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.