
• Monthly financial reports and separate bank accounts.
• Staffing
• Bylaw review and rewrite Minutes
• Future of skilled nursing facility, and Assisted living, RCFE, apartment living, board and care
Anyone interested in a paid support staff position with the Mendocino Coast Health Care District may contact MCHCD Board Chair Amy McColley at: amccolley@mcdh.org
Interesting article. Thanks for your coverage of a very important subject.
First, thank you for researching and writing this important piece. I do hope those who can affect the changes you’ve outlined are among your readers. Our healthcare system is in further peril if they ignore this.
Mr. MacDonald, thanks for this piece, as it was very educational. As a recent arrival to the area with a background in health care policy and to some degree health care finance as well, I would appreciate connecting with you directly to continue my efforts at seeing how I may be able to help. I’ll leave my email address in the required field. Thanks again.