For the past three months, officials from our hospital have been meeting with a San Francisco mediator and our major creditors, including UFCW8 and Cal Mortgage, in an attempt to negotiate a settlement agreement that would reduce expenses by $3 million per year. Unfortunately, the mediation process was concluded on Wednesday, September 5, without a mutual agreement.
The mediation process was conducted according to a new California State law that requires municipalities, such as Mendocino Coast District Hospital, to engage in such mediation sessions prior to filing a Chapter 9 bankruptcy. The process is highly confidential and details may not be released by anyone who participated in the mediation process.
MCDH Board Takes Action
The conclusion of the mediation process gives MCDH the right to file for a Chapter 9 bankruptcy but does not require that it does so.
Since the mediation process concluded without an agreement on a recovery plan, the Board of Directors authorized management, during a Special Meeting on September 10, to ask that an attorney draft a bankruptcy resolution to be presented to the Hospital Board at its regular meeting on September 27. It will be up to the Board and Management at that time to decide if a Chapter 9 filing is in the best interest of MCDH, and if so, when such a filing might take place.
Financial Recovery Plan
The Board also took action to require management to create an action plan for financial recovery that would be presented at the same Board meeting. The action plan will include savings that can be generated from a variety of sources, and will not be limited to 1 or 2 areas only. The Board will have both documents in hand as it deliberates next steps for financial recovery.
What You Need to Know …
It is going to take a team effort, including everyone associated with Mendocino Coast District Hospital, to return our hospital to profitability. That includes our Board of Directors, management, employees, medical staff, volunteers and our community. We have a first rate hospital here on the coast. We will need everyone’s support to keep it.
It is important for you to know as an employee, patient, or other stakeholder that should the hospital file for a Chapter 9 bankruptcy that it does not mean the hospital would be going out of business. Nor will this process in any way affect the quality and safety of care provided at MCDH. We will be open and fully operational, offering all of the same services which the community relies upon MCDH to provide.
What the process does do is allow us to negotiate better terms with our creditors and bondholders, and to alter our union contract in our effort to reduce overall expenses by $3 million per year.
Over the next few weeks, I will hold meetings with employees and community leaders to explain the process and answer their questions.