The Mendocino Coast District Hospital board of directors on Wednesday filed for Chapter 9 bankruptcy, an effort to save the long-foundering Fort Bragg facility from drowning in debt.
"It is a way of revising our debt structure," said Sean Hogan, the board president and an attorney.
It also gives the hospital more leverage in labor negotiations with its 320 employees, hospital officials said.
The board also this week voted not to renew the contract with its chief executive officer, Ray Hino, who was hired six years ago to rescue the hospital from an earlier debt crisis. The hospital has faced frequent financial dilemmas since it was established in 1974, officials said.
Hino in 2006 helped bring the hospital back from insolvency through a reorganization and by having the hospital categorized as a critical access facility, a status that allows higher Medicare reimbursements.
Two years ago, the hospital again began losing financial traction. In the first two months of this fiscal year, the hospital operated at a $429,000 deficit, Hogan said.
The annual budget is $45 million.
Most of the hospital's current financial problems stem from lack of revenue, Hogan said.
The hospital, and many others in the nation, has had a decline in patient visits over the past several years, in part a product of the ailing economy. Hino has said he suspects people are putting off routine medical tests because they are strapped of cash.
In addition, there was no flu season to speak of last winter, typically the hospital's busiest time of year.
Hospital officials hoped its new radiology wing, which opened last year, would stimulate patient use but it has been underutilized, they said.
Hogan said hospital organizations expect as many as 2,000 rural hospitals will close nationwide in the next 10 years.
"Rural hospitals are an endangered species," he said.
Still, he's optimistic Fort Bragg's will survive.
"This community can't afford not to have a hospital," he said. The hospital serves 25,000 people on the isolated coast. Without it, residents would have to drive more than an hour on a winding road to the nearest hospitals, in Ukiah and Willits.
Jeri Erickson, executive director of the hospital's fundraising foundation, said she's certain the community can pull together to save the hospital.
"I'm not worried," she said.
(You can reach Staff Writer Glenda Anderson at 462-6473 or firstname.lastname@example.org.)