Archive for the ‘Finance’ Category

Hospital Mediation Process Concludes Without Agreement
—Posted Friday, September 14th, 2012 at 1:13 pm— « »

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 … (more…)

MCDH – A Look Back At the Last 6 Years – Part 1
—Posted Monday, April 16th, 2012 at 12:52 pm— « »

DSC_0129I am often asked “what happened to get MCDH into the situation that it is in right now?”  It is very natural for people to want to be able to identify a person, persons or an event that caused such a significant reversal of fortune.  In the case of MCDH I feel that it is a number of events that have hit us, particularly in the past 2 years.  You could call it a “Perfect Storm” situation.  I hope that you will give me a chance to explain “what happened to MCDH.”   

I took over as the CEO of Mendocino Coast District Hospital in November of 2006.  At that time MCDH was in very good shape in some respects and poor shape in other areas.  After suffering a loss exceeding $5 million in fiscal year 2006 (ending June 30, 2006), MCDH was on a very strong path towards recovery.  Due to the phenomenal efforts of Jon Baker, Interim CEO and the entire MCDH family, Critical Access Hospital designation had been approved and became effective on October 5, 2006.  This ensured that the hospital would have a more stable source of Medicare payments effective immediately at that time.  Jon Baker and the staff had also done a great job of identifying some programs that were losing money for MCDH and eliminated them, putting the hospital on a stable course.  On the negative side, the hospital was down to only $500,000 in it’s Funded Depreciation account.  And just as significant, I soon learned that our (then) 35 year old hospital had some major physical plant deficiencies. 


MCDH Board Passes Resolution to Enter Into Mediation with Creditors
—Posted Saturday, April 14th, 2012 at 2:15 pm— « »

On Friday, April 13  the MCDH Board of Directors met and passed MCDH Board Resolution Number 2012-3.  This resolution begins a 60-day Mediation Process between Mendocino Coast District Hospital and it’s creditors.   The passage of this Resolution does not mean that MCDH will be filing for bankruptcy protection.  It is not the wish or desire or intention of MCDH to file for bankruptcy.  We plan to use this State mandated step for the purpose that it is intended for, to continue (with the assistance of a Mediator) to reach an agreement with our employees that would assist our hospital in returning to profitability.  UFCW is the only creditor that we plan to mediate a settlement with.  MCDH is confident that it can continue to do business with it’s other creditors without the assistance of a mediated settlement.  In the event that MCDH and UFCW are unable to reach a mediated settlement, yesterday’s Board Resolution would ultimately allow MCDH to file for a Chapter 9 Bankruptcy.  However, I would like to emphasize again that this is not the intention of Mendocino Coast District Hospital.  It could occur if nothing else is successful in improving MCDH’s profitability.  We need to do everything possible to ensure the survival of Mendocino Coast District Hospital even if it means a bankruptcy filing in order to restructure debt.

An Update on MCDH’s Financial Recovery Plan
—Posted Tuesday, April 10th, 2012 at 6:12 pm— « »

After 3 meetings between MCDH Senior Management and Officials of the United Food and Commercial Workers Labor Union during the past 45 days, I am very sorry to announce that the 2 sides have been unable to reach an agreement on a series of cost reduction strategies proposed by management that we believe would have brought our hospital back to a necessary level of financial stability in the next 15 months and would have preserved the level of services that are currently available at MCDH. 

 Our management team had sought 2 outcomes from these meetings.  First, we wanted to reach an agreement on some specific action steps that we can accomplish within the next 3 months.  At the very least we expected to receive a compromise offer from the UFCW leadership that would still allow us to move forward.  Second, we expected that ultimately the choice of a partnership solution between both sides would be put to a vote by our employees.  Neither of these steps was taken by UFCW. 


Welcome Back Wayne Allen!
—Posted Friday, September 9th, 2011 at 1:51 pm— « »

Wayne Allen, CFO

Wayne Allen, CFO


I am very pleased to announce that Wayne Allen has accepted the position of Chief Financial Officer for Mendocino Coast District Hospital, replacing Bob Anderson.  Wayne is one of the best CFOs that I have ever had the pleasure to work with and I am could not be happier that he has chosen to come back to MCDH.  He was our CFO  from 2006 to 2008, during a period when MCDH converted to critical access hospital designation and achieved an impressive financial turnaround.    For the past 2 years Wayne served as the Chief Financial Officer for Northern Hawaii Community Hospital on the Big Island of Hawaii.  That hospital, too, thrived under his leadership.   With National Health Care Reform, the California budget crisis and our current economy, it is a difficult financial time for hospitals, including Mendocino Coast Hospital.  We are extremely fortunate to have Wayne Allen back on our leadership team.  Welcome home Wayne!

Hospital Financial Report Positive for December
—Posted Thursday, February 3rd, 2011 at 5:58 pm— « »


MCDH Chief Financial Officer Bob Anderson

At last Thursday’s MCDH Board of Directors meeting, the Financial report for the month of December 2010 and the first 6 months of fiscal year 2010-2011 was announced to the Board and the public.  For the month of December, we reported a positive net revenue from operations of $217,687 and a positive net income from all sources of $305,926.  This is the highest single month for positive net revenue since June of 2009 and the highest month for positive net income since May of 2009.  These results are due to high volume for inpatient, outpatient and surgical services at MCDH for the month of December.   Although our inpatient census tracked very close to budget for the month, we had a higher percentage of acute and critical care patient days this month and a lower percentage of swing days, which resulted in high inpatient gross revenue.  It also helped that other revenue categories in outpatient, North Coast Family Health Center and Home Health all exceeded our budget as well this month.   It was good to see our outpatient services (those provided by our laboratory, diagnostic imaging, physical therapy, etc) grow this month. 


The Hospital Budget
—Posted Thursday, July 29th, 2010 at 5:42 pm— « »

DSCN1780These are difficult times in the United States and in our World.   When unemployment rises and the housing market tanks, it affects us in the rural parts of our Country too.   And in our case, on the Mendocino Coast, maybe it affects us more.   We rely upon tourism in this charming and quaint seaside community.    So when money is tight, there tends to be less travelling and less spending.  Our hospital is struggling along with the rest of our community.  This year we will end our fiscal year with a loss from operations for the first time in the past 4 years.   That means that the income generated through our charges for medical services during the past 12 months was not sufficient to cover our expenses.   In fact the shortfall was over $2 million.  Our total budget at MCDH is $43 million.  So the $2 million difference is very significant.  The good news for MCDH is that during the past 12 months we have also had income from other means outside of our operations.  In fact we received over $2 million in property tax income, charitable contributions, investment income and other contributions.  The bottom line result is that we expect to end the fiscal year ended June 30, 2010 with a bottom line positive gain.    That too is significant.