MENDOCINO CO., 12/14/24 — At its Thursday evening board meeting, the Mendocino Coast Health Care District directors approved a restructured lease with Adventist Health.
The lease negotiations – a hotbed issue that led to fears that the hospital would close the only critical-care facility on the Mendocino Coast – ended not with a bang but with a whimper. The worries began when Adventist, which has leased the hospital from the district since 2020, served a notice triggering a 60-day period for negotiating changes to the existing agreement.
The anxiety ended during the board meeting, when the district board unanimously accepted a November 22, 2024 letter from Eric Stevens, president of the Adventist Health Northern California Network, identifying “two minor items which should close out the negotiations and get us to a fresh start in 2025.”
The first change is in the language of a lease provision that allowed Adventist to serve the 60-day restructure notice in the first place. The lease permitted such a notice if Adventist determined that continued operation of the hospital “is no longer economically feasible.” The old provision gave Adventist the right to terminate the lease with 270 days’ notice if the negotiations could not be wrapped up successfully.
The new provision does much the same, only Adventist will now be able to skip the 60 days of negotiations and just give a 270-day notice of termination if its business is not going well. District board chair Paul Garza described the modification as a “slight change in language.”
The second item proposed by Adventist was the district’s agreement to take back responsibility for running the Hospice Thrift Store in the Boatyard Shopping Center in Fort Bragg. The thrift store is one of the properties leased by the district to Adventist. Under the restructured agreement, the district will let the hospital know of its decision by February 1, 2025. If the district decides to go ahead, “all financial and operational responsibilities would transfer”from Adventist to the health care district on July 1, 2025.
After the meeting, Garza explained that the thrift store became part of the negotiations because “retail is not part of the hospital’s business model.” Adventist, like other hospitals, is subject to regulations and standards that are not meant to apply to retail outlets, including, for example, requirements imposed by the Joint Commission (formerly, the Joint Commission on Accreditation of Healthcare Organizations) that make it difficult to process applications by volunteers to work in the retail facility.
Thursday’s approval meant only that the district “would start the investigation into running the thrift shop,” district Chief Financial Officer Wayne Allen said at the meeting. After the letter was approved, Garza appointed fellow board members Lynn Finley and Paul Katzoff to “take a good look at the operation of the thrift store and do some analysis and come back.”
The alarm caused by the restructuring notice earlier this fall seemed to have died down by the time the district board’s approval of Adventist’s proposal came to a vote. The only public comment on the issue at Thursday’s meeting had to do with whether or not the proposed letter was being “accepted” or “approved.”
The negotiations caused a “panic that was unfortunate,” Garza said. Adventist sent its 60-day restructuring notice under the impression that it could obtain more funding through intergovernmental transfers via the state’s Voluntary Rate Range Program if the district took over certain billing and other responsibilities under the lease. This impression turned out to be “an honest mistake,” Garza said, and negotiations quickly moved on to more minor issues.
Now that the dust has settled, the process should mean that there is “better communication” between the district and Adventist in the future, Garza said.