Transparency has become a buzzword to serve the purposes of politicians or those who oppose them. In Fort Bragg, California, it is one of the rallying cries of citizens seeking the ouster of the mayor and the city manager. However, Fort Bragg's city government is a shining light of transparency when compared to the dark hole of information across town at the Mendocino Coast District Hospital (MCDH).
If one wants to see how the City's finance committee is transferring Community Development Block Grant (CDBG) funds to the town's general fund, a couple of clicks on the City of Fort Bragg's website will take any curious citizen to a fairly detailed explanation of the process and the amounts being transferred (approx. $200,000 total). About three months ago I bumped into one of MCDH's Board members who gave me some information about the hospital's return from bankruptcy and a hint about the about-to-be-hired CEO. I went to the MCDH website to see when the next Board of Director's meeting and/or Finance Committee meeting would be held.
What I found in March was much the same as what I'm about to quote for you from MCDH's May website under the heading “Public Meetings.” For the Board of Directors meeting: “5 28 2015 Fourth Thursday of every month, 6:00 p.m., in the Redwoods Room.”
Simple enough. Okay, but I wanted to attend the Finance Committee meeting as well. Scroll down a couple of lines on the MCDH website and here goes: “5 28 2015 Tuesday immediately preceding the 4th Thursday of the month, 3:00 p.m Tuesday, immediately preceding the Board of Directors meeting every month, 2:00 p.m., in the Redwoods Room.”
Wow! According to that post the MCDH's Finance Committee was to meet on Tuesday, May 28th (May 28th was actually a Thursday). Within the space of a dozen words the MCDH website tells readers that the Finance Committee meets at two in the afternoon then three in the afternoon.
Around 1 p.m. on Tuesday, May 26th I called the hospital and after wading through the usual recorded multiple choice options spoke to a real person who was equally baffled by the website post for the Finance committee. She had an in house calendar at her desk that listed said Finance committee meeting for that afternoon at 3 p.m. in the Redwoods Room.
I arrived at the Redwoods Room at 2:50 p.m. The door was open, but there was no sign of anyone or a meeting about to take place. I waited there until 2:59 without anybody else appearing. Armed with a copy of the meeting schedule printed from MCDH's website, I went to the front desk and explained the situation. Another baffled hospital employee had no answer, but made a note to herself regarding the problem. Later in the afternoon I returned to the Redwoods Room where lo and behold agendas had appeared for the Board of Directors meeting and the Finance Committee meeting. Both were to be offered up on Thursday, May 28th. The Board meeting was, as advertised, at 6 p.m. The Finance Committee meeting was to be held neither at two or three in the afternoon, but at 2:30.
While plodding through search engine results in an attempt to find any mention of MCDH's Finance Committee, I stumbled upon the most recent official audit of MCDH. This 2014 report includes a lengthy paragraph on its final page which notes a series of Stark Law violations to the tune of $11,555,000.
Readers may reasonably inquire, what is the Stark Law? It is a federal code that prohibits physicians from referring Medicare or Medicaid patients to a whole host of business entities, including hospitals, labs, or clinics, in which the physician or a family member has a financial interest. Hospitals are also prohibited from submitting claims to Medicare or Medicaid furnished as a result of a prohibited referral.
MCDH claims to have self-disclosed the problematic billings, but it nevertheless was fined roughly $400,000. Half of this penalty was paid outright by MCDH, the remainder is in the process of being paid off payment by payment. $400,000 is a significant amount for a hospital just now coming out of bankruptcy, with monthly cash flows hovering near or slightly below the break-even line.
One sign of progress occurred in the Finance Committee meeting when newly elected committee chair Dr. Bill Rohr at least proved that he is aware of the concept of trend analysis to track where the hospital's specific money problems occur, although the analysis presented in a brief “Powerpoint” appeared to go back no more than a single year.
MCDH's Board of Director's has included Tom Birdsell for several years now. Mr. Birdsell is purported to be a former financial wiz out of Silicon Valley, yet his tenure on the board overlaps the hospital's bankruptcy. Birdsell seems stuck on the age old parcel tax as a means of boosting the hospital district's coffers, though his parcel tax plan appears to only bring in about one and a half million dollars per annum. No pittance, but in the light of looming capital expenditures on such basic items as electrical surveys and a functional nurse call system that could run into the hundreds of thousands of dollars, a million and a half can go quickly at MCDH.
Birdsell's tenure on the MCDH Board was the focal point of long time coast resident Scott Peterson's statement during the public comment period of the meeting. Peterson said, “At the last board meeting I attended, Mr. Birdsell made a point that Sonoma Valley Hospital is a peer of ours. When I spoke with him privately later, he said they are not, which was confusing. So I did some research. I got our audited financial statements and theirs. I also got the tax returns for both foundations [fundraising entities for each hospital], ten years worth. Then I did something called a vertical analysis where you add a percentage column. Then I did something called a trend analysis where those percentages are compared year-by-year and case-by-case.
“Here's what I found: We are similar to Sonoma Valley in revenue. So is our annual wear-and-tear. Our foundations were similar before Mr. Birdsell joined the board, kicking in 10% of that wear-and-tear. Two years ago Sonoma Valley brought their foundation in-house and discovered $6,000,000 in unreported contributions. That's revealed by their financial statements and tax returns.
“Now they are building a new hospital. We need to do that, too, within 15 years or close our doors. It's the law.
“Our wages and salaries are different. Sonoma Valley pays 15% more. Ours have dropped since Mr. Birdsell joined the board, by 7%. Sonoma Valley pays 6% less for medical fees. Ours have increased since Mr. Birdsell joined the board, by 7%. That's doctors robbing nurses to me. Our insurance expenses were the same [as Sonoma Valley] before Mr. Birdsell joined the board. Sonoma Valley's have gone down since then. Ours have nearly tripled.
“To Mr. Birdsell's credit before he joined the board our losses averaged $3,000,000 per year. Now those losses are under a million. Today Sonoma Valley's average loss is $3,000,000 a year, but they are not bankrupt. We are and seeking concessions from the employee's union to drive wages down ever further. I don't see that happening to the doctors, which makes this look like a sham bankruptcy to help the one-percenters, who just happen to be doctors.
“So, Mr. Birdsell was right. We are the peers of Sonoma Valley in some ways and not in others, but look at their hospital and then look at ours. We should be peers in every way possible.
“I know a fundraising company that's helped the hospital before, with a quarter million dollar capital campaign at twenty-five cents on the dollar. So I contacted Mr. Birdsell and offered to set up a meeting to talk about bringing the foundation in-house and build a new hospital, like Sonoma Valley is doing. The fundraising company was willing, but Mr. Birdsell didn't want to talk about it.
“Since Mr. Birdsell has been on the board, we've taken in over a quarter billion dollars. That's Billion with a B. Three years ago we declared bankruptcy. Sonoma Valley's taken in the same amount and they are building a new hospital. Sonoma Valley has an online up-to-date strategic plan, with progress reports. Look at ours. We've got twenty-eight pages of plans, with seven sections for progress reports, but no progress. There's no financial plan and no fundraising plan. There should be. They should all be written by licensed professionals and there should be progress reports on everything, open to the public, on our website.
“We should also have a reasonable budget, from a peer like Sonoma Valley, to make our medical fees and employee wages sustainable. The same for insurance expenses and our bottom line. If Sonoma Valley can lose $3,000,000 a year, then so can we with an effective foundation. Anybody we consider for future fundraising should have a track record on their CTRD. That stands for ‘cost to raise a dollar.'’ We should open that process up for bids, paid for by the foundation. It's got $2,000,000 in the bank, maybe more squirreled away, like Sonoma Valley had. That could generate all the money we need, but not with the foundation's track record. So we need to manage the fundraising by talking about it and bringing the foundation in-house.
“There's another thing we need to talk about. That is policy. Madame Chair [RN Kitty Bruning], I understand you had to quit your job as a nurse to be on the board. Is that correct? And doctors don't have to quit to be on the board, right? That policy is absolutely wrong. Look what it's done. We've got doctors robbing nurses under that policy. That has to stop or we'll lose our nurses.
“One final note. We should revisit the professional assessment written by Delta One Partners ten years ago, before Mr. Birdsell joined the board. There are a dozen recommendations in that assessment. Most of them were ignored. We should follow all of them and put it on our website, right next to the strategic plan and the financial plan, and the fundraising plan, with sections for public comment on everything, moderated by a hospital staff member, not by a public relations consultant.
“Mr. Birdsell's not a bad guy, not at all, but he needs our support and above all our honesty. We all need to talk.”
Even if there is some element of self-serving in Mr. Peterson's presentation (he works in the business of fundraising), there is also potential food for thought in his words concerning the finances of MCDH. Perhaps the most damning statement made by Peterson was his assertion that if a nurse joins the MCDH Board then he or she must resign their nursing position, but doctors are not held to that standard. Though statements from other members of the public received clarifying comments from the Board of Directors several times, no one on the MCDH Board made any attempt to change or amend the declaration about nurses and doctors on the board of directors.
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