Five years after a remarkable financial recovery the Mendocino Coast District Hospital again is in a financial quagmire.

"We've seen some reversal," said Chief Executive Officer Raymond Hino.

The hospital ran a $583,000 deficit in December alone, largely because the flu season was mild, aggravating a two-year decline in the number of patients who utilize the hospital, its clinic and its laboratory services, he said. Hospital visits also were low in January, he said.

"We're on track for a $2 million (annual) loss if we do nothing," he said. The hospital's annual budget is $45 million, Hino said.

He suspects that the economic slump has contributed to the overall decline in patient visits. People who have lost their jobs and their insurance coverage are less likely to opt for routine laboratory workups, Hino said.

"They're deferring medical services perhaps until they're really sick," he said.

People without insurance also tend to shop around for the best prices. A small rural hospital that provides 24-hour services can't compete with a larger facility that is open just 8 hours a day, five days a week, Hino said.

"They have much less overhead and more volume," he said.

When the hospital's $8 million radiology wing opened last year, hospital officials hoped more people would seek services locally.

"It's beautiful but underutilized," Hino said. The hospital built the new wing and purchased new equipment because the old facility was inadequate and the equipment was wearing out.

"If we were going to continue as a hospital, we had to have diagnostic imaging," Hino said.

Hino said the hospital will be looking at streamlining and eliminating services, such as its home-health program.

Hino helped pull the hospital from a sea of debt when he came on board six years ago. The 2005-2006 fiscal year had ended with a $5 million deficit that nearly drained the hospital's cash reserves and threatened the existence of the facility, which is the sole hospital for some 25,000 coast residents. At the time, the hospital had a budget of $35 million and employed 300 people.

The hospital reorganized, reduced the number of hospital beds and obtained status as a critical access facility, which boosted its Medicare reimbursements. By late 2006, the hospital was operating in the black money.

A fix of that magnitude is not available now, but Hino is optimistic.

"We did it once and we can do it again. It was much worse before," he said.

You can reach Staff Writer Glenda Anderson at 462-6473 or