Today’s Managing Health Care Costs Number is 25
KQEDreported earlier this week about the efforts to keep Mendicino Coast District Hospital (MCDH) in Fort Bragg California from closing its doors.
Mendocino is a 25 bed rural acute care hospital. It lost $3.2 million on $43.7 million in net operating revenue in FY 2013. It employs about 215 FTEs (245 for the health system overall, which includes 25-30 at a community health system). Of note the system has an exceptionally high cost of fringe benefits (about 38% of total employee compensation; most health care systems are under 30%).
On one hand, Mendocino Coast District Hospital sounds like a dismal place to get medical care. Here’s a description from the KQED reporter:
It’s like stepping back into 1971. The main patient floor is lined with painted cinder-block corridors and drab brown carpets. The smell of Salisbury steak spills out of patient rooms.
The hospital gets a single star in either in-hospital or 30 days post hospital quality in five of ten measures of clinical care according to HealthGrades. (Single star is “worse than expected” in a five star scale). The hospital scores below national averages on all ten measures of patient experience, and it’s less than half as effective at giving appropriate surgical antibiotics as national averages
On the other hand, the nearest hospital is 35 miles away –and Mendocino Coast District Hospital is one of the few good employers left in Fort Bragg. It’s no surprise that the residents of the town are fighting to keep their hospital open.
MCDH faces a number of existential challenges. The rural population is dwindling, leading to decreased demand. Federal funding for critical need hospitals, which are paid based on ‘cost’ rather than bundled payment by admissions (DRGs) like other hospitals, has decreased. Recruiting physicians to a decrepit hospital hours from a big city is getting tougher, and the average age of physicians is probably increasing. The hospital has had 4 CEOs in the last year, and the leadership physicians are squabbling, to put it politely. The current facility needs to be rebuilt to meet California’s new earthquake code, and there is no endowment to tap.
The CEO and CFO want to raise revenue, and the leadership physicians want to cut (administrative) costs. Increasing charges for the few people covered by private insurance doesn’t seem like a likely way to become a viable business. The hospital will probably have to reconfigure its (generous) benefits and slim down further even if the county increases its subsidies.
The county will vote on whether to raise taxes to keep its hospital afloat in fall, 2016. It will be a terrible blow to the community if this hospital closes – but it might be that funding primary and specialty care and transportation to better equipped hospitals in neighboring towns would be a better investment than keeping this facility open.
