By Deb Murphy

The Independence Civic Club hosted a forum on the Southern Inyo Healthcare District’s April ballot measure for a parcel tax. Two things were obvious: the district board has explored every avenue to resolve its bankruptcy and give the hospital a chance to survive. And, the atmosphere Monday evening was markedly different from the contentious meetings more than two years ago as the district was sliding out of financial control.


Since then, the district has survived two years of mismanagement with Healthcare Conglomerate Associates and appears to be on the right track under the management of new CEO Brian Cotter. The question for district voters: will the $215 parcel tax be enough to get the district to the point of sustainability?

Board member Dick Fedchenko brought the audience up to date on operations—the Skilled Nursing Facility is near capacity at 27, up from 15 when SIH was shut down in January 2016; all departments are near historic levels and the district receives $750,000 annually from the PRIME program through the rural healthcare clinic.

As for the bankruptcy process, the district filed its revised plan in mid-January. The judge opted to hold off until a May 30 hearing, after the election. The estimate on the scope of money owed ranges from $2 million for allowed claims to a potential $5 million. The difference depends on the outcome of future rulings on a loan through Optum, HCCA’s unpaid management fees and additional monies to a HCCA financial affiliate.

Measure J would levy a $215 tax on all parcels within the district, generating more than $602,000 a year until it sunsets in 15 years. The one new wrinkle: adjacent parcels could be combined to reduce the tax impact on the owner. The parcel tax was the only available vehicle to cover the cost of repaying debt.

If Measure J fails, Fedchenko anticipates the bankruptcy would be dismissed opening up the district for legal action by creditors and the strong possibility that creditors would go after the hospital’s collateral assets.

Additional information was provided during the course of the Q&A session.

Cotter responded to the question of the hospital’s chances of surviving once the bankruptcy is settled. His answer “there’s almost enough business to stay open.” The gaps right now are lower numbers at the clinic, a static potential for use of the Emergency Room and the SNF operating below its capacity of 33. The solutions: provide additional services through the clinic, continue to recruit staffing for the SNF to bring it up to capacity.

Cotter’s current focus is increasing the efficiency of the billing process. Right now, he explained, the income represents half of the billing—a pretty good ratio in the weird world of health care—up from less than 30-percent under HCCA. Once the revenue cycle is improved, the district can begin to provide additional services.

An additional source of income is Intergovernmental Transfers, another healthcare oddity involving the state matching funds from the district. According to Fedchenko, the district can “do a better job with IGTs” than HCCA.

Innovative approaches to health care, like free-standing ERs, are currently not available due to existing laws and regulations. According to Cotter, the free-standing concept would be an easier sell for rural hospitals. SIH is currently working with Ridgecrest and Northern Inyo Hospital to bring specialists to all three hospitals.

The rural health clinic requires the availability of an ER in order to stay open. In other words, the district can’t close the hospital and continue to provide care through the clinic.

District 5 Supervisor Matt Kingsley responded to the possibility of increasing income by adding to the district’s sales taxes, putting some of the burden on the tourist trade. The sales tax increase would have to be too high to have a real impact, Kingsley said. Another alternative the district could look at later is to increase the Transient Occupancy Tax, levied through area motels for a potential income between $50,000 and $200,000 annually.

Downgrading the hospital from an acute care facility to an urgent care facility would negatively impact reimbursements, according to Cotter.

The impact on the district’s ambulance services if the hospital closes would be significant with drive times doubling or tripling, according to board member and Lone Pine Volunteer Fire Department Chief Chuck Carson.

The district opted for a special election, April 10, rather than wait for the June primary election cycle. Fedchenko explained the judge in the district’s bankruptcy case has been patient, but the issues have to be resolved soon. “With the bankruptcy going on for two years, putting off until June or November just wasn’t viable,” he said.

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