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Healthcare district following Grand Jury's financial and organizational recommendations

A white-haired man in a light blue shirt smiles slightly.
Paul Garza, chair of the Mendocino Coast Healthcare District.

The Mendocino Coast Healthcare District has secured funds and hired staff.

The Mendocino Coast Healthcare District has taken a Grand Jury report to heart, and is working to clean up its finances and organize its policies. The new chair says financial projections indicate that the district will have enough money to perform a state-mandated seismic retrofit of the hospital, expansion of two key departments and deferred maintenance, without asking voters to approve a bond.

The Grand Jury report, titled “Mendocino Coast Healthcare District: Sick, but Returning to Health,” says the Grand Jury has received over three times as many complaints about the healthcare district as any other county governing body in the the last several years. The report, dated June 12 of this year, recommends a voter-approved bond to raise money for the seismic retrofit of the hospital, which came under the management of Adventist Health shortly after the start of the pandemic. However, the district would need a solid bond rating to get a good interest rate on a bond. That would demand careful documentation of the healthcare district board’s activities, which is sketchy at best.

The report notes that the district’s “financial issues do not stem from lack of money, but rather mismanagement of what they have.”

In April, Wayne Allen, the district’s newly hired chief financial officer, told the district’s board that over $6 million was in banks without FDIC coverage, and that most of it was also not earning interest. This, he wrote, could be construed as negligence. He calculated that the district was missing out on over $800 in interest payments a day, violating the state’s rules for investing surplus public funds. Monies were squirreled away in 25 bank accounts. Now the district has two bank accounts, and funds are invested in treasury bills.

Paul Garza, who has been the chair of the healthcare district since August of last year, says the money has now been tallied up, and he expects that the seismic retrofit can be paid for by the deadline in 2030.

Garza ticked off the district’s sources of income: rent from the hospital, Measure C, the parcel tax voters approved in 2018; and a voter-approved bond from 2016. He believes that this income will add up to over $25 million, well before 2030. He said the district also has about $13 million on hand. “With some moderate projections of interest,” Garza predicted, “that brings us up to a total of $41 million” by 2030. Previous architectural planning has estimated that the seismic retrofit and expansion of the Emergency Room and surgery ward would cost $34 million. Deferred maintenance includes updating the IT room, roof repairs and upgrading the HVAC system. Garza believes that the district’s new financial security would enable it to seek a loan, if it becomes necessary to seek additional funds.

The district contracted with a consultant called Regional Government Services to manage the district, which Garza said “changed things immediately.” He credits Kathy Wylie, an RGS hire, with convincing Wayne Allen, “who was formerly the CEO of the hospital and rescued it twice from bankruptcy, to come in and act as our chief financial officer. That has made a complete difference,” Garza declared. “We have an understanding of our finances.” California law requires public money to be guaranteed, or invested safely, with some yield. Garza reported that, now that the funds are secured, the district has accrued $41,000 in interest, which he expects will be a key component of the district’s future financial strategy.

The Grand Jury report recommended hiring staff and noted approvingly that changes were being made as its investigation was underway. The report is available on the Mendocino Coast Healthcare District’s website. It will also be discussed at the regular board meeting this Thursday at 6 pm. The meeting is accessible on zoom or in person in the Redwoods Room at the hospital on 700 River Drive in Fort Bragg.

Local News
Sarah Reith came to Mendocino County in 2008 and worked as a reporter and freelancer, joining KZYX as a community news reporter in 2017. She became the KZYX News Director in March, 2023.