Unprofessional Governance?

For the first hour and fifty minutes the March 26th Finance Committee meeting for Mendocino Coast District Hospital (MCDH) looked like one of the best in years. Then committee chairman and MCDH Board member John Redding went into what he labeled “The Last Word” on the agenda.

Redding's concluding comments took about five minutes to complete. “As a board member I have become increasingly frustrated by my own board… I had an epiphany last week after a couple of contentious meetings with my colleagues… Maybe affiliation [with another hospital group, such as Adventist Health] is a good thing, It looks better to me now than it did before, not because the Adventists offer better, more professional management. I don't think that's the case. I think we have a great team here [he presumably means interim Chief Executive Officer and full time Chief Financial Officer Mike Ellis and other MCDH administrative managers]… but they [Adventist] would provide professional governance, which I don't think we have here.

“I'm sorry to have to say that so early into this, but this board does not meet my standards of professionalism. It just doesn't. We bounce from one thing to another. We started with the strategic plan then we jumped ship to affiliation. It was not properly introduced to the public or to the board. Now the switch is to an organizational review because of this fear that we're about to run out of money. You'll notice on the board agenda [for Thursday, March 28th] there's an organizational review. I wondered how is that different from what we've been talking about here, so I'm confused by my leadership, confused by my colleagues. What the hell is going on.

“One of the things I've become increasingly concerned about is the treatment of our management staff by some of our board members. There is no reason to distrust the professionalism of our team… It is my experience that Mike [Ellis] and his team have been more than forthcoming with information, more than cooperative. I can talk to any members of the staff [Redding referenced two in the audience] and get answers. Some of my colleagues apparently feel they can't do that. I don't understand that. It's wrong and it says more about my colleagues than it does about Mike Ellis and his team. I don't know what to do about it. I think it's a structural flaw in public hospitals where you have elected officials. We're volunteers, you get what you get. It's almost a random crap shoot.

“I like my colleagues. I know that they intend well. They do intend well, they are likable people, but good intentions don't translate into good actions. So, I needed to get that off my chest because I think the biggest problem facing the hospital right now is the board that I sit on.”

At that point there was applause from some in the audience. It's probably best not to name specific names because some might get left out some or others might be included accidentally, folks who were simply seated next to a clapper. One wonders if those who applauded Redding's comments would want to be disparaged by a colleague themselves without being present to accept or refute the criticism. Most likely, considering Mr. Redding's reference to contentious meetings with other board members, he has expressed some of these sentiments to his board colleagues either face to face or over the phone. However, that is a relatively closed door activity, as opposed to a public tossing under the bus. Anyone hearing or reading Mr. Redding's remarks has to conclude that he meant all four of his colleagues on the MCDH Board of Directors. He provided no evidence of exception(s).

At the opening of the meeting, Mr. Redding repudiated the analysis of a former long time member of the finance committee (as reported here in the AVA) whose financial study concluded that the hospital would run out of money by the fall of 2020. Redding stated that another longtime observer of the hospital had abandoned an analysis that MCDH would be penniless by the summer of 2020.

The highlight of the meeting was a fairly lengthy presentation by MCDH's Revenue Cycle Director Colene Hickman. She has been on the job since May of 2018. Ms. Hickman detailed several methods that will help to improve the hospital's bottom line. She stated that 60% of the information that later goes onto claim forms is gathered at a patient's first stop: registration. Hickman claimed that when she arrived at MCDH the quality of accounts were barely meeting accuracy rates of 50%. In addition, 25% of all mail was being returned as non-deliverable. Addresses for patients and their bills were not being taken down correctly or updated. The new MCDH goal for such matters is 95% or higher (95% being the industry standard). Hickman said that if errors such as incorrect addresses occur now, the source of the error, be it registration or elsewhere is sought out and the person who made the error must track down the correct information.

According to Hickman, MCDH has improved its financial assistance policies. What was recently being written off as bad debt can now be captured under the category of “charity care,” bringing back multiple hundreds of thousands of dollars to the hospital through Medicare reimbursement.

Hickman cited better up front collections, using the hospital's clinic, North Coast Family Health Center (NCFHC), as an example. Her statistics show NCFHC going from $5,000 per month in up front collections to $20,000 per month in just a two month span of time.

The revenue cycle director said that many missing charges, out of date charges, or coding errors have now been identified. In other words vast amounts of money in coding or billing oversights or errors as well as passed over charges are being located. If this sounds familiar, check out the April 4, 2018, AVA for reference to the findings of MCDH's then interim CFO John Parigi: “Parigi uncovered millions and millions of dollars worth of legitimate charges to patients that have, until Mr. Parigi's brief tenure, not been billed for, nor payments collected. In just three months Parigi's small team found over $3 million from previously languishing accounts. The fault for this lies not on any specific employees in the billing and finance departments, but on the fact that the hospital has been operating for years on a three-way jury-rigged electronic system. Thus, coding for a specific patient's charges and the subsequent billing had to go through multiple, yet different, types of computer systems. Therefore, the chances for misplacing or losing charges or the entire bill were exponentially exaggerated at all times.”

A month after Parigi was prematurely fired and Hickman entered the financial fray, 95% of cases were still being returned to coding for corrections. Additionally, there was a backlog of 30,000 cases. Hickman stopped the use of outsourced coding companies and within a couple of months a MCDH team got more or less caught up.

Hickman went on for nearly forty-five valuable minutes detailing ways that have already been implemented to improve charge capture and reimbursement in surgery cases, swing bed revenue, and other areas of the hospital as well as those that can be enhanced once the new electronic health record (EHR) system becomes fully operational in July.

Hickman's detailed and no nonsense approach merited applause for her and her fellow financial department workers. Nevertheless, after Hickman's presentation, this writer asked if she or Chief Financial Officer Mike Ellis could tell the public if these improvements meant that MCDH could maintain enough monetary independence to avoid affiliation with an outside entity (such as Adventist Health).

Mr. Ellis took on the question, “We are certainly looking at that. The baseline is where we are now [a projected loss of about $1 million for the fiscal year ending June 30, 2019]. We know that we will be more efficient in our processes and in our management applications of looking at where costs are and where the revenue streams are coming from [meaning from which specific departments and even inner-departmentally]…” His answer went on to essentially say that in the future more charges would be collected and collected faster, but as to how independent this would make MCDH, Ellis offered no definitive response.

If the meeting had concluded there an objective observer would have been buoyed by the preciseness of Ms. Hickman's presentation and encouraged by the news that Mr. Ellis is taking no additional salary beyond what he earns as CFO, though he has taken on the additional duties of CEO. That observer might retain some concern about the hospital's short to midterm ability to hold on financially (remember there are scads of required capital maintenance improvements required by California's Office of Statewide Health Planning and Development [OSHPD], at costs that most likely will run into the millions), but also hopeful that the institution's new board of directors (four out of five were elected for the first time in November) would find a positive path forward.

Then board member and Finance Committee Chair Redding let us know that a serious rift exists between himself and the rest of the Board of Directors. Next up, how will they respond publicly?