Link to Anderson Valley Advertiser:  www.theava.com

On March 16th Mendocino Coast District Hospital (MCDH) abandoned all plans to convert to a “Hospital Fee Structure” when it became clear that there was no money to be gained by such a conversion. In fact, in a financial impact estimate presented by the hospital's Chief Financial Officer, Wade Sturgeon, MCDH would actually lose $50,000 annually under the “Fee Structure” compared to current revenues brought in by intergovernmental transfer (IGT) funds, Assembly Bill 915 dollars (medical provider reimbursement), California Senate Bill 239 (quality assurance fees), and the “Prime Project,” which by itself brings in $750,000 this year.
The failure of the “Hospital Fee Structure” program to benefit the financially struggling hospital appears to be mere background to concerns surrounding the hospital's top administrators. Almost immediately following the disbanding of the ad hoc committee dedicated to the hospital fee plan last Thursday, the MCDH Board of Directors met in closed session to consider one item: a performance review of their CFO, Mr. Sturgeon.
Readers may recall from articles in the March 1st and 8th editions of the AVA that in the fall of 2016 Mr. Sturgeon downplayed the seriousness of billing and coding errors made by the newly contracted Emergency Room (ER) provider in his official reports to the hospital's Board of Directors and its Finance Committee. In addition, both the CFO, Sturgeon, and MCDH Chief Executive Officer (CEO), Bob Edwards, ignored internal warnings to add employees in order to sort out the billing and coding mess.
There are also creditable indications that a personnel claim, that has been referenced in an ongoing series of MCDH Board closed sessions, involves workplace harassment complaints made by the hospital's most recent chief human resources officer, complaints directed at Sturgeon and possibly Edwards as well. The March 16th performance review of Sturgeon lasted just under an hour and a half, with Sturgeon in the room for a majority of the session. The remainder of the time the five MCDH Board members consulted with their legal counsel, John Ruprecht.
At the conclusion of the session, without Sturgeon present, Board Chair Steve Lund called in the only members of the press in attendance, yours truly and Marianne McGee from Mendocino TV. Lund stated that the Board would be conducting further interviews with MCDH staff before rendering any decision on Sturgeon's performance.
At that point comments from the community were allowed. I read the following questions, which were additionally submitted via email the next day to the five MCDH Board members and legal counsel Ruprecht: Is it true that fourth quarter (Oct. - Dec.) 2016 professional fees, from Medicare, were not paid to two North Coast Family Health Center (NCFHC) physicians in anything resembling a timely fashion? Reports are that this was an ongoing problem as of Monday, March 13, 2017. A problem not reported by the CFO to the Board or the Finance Committee of MCDH.
Is it true that Rural Health Clinic (RHC) claims from NCFHC, approximately fifty days worth, dating from mid-November into Jan., 2017, had not been billed for as of March 13th?
In relation to the first question, is it true that last autumn NextGen [a provider of electronic health record sytems] refused to release the updated ICD-10 codes to this hospital, alleging that MCDH had not sent out its invoice to NextGen? At the Jan. 4, 2017 Finance Committee, the CFO, Mr. Sturgeon, stated that issues associated with the clinic's (NCFHC) billing had been fixed or would be fixed by the end of January. Yet the issue of professional fees cited above still existed at the beginning of this week (March 13, 2017).
Is it true that last summer the CFO informed third party payers with contractual agreements that MCDH prices would rise by an average of 5% on August 1, 2016, when he should have known that such increases would not be implemented? It is alleged that as a result of the CFO's letter to this effect Blue Shield reduced payments by 5% in response, as they are contractually allowed to do. Is this allegation true? [All of the questions to this point are based on fact/data based research on my part. Much of this information was not known by the MCDH Board of Directors because CFO Sturgeon chose to withhold it from.]
When the CFO was accused of workplace harassment, why was the accuser/victim of the harassment placed on administrative leave instead of the accused CFO?
Does MCDH have a clear written policy regarding whether the accuser or accused in harassment cases is placed on leave? Is there a policy that allows for both to be placed on leave? [Where appropriate answers, or best guess responses to these queries will be provided to readers. Indications are that the answers to these two particular questions are: No and No.]
There are allegations that the CEO has in effect been an enabler of the CFO, essentially ignoring serious complaints directed at the CFO and participating in coercive actions, including behavior aimed at humiliating accuser(s). Has the Board fully investigated this aspect of the current administration at MCDH? [Most likely answer: Not yet]
It has been reported that the CEO obtained the results of a study regarding OB (obstetrics) risk assessment (in the case of MCDH closing the OB Dept.) as early as Feb. 21, 2017, yet failed to release those results to the OB Ad Hoc Committee for use at its final meeting. Has the MCDH Board investigated this matter? [The answer is: No, meaning the CEO, Edwards has not shown these results to the MCDH Board either]
It has been reported that the Hospital Foundation donated a significant amount of money in late 2015 for the purchase of infant warmers. The money, under the charge of the CFO, seems to be unaccounted for. Has the MCDH Board completely investigated this matter? [The key word is “completely”]
Have Compliance Officers been allowed to speak to the MCDH Board, in closed session, without the CEO or CFO present? Has the Chief Human Resources Officer been allowed to speak to the full board without the CEO or CFO present? [Most likely the answer to both questions is: Yes; however the MCDH Board might want to re-interview them along with other department managers as well]
Was the chain of command altered when the current CEO took an extended sick leave? Prior to that time it seemed that the Patient Care Services Manager would have been in charge in such a situation; however, when the CEO did go out on sick leave the CFO was suddenly in charge. Was this chain of command altered by the CEO alone, by the Board of Directors, or by the board at the behest of the CEO? Is there a clear policy in place to cover such situations? [The third option is most likely]
Is the MCDH Board of Directors aware that a significant number of hospital employees, from manager level on down, are on the side of the person who recently filed a personnel claim (another ongoing closed session matter)? Many employees believe in this person, and, though relatively silent in public, are hoping that they will not have to continue working with the current CFO. [The most likely answer: until the point was raised a majority of the Board members were unaware]
Has the MCDH Board of Directors hired any outside investigative services concerning the CFO's performance or the personnel complaint that is ongoing? [Most likely answer: Yes]
The motivation for the string of questions came from reports earlier in the day (March 16th), indicating that Sturgeon's performance review would conclude with nothing more than a proverbial hand slap and that no connections whatsoever would be made to CEO Edwards' role in these matters. However, the fact that the Board of Directors will conduct more interviews with staff puts things in a more hopeful light for the numerous hospital employees who, as cited above, have grave questions about the top two figures in MCDH's administration.

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Anyone who has ever been to Mendocino can direct you to the McCallum House on the north side of Albion Street, cattywampus from Daisy McCallum's parent's house on the south side of the same street. It was at this Kelly (as the family once spelled their surname) House that Daisy Kelly wed Alex McCallum on a Tuesday, September the 2nd, in 1879.
During that same month of September, 1879, the local newspaper, edited and published by William Heeser, ran several stories that displayed how quickly happy occasions could be displaced by more sobering events. In his newspaper's September 13th edition Mr. Heeser wrote, “Francis Stephenson was employed in the Caspar woods as a chopper. On that morning [Tuesday, Sept. 9th] Stephenson proceeded to fell a tree, but when he had it nearly cut down he found that the wind was in the wrong direction to permit the tree to fall the way he wished; he thereupon left the tree and began cutting another near by. In the mean time the wind blew quite hard and broke the first tree down, falling it in the direction where Stephenson was chopping. He, seeing the tree coming, started to run, but too late, the top of the tree striking him on the head, mashing off the whole upper skull, crushing his shoulders, tearing off his arms and breaking all his ribs, which protruded through the flesh, leaving him one mangled mess.”
The modern day Mendocino Beacon may pull punches, not so its founding father. Two weeks later, Heeser was at his bluntest, some might say darkly comedic. “A new but very successful way of committing suicide comes to us from Copper City, Shasta county (it was not the fashion of Mr. Heeser's day to capitalize several words we would today), where a young man named LeClerk placed a giant powder cartridge in his mouth and lit the fuse. In an instant his head was blown to atoms.”
Two items from that same late September, 1879, Beacon fit oddly together. The first reads innocently enough. Readers might have wondered, then and now, if it was merely a paid advertisement written out in story form. “Tintypes! Tintypes! You can now have your pictures taken in Mendocino City, for Bonine is here with his tent, located on the lot adjoining Wheeler's dentist office. As good pictures can be taken in foggy weather as clear, and generally better. Album size four for one dollar. Large size for frame one dollar each. The tent will be here for a short time only.”
The lot adjoining Doc Wheeler's dental office was just up the hill from Norton's Hotel and Livery. Whether the photographer was camping out or paying for a room at the hotel, the following story, from the same Beacon edition, might make a reader ponder just what sort of noises woke the taker of tintypes that week.
“Tom Bell, who resides near Prairie Camp [several miles out the Comptche Road], some six months ago captured a young bear, and on Monday last boxed it up and sent it to this place intending to make Dr. Witherell [a former druggist in Mendocino then residing in The City] a present of it. The box was placed in Norton's barn where it was to be kept until Thursday, when it would be sent to San Francisco on the steamer, but in the night the bruin broke out of the box and began roaming about the barn. Finding himself still imprisoned he became frantic with rage, and wreaked his vengeance on some twenty sacks of barley which he tore up and scattered about promiscuously. There being no way of getting him back into the box, Dr. Wheeler was called to shoot him.”
The barley in Mr. Norton's barn was undoubtedly purchased from William Heeser himself. Every week the paper ran a brief note about barley for sale at the Beacon office. Dr. Wheeler was the one called to dispatch the bruin for a reason. The coastal paper ran a number of brief and/or lengthy accounts of Doc Wheeler's prowess with firearms, from prodigious hunting feats to shooting at prowlers. It's unlikely, though, that any of Mendocino's residents of the 1870s had the faintest idea that Dr. Wheeler had once killed none other than Bigfoot. Of course, that's a story for another time and a space all its own.

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The takeaway from last week's piece was this: In the fall of 2016 Mendocino Coast District Hospital's Chief Financial Officer (CFO) downplayed the seriousness of billing and coding errors made by the newly contracted Emergency Room (ER) provider in official report after report to the hospital's Board of Directors and its Finance Committee. In addition, both the CFO and the Mendocino Coast District Hospital (MCDH) Chief Executive Officer (CEO) ignored internal warnings to add employees to sort out the billing and coding mess.
Moreover, dating back years before the current CEO and CFO joined MCDH (respectively April and September, 2015) the hospital has missed one opportunity after another to pad its revenue, which could have been achieved simply by billing for routine charges in practically all clinical areas of the facility. MCDH performs services that are part of everyday, normal care, but those procedures have not been charged or billed due to incomplete documentation.
A simple example: a patient in “Observation” status is charged an hourly care charge and nearly all those patients receive intravenous (IV) infusion for most of their time in the hospital. In this day and age “Observation” is technically classified as an outpatient. MCDH could charge, bill, and be reimbursed for each hour of infusion the patient received. The initial IV hour would amount to a charge of about $420, with every subsequent hour charged at approximately $180. The only documentation necessary to substantiate the charge is the time the infusion was started and the time it was discontinued, two small entries in the medical record. Considering most patients are under “Observation” status for more than twelve hours that potentially could generate serious cash in the MCDH till. If any other medications are given through the IV and documented with the time given, that's somewhere in the neighborhood of $80 - $100 per drug, per dosage.
Similar examples could be applied to almost all departments within MCDH. Administrations past and present have seemingly been apprised of this. Apparently, the closest administrators have come to implementation is the phrase, 'we'll look into it.' Of course, there has been no overt action that indicates they have.
A source outside the hospital, who nevertheless is familiar with the situations at MCDH, contributed this opinion, “Why would anyone be surprised that there are lots of small item [billing] details being missed when even the big, most obvious macro business issues are being severely mismanaged. If you can’t manage the big stuff, you certainly aren’t managing the small stuff.”
Also, from an outsider's view, “Beware [the month of] June. There are some big payments due, including a Stark violation payment, another payment remaining from deferred payments in the bankruptcy settlement, and the pension payment. It does not appear they have been accruing towards those payments. On top of that, there is still the outstanding $2+ million owed Medi-Cal. Realize that if it wasn’t for the IGT [intergovernmental transfer] and other one time payment events the hospital would already be in bankruptcy again. Note also, that the way the hospital used to fund the pension payment was the annual settlement from Medi-Cal would be received a month or so before. This was usually a positive settlement for the hospital as Medi-Cal classically only paid 80-85% until the settlement. My guess is that with the outstanding Medi-Cal debt, that won’t happen this year. That’s my guess as to why they are feverishly trying to borrow money.”
Then there is the issue, or issues, surrounding the obstetrics (OB) department. MCDH's administration has not been hesitant to declare it a million dollar a year loser. Yet at multiple Finance Committee meetings the CFO has flatly refused to give any comparative profit or loss numbers for the new ER, a new orthopedic surgeon, or the pain management program that came on line last year.
MCDH will begin working on its 2016-2017 budget during March. We shall see what we shall see. We will also attempt to discover why the Chief Human Resources officer and another long time department manager left MCDH ever so abruptly in the new year.

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The Mendocino Coast District Hospital (MCDH) Board of Directors have denied Dr. Peter Glusker's attempt to have his recent censure rescinded. Glusker was censured by his fellow board members in January for hitting Reply ALL on a December 30th email rather than sending a one person message to the MCDH Board's Executive Assistant. The email in question stated, “Closed session agenda does not list the item Mr. Ruprecht [legal counsel to the MCDH Board] said he would report on at this meeting about follow-up on Ellen Hardin's emails and allegations of harassment and possible fraudulent billing problems. I believe the board needs a report at this time on those matters.”
Ms. Hardin was then MCDH's Chief Human Resources Officer. More or less since the time of Glusker's censure in January Ms. Hardin became invisible. Queries posed to reliable sources in and outside the hospital appear to disclose that Ms. Hardin is on some sort of leave at present and that she will no longer be employed at MCDH in the future.
Further questioning here and there reveals that the somewhat ambiguous wording in Dr. Glusker's email means that Hardin's communications (emails) concerned alleged workplace harassment of her, presumably by someone higher up the chain of command at MCDH. The “Closed Session” agenda for the MCDH February 23rd board meeting contained the item “Conference with legal counsel regarding personnel claim against the District. Government Code 54956.9(d)(2), (e)(3).” Whether this item has anything at all to do with Ms. Hardin is unknown at this point.
Conjecture regarding the accidental nature or deliberateness of Glusker's email SEND remains split, though it is interesting to note that Glusker sent it from a personal email address and not the mcdh email address often used by board members. Which leads to the question, if Dr. Glusker deliberately sent the email out to more than fifty non- Board member recipients why would he have done so? Frustration that information was being kept under wraps within MCDH would be the most obvious answer.
We've already alluded to the possibility that the Chief Human Resource Officer at MCDH may have been the victim of workplace harrassment, but the other part of Glusker's December 30th email used the words “fraudulent billing problems.” At the February 23, 2017 MCDH Board meeting, legal counsel John Ruprecht reported that the accounting firm WIPFLI (the title derives the company founder's surname) had found no evidence of fraud in MCDH's practices; however, WIPFLI was nevertheless retained by a vote of the MCDH Board as a consultant for periodic medical record and billing compliance review.
If that sounds like something is out of whack then it's time to take a look back to Chief Financial Officer (CFO) Wade Sturgeon's early November financial report given first to the MCDH Finance Committee then to the full MCDH Board of Directors. In the narrative portion of Sturgeon's report he states, “Unfortunately we are still dealing with some transition pains associated to the switch to EmCare in our ER. At the end of September, we were 60 days post implementation. We anticipate this
challenge to be neutralized by the beginning of November. but unfortunately it has taken us about
90 days to get our processes in place working alongside of EmCare.”
If we go back further, to the CFO's report to the Finance Committee on September 27th of last year we'll find Mr. Sturgeon saying, “Due to complications with the ER transition, we had issues with billing and getting charges into the system. We believe that the initial issue was fixed in September and we will have some charges for services rendered in August hit the September income statement. The amounts were not deemed large enough to manually input to the August income statement due to the amount of time and effort it would take.”
Remember that phrase “compliance review” as part of the reason MCDH is retaining WIPFLI? Medicare requires hospitals like MCDH to be at an 85% or a higher level of compliance in billing matters. For the first seven months of 2016 MCDH had no problem maintaining that standard, but when the outfit known as EmCare began running the MCDH emergency room (ER) on August 1, 2016, and subsequently took over coding and billing practices for the ER that billing compliance percentage dropped to 39% for the month.
Keep in mind that part of the reason EmCare won the ER contract at MCDH was a promise to provide an overall increase in revenue for the hospital to the tune of $4.1 million if EmCare took over coding and billing matters in the ER, resulting in a potential cash collection increase of slightly less than $2 million annually for the hospital. Obviously EmCare's ability to code, especially for Critical Care practices, was a bit lacking. Also keep in mind that CFO Sturgeon knew about the massive drop off to 39% by mid-September, but at the end of that month he told the hospital's finance committee, “that the initial issue was fixed in September,” and “the amounts were not deemed large enough...” These statements create an issue not only of transparency but trustworthiness.
What's at stake monetarily as a result of this sort of 85% slide to 39%. Pretty simple: Medicare can threaten to cut off what are called periodic interim payments (PIP) to the hospital. This can amount to serious money in no time, anywhere from $4 to $7 million yearly at MCDH.
It has come to this writer's attention that by sometime in November both CFO Sturgeon and Chief Executive Officer (CEO) Bob Edwards were aware that it would take extra manpower to sift through the backlog of EmCare billing mess-ups, yet these sorts of positions were not created until January.
Speaking of January, 2017, let's take a look at the Finance Committee meeting held on the fourth day of the new year, recalling CFO Sturgeon's remarks from two months earlier that he anticipated the “EmCare challenge to be neutralized by the beginning of November.” In Sturgeon's 4th of January financial narrative he claims, “We have cleaned up the major issues associated to EmCare.”
Yet MCDH is contracting with WIPFLI to oversee billing compliance review at a cost of $15,000 per quarter minimum. Something smells here. Reports from in and outside the hospital indicate that the kind of errors EmCare made back in August are still ocurring, lots of coding errors. Getting the codes correct makes a huge billing difference in dollars. For instance, if someone comes into the ER for an arm injury that requires a splint, but the code for an Ace bandage is recorded instead, the result is a significant dollar difference. You have these errors over and over, then we're talking major amounts per shift, per week, per month.
These errors may not rise to the level of billing fraud; however, if reports that EmCare's billing and coding errors have continued into 2017 prove accurate, contrasting with the CFO's contention that those issues have been cleaned up, then there's some serious explaining to be done.