MCHCD holds the lease on the Mendocino Coast Adventist Health hospital building. (Mary Benjamin – Fort Bragg Advocate News)
FORT BRAGG, Calif. — The Mendocino County Civil Grand Jury has completed a year-long investigation into the operations of the Mendocino Coast Health Care District Board and released its findings and recommendations.
The June 6, 2024 report said the board had failed to follow the laws laid out for elected officials, failed to serve the public interest, and mismanaged the hospital’s finances over a long period of time. It also said the board had a disregard for public transparency and lacked civility in public meetings.
The report, titled “Sick but Growing Healthy,” acknowledges that the commission is currently working to improve its management practices. The grand jury noted that “since the investigation began, MCHCD has taken numerous steps to correct the problems described above, and its renewed focus and hard work are to be commended.”
The grand jury “decided to approach its investigation of MCHCD at a higher level than individual complaints and focused on systemic issues within MCHCD that have continued for several years and through multiple committees, leaving many issues unresolved.”
The concerns center on the board’s failure to restructure after transferring operations of the hospital to Adventist Health, which has severely impacted the board’s ability to secure bonds needed for state-mandated seismic upgrades to the hospital building.
The report cited three main reasons why the board previously decided to lease the hospital to Adventist: Overall, MCHCD was “in poor financial condition and was experiencing declining revenues due to changes in the health care industry” (a common problem for rural hospitals) and “had difficulty recruiting medical professionals to remote locations.”
Additionally, since the changeover, “the functioning of the MCHCD Board has frequently been raised as a matter of concern to local residents at community meetings and in the media, and has resulted in numerous complaints to the Mendocino County Civil Grand Jury.”
The report identifies issues in all areas of the elected board’s operational and stewardship responsibilities. “Areas of concern for focus” include board training and certification, bylaws and policies, vision and mission, finances, and public transparency.
Importantly, since the transition, the board has not had oversight of medical operations, medical procedures, departments, employees or the hospital operating budget.
The report begins by citing a lack of training for newly appointed or appointed board members who “have no background or experience in leadership or supervision.” As an example, the grand jury said the board did not have a clear understanding of the Brown Act and ethics, and no board member could provide documentation that they had received training.
The grand jury noted numerous public complaints about board discussions and actions outside the legal bounds of scheduled public meetings. The report recommended that the board request training and assistance from state agencies established for this purpose. The services of these agencies are often free of charge.
The personnel changes meant that the board no longer had access to the secretarial and administrative employees it once shared with the hospital. The board tried to fulfill all of its responsibilities on its own, but was unsuccessful.
The committee has hired Regional Government Services (RGS) to help, but the report notes the cost could exceed the committee’s $250,000 budget. The committee has yet to determine what specific assistance RGS will provide or for how long the agency will provide that assistance.
The second area the Grand Jury will address focuses on bylaws, policies and procedures, and mission. The Grand Jury states that these elements constitute “a stable foundation necessary for a functioning organization.”
“Without them, an organization of this size, responsibility and mandate is likely to descend into chaos, leading to process conflict and discord that prevents the organization from making meaningful progress towards its goals,” the report argues.
“To the best of the grand jury’s determination, the board has been operating without a duly signed, written set of bylaws applicable to the new roles,” the report states. Additionally, a copy of bylaws for a November 2020 meeting was found that was signed and dated Aug. 16, 2023, by a board member who did not hold the position as of November 2020.
Further evidence of the Commission’s failure to meet its responsibilities to the public is the report’s assertion that the Commission had no Policy and Procedures Manual to present to the Grand Jury. A grand jury document review was provided with a 1999 version of the manual, which was later discovered, and it was noted that “all 15 sections were no longer relevant to the Commission.” [Board’s] The role has changed.”
The report recommended that the board is currently working on adding policies on “conflicts of interest, record keeping and ethics,” but should also add policies on “financial management, technology, security and comity.”
The grand jury also highlighted the “significant impact” of “more than a year of missing board meeting minutes.” The report said the failure to keep official minutes “nearly delayed the hospital from meeting deadlines for renovations that will require funding through voter-approved bonds.”
The state can close special district hospitals that don’t meet the deadline. To put a bond measure on the ballot, the MCHCD board must secure “an acceptable interest rate on the bonds to verify the board’s creditworthiness.”
The rating agencies will demand an audit, which would examine “board actions through review of minutes of activities going back several years.” The report says the “lack of minutes precludes completion of the audit and casts doubt on the official historical record, raising the possibility of fraud and that board actions may have been lost or improperly recorded.”
The grand jury also noted that there was “no updated policy providing for expense reimbursement … and requiring receipts is standard policy for all organizations, especially those that use tax dollars.”
When asked about the commission’s mission statement and vision, members agreed on the vision language but disagreed on the mission statement language, warning that this situation could lead to grand juries “causing dysfunction and breakdown” and that the commission “will not make progress to effect change in the community.”
“Had this been done, the public would not have witnessed the lack of courtesy that has been damaging to the organization and our county,” the report said.
“It would have helped ensure that basic requirements like meeting minutes were met, finances were handled properly and board members were in agreement about the mission and their role within it,” he continued.
“Public trust and confidence in the Council’s ability to get bond measures approved by the required two-thirds majority vote is crucial,” the report added.
The report then focuses on MCHCD’s financial situation, which according to the grand jury, “their financial problems do not stem from a lack of funds, but rather from mismanagement of the funds they have.”
The report said there was a lack of understanding of financial policies, the board did not have access to some accounts, was unable to account for lump-sum funds, annual audits were years late and there was a lack of clear budget reporting.”
The grand jury found that “all … contributions[d] They have failed in one of their primary responsibilities: to be transparent with the public about how their tax dollars are being spent.”
The report lists evidence of these failures: District funds were placed in improper non-interest-bearing accounts, potentially resulting in as much as $300,000 in lost interest per year; Quarterly fees were assessed on 25 accounts totaling thousands of dollars; Most of the district’s funds were not held in FDIC-insured accounts in case of bank failure;
The Grand Jury recognizes the Board’s recent efforts to address these financial missteps and views the Board’s April 10, 2024 meeting and discussion of these issues as “an excellent start in the right direction.”The Grand Jury recommends that financial reviews be undertaken by a qualified CFO every three to four months for the next several years.
At this point, the report also noted that Mendocino County has not reexamined the structure of the MCHCD board, as legally required by the Government Reorganization Act of 2000. Since the handover to Adventist Health, the board has become a separate entity.
The grand jury then noted that the MCHCD board does not have a required facility plan because it is the “owner of the hospital building. ” The report recommended that the board complete and approve the plan before upcoming lease negotiations with Adventist Health.
Finally, the report noted the need for public education to “understand.”[ing] The grand jury, “MCHCD’s Roles and Responsibilities Since Affiliation with Adventist,” recommended that the board actively reach out to the public to solicit feedback and input. It also suggested that a public advisory committee be established as a forum for the board’s actions.
In total, the grand jury identified 20 findings and made 18 recommendations in its report. The MCHCD Board and the county’s Local Agency Formation Committee (LAFCo) are required to submit responses to the report to Mendocino Superior Court Judge Ann Moorman, the Mendocino County Legal Counsel’s Office and the Mendocino County Civil Grand Jury within 90 days.
To view the full grand jury report, visit mendocinocounty.gov/government/grand-jury and click on “Current Grand Jury Report.” In the new window, click on “MCHCD, Sick but Recovering to Health.”
Editor’s note: Mary Benjamin is the spouse of a Mendocino Coast Adventist Health employee. The MCHCD board does not oversee Adventist Health employees at the hospital.
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