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COVER
STORY | CALENDAR
April 25, 2002
Q&A
Mad River
Hospital Condition: Acute
by JUDY
HODGSON
"Imagine there was a
state regulatory agency that told you you had to use gold ink
when you print your newspaper, you had to use a certain kind
of special paper, you had to devote so many pages of your paper
and give them away for free -- and you could charge advertisers
no more than this amount. You add up all of that and say, `But
that's not enough to even break even.' And the state says, `Tough
luck.'
"That's the exact position
medicine is in right now in California."
That's the way Dr. David Gans,
head of the utilization review committee, describes inadequate
MediCal reimbursements, one of several reasons Mad River Community
Hospital was forced to lay off 49 full and part-time employees
last week, the first layoffs in its 30-year history.
Mad River is not alone in its
plight. About two-thirds of the hospitals in the state are currently
losing money on patient care, according to the March California
Healthcare Association's CHA Special Report.
But while Mad River is not alone
in facing falling revenues, it is a unique hospital in some ways
and its financial situation is more acute, to use a medical term.
First, it is one of the last
independent hospitals -- if not the last private, independent
hospital anywhere, according to Doug Shaw, whose family owns
the majority of stock in the closely held corporation. It is
not part of a chain, like St. Joseph and Redwood Memorial hospitals.
It is not funded by public money through special districts, like
Jerold Phelps Hospital in Garberville. It cannot rely on donations
or foundations to raise money. And it is certainly not tax exempt
-- if and when it should happen to make a profit.
It also has zero clout in negotiating
contracts with insurers like Blue Cross.
"Blue Cross, for instance,
makes a contract with St. Joseph, Sisters of Orange -- a big
multi-state hospital chain with lots of hospitals, lots of beds,
lots of clout," Gans said. In other words, St. Joseph is
paid more by Blue Cross than Mad River for many of the exact
same services provided.
Even with all this stacked against
it, two years ago the decision was made to expand. Outpatient
facilities were opened in Eureka and McKinleyville. Ground was
broken in November on the 22,000 square-foot Outpatients Pavilion.
"Originally it was going
to be a lab and x-ray, rehabilitation center and medical offices,"
said Shaw, who is chief executive officer of Mad River. When
St. Joseph bought General Hospital, the plan was totally revised
to include a large outpatient surgery center with suites for
endoscopies, eye surgery and other short-stay procedures.
But after a series of financial
setbacks -- including a $150,000 remodel that ballooned into
a $400,000 project, $500,000 less that expected in MediCal reimbursements,
and a building loan that never materialized -- construction was
halted last month and a consultant brought in to cut costs.
Shaw, Gans and consultant Richard
Parsons, president of Performance Healthcare Inc. of Danville,
Calif., sat down for an interview with the Journal Monday
to discuss the hospital's financial crisis and what the plan
is to turn it around.
What happened to financing
for the new building?
Shaw: "Financing was supposed
to be through a loan, but it never materialized. We were told
it was in the bag, we're almost there -- but it wasn't.
"The building is going
to happen. We're working with three banks right now. The building
is a symptom, yes, but it's not why we did this [cut staff]."
Why the layoffs now?
Shaw: "We are prioritizing.
We had to stop to put more effort into our ICU [intensive care
unit] remodel.
Gans: "OSHPD [California
Office of Statewide Health Planning and Development] is literally
hell to work with. That project is over a year old and it's only
2,000 square feet. It started out as a cosmetic overhaul for
$150,000. Now, 12 months later, it's cost more than $400,000."
How were layoffs determined
and what are the implications?
Parsons: "We looked at
all the departments. ... We worked with each manager to evaluate
the impacts of a theoretical reduction in force. ... We tried
to project as best as possible how to continue to draw blood,
for instance, without any interruption in services. We didn't
make a single decision without considering the implications."
What about direct patient
care?
Shaw: "There were no nurses
let go. There were a couple reassigned."
Gans: "Laying off nurses
doesn't make any sense. If you're trying to save a car, you don't
lay off the engine."
How financially stable is
the hospital?
Shaw: "It's been difficult,
especially the last three years. You can't really say red or
black. A cost report can throw you off. The state took $500,000
out of our cash flow last November [MediCal]. ... It's not a
science, it's a system. We may owe money, they may owe us money.
In this case, we sent our cost reports in and they said you owe
us. They don't give you any time to think about it. They just
stop paying."
Since private stand-alone
hospitals are rare or extinct, have you pursued partnerships?
Shaw: "We are partners
with Quest Labs, the largest laboratory organization in the United
States. We're in partnership with Tenet Health when we set up
the [cardiac] catheterization lab."
What about a merger or outright
sale?
Shaw: "We don't have a
sign out."
Gans: "As a staff member,
I would want to be very, very careful of who we would sell to
-- a corporation that is strictly bottom-line, business oriented?"
You've brought in consultants
before?
Shaw: "People tell me that,
but we are not `over consulted.' Eight years ago we had someone
in. And then two years ago there was a company here to help United
Indian Health Services. They also helped us with our strategic
plan. Two years ago we did a lot and now a lot of things are
underway. ... Then came the big crunch."
What does the future look
like for health care?
Shaw: "This may be the
beginning of a meltdown. I went to a rural health care symposium
in Sacramento four weeks ago. Rural hospitals are impacted first."
Gans: "This is a hospital
trying to make it in an environment that is toxic for small hospitals.
The same thing is happening to doctors. Doctors used to stand
alone. If you come to see me and I take bad care of you, I'm
the only person to blame. You can sue me, you can get another
doctor -- do what you want. Now doctors get out of training a
quarter million dollars in debt, frightened, and they go to work
for people because they can't afford to open their own practice.
Then their ethics are consumed by the ethics and demands of the
organization they go to work for."
Violating
Clean Water Act?
The North Coast Regional Water
Quality Control Board is in violation of the Clean Water Act
for failing to limit sediment discharges from Pacific Lumber
Co. logging operations, representatives of an environmental group
and a watershed protection organization said Tuesday.
Ken Miller of the Humboldt Watershed
Council and Cynthia Elkins of the Environmental Protection Information
Center said they are considering suing the water board after
a marathon two-day, 24-hour-long hearing late last week in Eureka
did not result in a strong plan of action to address flooding
and water quality problems in Freshwater Creek and the Elk River.
Bomb trial
continues
The second week of the federal
civil rights lawsuit brought by Earth First! activist Darryl
Cherney and the estate of his deceased colleague Judi Bari against
the FBI featured dueling accounts by FBI forensic scientists.
Bomb specialist Frank Doyle
defended the FBI's initial conclusion that the bomb had been
in plain sight before exploding, indicating the two activists
were knowingly carrying the device. But Special Agent David Williams
said that evidence suggested the bomb had been wrapped in a towel
and hidden beneath the driver's seat.
The Cherney/Bari team claims
the activists were improperly targeted because of their political
views.
Judge: more
water for Trinity
Federal Judge Oliver Wanger
ruled April 19 that more water should remain within the Trinity
River, rather than being diverted south for hydroelectric power
and irrigation. The decision comes a year and a half after Bruce
Babbitt, then Secretary of the Interior, signed an agreement
to return roughly half of the river's water.
EPA to study
pesticides
As part of a settlement of a
suit filed by three Humboldt County environmental groups, the
Environmental Protection Agency has agreed to study the impacts
of 18 pesticides on endangered species.
Under the settlement, to be
signed Friday, EPA will consult with the National Marine Fisheries
Service and the U.S. Fish and Wildlife Service on the effects
of such pesticides as atrazine, Roundup, and diazinon on listed
species.
The suit was filed by the Humboldt
Watershed Council, the Environmental Protection Information Center
and Californians for Alternatives to Toxics.
"We welcome the EPA's resolve
to take these first important steps to protect some of the nation's
most highly valued and imperiled species," said Patty Cleary,
executive director of CATs.
Stop fuels reduction
Environmental groups opposed
to the U.S. Forest Service's approach to fighting wildfires won
a key victory April 22 when a federal judge halted a logging
operation designed to reduce the fire danger in the western Trinity
mountains.
The plan involved removing trees
killed during the Megram fire in 1999. Environmental groups including
the Sierra Club, the Environmental Protection Information Center
and the Center for Biological Diversity maintain the plan's real
purpose is to harvest timber with little reduction of the fire
danger to neighboring communities.
Supervisors:
amend rail bill
Citing fears that the North
Coast will be left out of railroad redevelopment, the Humboldt
County Board of Supervisors voted Friday to ask for amendments
to a bill currently in the state Legislature.
Assembly Bill 2224 would create
a Sonoma-Marin Area Rail Transit District for the purpose of
commuter transit on the southern end of the Northwestern Pacific
line. The North Coast Railroad Authority has expressed concern
that rail freight -- perceived as the heart of any future rail
service in Humboldt and Mendocino counties -- is being excluded.
In a letter to the bill's author,
the board asks that an operating agreement be created between
the NCRA and the new transit district, and that the NCRA be given
a seat on the district's board of directors.
Another
temp for Rio Dell
Jim Stretch, Rio Dell's interim
city manager, announced he is leaving his position next month,
paving the way for James Buell, who will occupy the office on
a temporary basis.
Rio Dell continues to struggle
in its search for a permanent city manager. The city has been
looking ever since Loretta Nicklaus was picked as Humboldt County's
chief administrative officer last October.
Delegation
to visit sister city
Nelson, New Zealand, Eureka's
new sister city, will be receiving a visit from an official delegation
in September.
The Eureka City Council voted
to send a three-member delegation April 16. The council also
stipulated that the delegation's members would have to raise
their own funds to cover the cost of the trip.
Builders'
Association settles
A lawsuit filed by the Northern
California Association of Homebuilders against Pacific Union
School District has been settled.
In its lawsuit, the association
claimed that the district had illegally imposed a development
fee on new construction that added $2.05 per square foot to all
new residential construction. Development fees are supposed to
pay for school expansion when facilities become overcrowded.
The association claimed that Pacific Union was overcrowded because
it had intentionally attracted students from outside the district,
not because of development within the district.
The settlement stipulates that
Pacific Union not collect the fee from those building new residential
units until they have reached capacity with students from inside
the district.
A milkcan
full of Ferndale
If you could send a representative
object ahead into the future to explain the time you live in,
what would it be?
A milkcan, of course.
Well, it makes sense in Ferndale.
To celebrate the town's 150th anniversary, a time capsule is
being put together inside a seven-gallon milk can for opening
in 2152.
Time capsule committee chair
Barbara Taubitz said likely objects include copies of local newspapers
to show what people talk about in 2002, grocery fliers to document
how much items cost and a publicity poster from The Majestic
to show what else was going on in Ferndale besides dairy farming.
"Of course, we're open
to suggestions," she said. There's just one condition: No
electronic media, please. "Most of my research shows that
you don't want to put things in that have too much technology,
because the technology to read it won't be around in another
150 years."
Ideas? Call Taubitz at 786-4244
or email her at LionHouseFerndale@cox.net.
Eye in the
sky
Following an especially severe
episode of vandalism at Humboldt Redwoods State Park, the park
rangers are considering an unusual step: placing small infrared
cameras in the redwoods.
The cameras may allow park staff
to identify the people stealing wood products or damaging restrooms,
said Steve Horvitz, superintendent for the Eel River sector of
California State Parks.
"More importantly, they
can alert us to the fact there are people out there," he
said.
The extra surveillance comes
after two large redwoods within park boundaries were illegally
felled, possibly to harvest their burl. The trees were between
200 and 300 years old.
Horvitz said surveillance techniques
had been successfully used in other state parks, but that this
marked the first time they were installed in Humboldt Redwoods.
"Unfortunately, vandalism
is a common problem," he said. "Our units on the coast
generally have more of a problem, but we're beginning to see
a trend on the Avenue of the Giants." There have been problems
with damage to public restrooms, theft of park property and damaged
water lines as well.
"In general it's very difficult
to investigate these," Horvitz said. "If we have techniques
like this, it increases our ability to investigate. It's not
surefire, but it gives as another tool."
Lotto winner
in SoHum
When Jackie Brumback got a letter
from the IRS this week informing her she might qualify for a
tax break for the working poor, she had to giggle.
"I just said, `I don't
think so'," laughed the Garberville resident.
That's because a week prior,
Brumback had come home and scratched a lottery ticket worth $90,000.
"I'm still in shock," she said.
Brumback plans to use some of
the money to buy herself a vehicle -- she's always wanted a small
truck, she said. And she wants to buy her mother a couch, because
the current one is too small. Other than that, she plans on keeping
the money for a rainy day. She'll continue her job at Sentry
Supermarket.
No luxuries? "Well, I'm
going to fly my son out from Colorado," she said. "That'll
be a real luxury."
L-P plant on market
Louisiana-Pacific may be looking
to sell its Arcata particle board plant to a Crescent City company.
"We can confirm we are
in very preliminary discussions," said Mary Cohn, corporate
communications specialist for L-P.
"All we're doing is looking
at it," said Dwayne Reichland, president of Hambro Forest
Products, in a telephone interview from Crescent City. "There
hasn't been anything formal."
There has been a tour of the
facility, however. And while neither L-P nor Hambro would confirm
any specifics of a possible sale, the Arcata plant would fit
the Crescent City company's profile -- Hambro specializes in
recycling wood waste into particle board.
Hambro is small and nimble enough
to remain profitable in today's rough wood products market, Reichland
said.
L-P, on the other hand, has
had trouble in recent years. Sales fell 20 percent during 2001
due to lower lumber prices. L-P lost $171.6 million over the
last year. The company is not alone; a soft market for forest
products has dragged many other timber companies into the red.
Hambro has stayed healthy because
it has found a niche -- the small, employee-owned company specializes
in flooring for manufactured homes.
"It's a small part of the
wood market -- something we can do that [big companies] cannot,"
Reichland said.
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