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Frequently Asked Questions

FAQ Sources, Studies & Citations

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Information Sources for our FAQs

To ensure accuracy in our FAQs we've collected our info from many reputable sources.

Health Care Publications

MedPage Today
A CE and CME accredited medical news service, providing free continuing education to healthcare professionals in addition to the latest news.

NHRA Today
NRHA Today, National Rural Health Association Newsletter and Rural Roads, as well as other NRHA publications.

CHA News
Various publications, including up to date briefings by the California Hospital Association.

AHCD Legislative Updates
Various Association of California Healthcare Districts articles including legislative news, and monthly updates.

Health Care Association Resources

MedPage Today
SHCHD staff and board pursue ongoing education through annual conferences, on-line workshops, consulting and site visits by healthcare associations' professional staff, and by reading publications including those cited above.

These organizations include the Association of California Healthcare Districts, the California Hospital Association, the Hospital Quality Institute, and the National Rural Health Association, as well as professional associations such as those for nursing specialties, disaster preparedness, facilities management, and electronic health records.

Sampling of Specific Studies

Causes and consequences of rural small hospital closures from the perspectives of mayors.
Hart LG1, Pirani MJ, Rosenblatt RA., 1991

The Closing of Trinity Hospital: The impact on property Values in Trinity County - PDF Link
Center for Economic Development, California State University, Chico, 2004

Depreciation and Stating the Value of Hospital Buildings
John R Holmes, David Felsenthal, Oct 2009

The Economic Impact of the New Hospital on the Economy of Drumright, Creek County, Oklahoma
Oklahoma Cooperative Extension Service, Oklahoma Office of Rural Health, Rural Health Policy & Research Center, Oklahoma State University, January 2005

The 'Golden Hour' and Acute Brain Ischemia
Jeffrey L. Saver, Eric E. Smith, Gregg C. Fonarow, Mathew J. Reeves, Xin Zhao, DaiWai M. Olson, Lee H. Schwamm,
and on behalf of the GWTG-Stroke Steering Committee and Investigators, AHA Journals, June 28, 2010

Report to Congress: Alternative Payment Models and Medicare Advantage
CMS - Centers for Medicare & Medicaid Services

The Changing Payment Landscape Of Current CMS Payment Models Foreshadows Future Plans
David Muhlestein, Natalie Burton, and Lia Winfield, February 2017

WHY CAN'T WE REBUILD OR REMODEL AT CEDAR ST?

Our current facility consists of a collection of spaces built at different times, patched together and repeatedly repurposed over the years. All segments were built long before the Office of Statewide Health Planning and Development (OSHPD) was created by the California legislature in 1986, and also before the 1989 Loma Prieta and 1994 Northridge earthquakes heightened awareness of the need for seismic safety standards for hospitals. While our hospital has been repeatedly upgraded and retrofitted to comply with increasingly stringent safety requirements, we are rapidly approaching a time when our hospital will be irrevocably substandard.

The challenges of accomplishing any building or equipment upgrades with existing wiring and other structural conditions often multiply their costs or render them unfeasible. Already our hallways are too narrow and our rooms too small to meet current standards. It is difficult to maintain mandated minimum and maximum temperatures our patient rooms, and our Emergency treatment rooms are barely adequate. Current standards of care calling for negative-air-flow rooms for isolation of patients suspected of having communicable diseases are unattainable in our existing facility.

That being the case, to rebuild where we are would require razing the current facility, leaving nowhere to house all our services during the years-long rebuilding period. It's also true that a new facility on this site would be subject to current regulations for room and hallway sizes, parking, access, and setbacks, etc. That could only be accomplished in a prohibitively expensive multi-story building.

The good news, however, is that we can put our current campus to great future use for elements of healthcare service that don't have such stringent building requirements, such as a skilled nursing facility with significantly larger patient capacity and a more spacious physical therapy suite.

WHY CAN'T WE JUST HAVE A STAND-ALONE EMERGENCY ROOM?

Stand-alone Emergency Rooms, also called Freestanding Emergency Departments (FEDs), are legal in several states such as Texas, Florida, and North Carolina, and they are becoming common in upscale population centers in these states. Insurance programs cover visits to these facilities differently than those to hospital Emergency Departments, often making out-of-pocket costs to patients much higher. They are not legal in California, and even if legalized, a stand-alone Emergency Room would not be feasible here.

In the first place, the name is a misnomer: FED facilities do not stand alone, but rather rely on nearby affiliated large hospitals for all but the simplest care. To truly stand alone, an emergency department must provide laboratory and radiology services around the clock. In a rural area like ours, the patient volumes needed to support these ancillary services come from our clinic, skilled nursing facility, and acute-care hospital patients, and funding for our Emergency Department further augmented due to our Critical Access Hospital status.

WHY CAN'T WE HAVE A 24/7 URGENT CARE CLINIC?

Southern Humboldt's population could not support an Urgent Care Clinic, either, and even if feasible, such a clinic could not provide the services our SHCHD Emergency Department delivers.

Urgent Care Clinics are another step down in service capabilities from FEDs. While they may or may not operate within a hospital system, essentially they merely provide clinic services to drop-ins with hours that extend to evenings and weekends. Only a few Urgent Care Clinics are open 24/7, and these are in very highly populated areas. Only rarely are they licensed to receive patients via ambulance transport.

In California just a handful of urgent care clinics, such as those in Downieville and Gualala, are granted an ambulance exception because the towns are located on winding two-lane roads far from freeways such as 101, and none of these clinics operate around the clock.

WHAT WILL HAPPEN TO THE CURRENT FACILITY WHEN THE NEW HOSPITAL IS COMPLETE?

Specific space allocations are not yet firm for either the new facility that will house our hospital nor for our existing building, but we do know that we will make good use of both in fulfilling our vision to empower individuals to live longer, healthier lives.

Skilled nursing facilities, long-term care homes, and other services for the elderly are increasingly in demand as our population ages. When we move hospital and administrative functions to the new site, we will be able at least double the capacity of our highly acclaimed skilled nursing facility. Studies show that our elders do better in familiar surroundings where their family and friends can visit them, and we already have a long waiting list for this important service.

We'll also expand the space available for independent Ther-A-Con Physical Therapy, currently operating in our building, and it's possible that as plans progress we'll decide it's best to keep the clinic in its present location. Remaining space might also be used for storage, certain administrative and/or billing tasks, and perhaps a classroom or meeting room.

WHY ARE EARTHQUAKE STANDARDS REQUIRED?

Forty five years ago in the San Fernando Valley near Sylmar a 6.6 magnitude earthquake struck at 6am. The unreinforced concrete eight-story VA hospital collapsed killing 44 people and injuring 2500 others. This earthquake started the State of California on a mission to prevent this type of disaster from happening in the future. New earthquake standards have been upgraded due to other earthquakes since then. The Loma Prieta earthquake collapsed the Bay Bridge right before the World Series game in 1989.

Even though our small single story wood framed hospital is not likely to collapse, we may have internal infrastructure failures that would prevent immediate continuation of services. The State of California will close our hospital by 2030 if we don't meet their earthquake standards.

Garberville and Redway sit on top of a small field of earthquake fault lines and are about 100 miles from one of the largest subduction faults in the world. The Cascadia fault ruptures about every 300 years. The last Cascadia earthquake was in the year 1700. When, not if, this fault erupts, it could be as high as a 9.0 earthquake. Having a modern earthquake compliant facility will provide emergency services when we need it the most.

HOW CAN WE BE SURE YOU WON'T TEAR DOWN THE REDWOOD PLAYHOUSE BUILDING?

We understand the importance of artistic expression in the quality of life of those we are privileged to serve. The existing school and playhouse are historically significant to many in our community, including us. We plan to pursue historic designation for the building once we enter escrow on the property.

The existing buildings are incorporated into the overall design that we are considering, and we intend to retain this incredible space for continued use for the community and ourselves. It is the philosophy of the governing board, the administration and staff at SHCHD to support and promote optimal health in our community.

Our Mission and Vision statements offer insight into the attitudes and values that we bring to the table:

MISSION
It is the mission of the Southern Humboldt Community Healthcare District to provide high quality local medical services, to engage community members with education, activities and lifestyle opportunities which promote optimal health and to assist our patients in navigating access to services throughout the healthcare system.

VISION
Our vision is to empower individuals to live longer, healthier lives through the use of information, relationships and technology.

WHAT HAPPENS WHEN SMALL TOWNS LOSE, MAINTAIN, OR BUILD NEW HOSPITALS?

HOSPITAL CLOSURES

When small-town hospitals close, especially those located many miles from the next nearest hospital, these are the certain consequences, as has been documented across the nation: Many resident seniors move closer to other medical facilities, and very few new retirees move into communities without hospitals nearby. Likewise, many families with children move out, and fewer new families move in. All the jobs in the hospital are lost, from med practitioners to housekeepers. Local businesses and schools, etc. are impacted both by reduced income and enrollment, and by the loss of valued employees and difficulty recruiting new ones. Property values drop due to reduced demand for housing.

In a 1991 study of Causes and Consequences of Rural Small Hospital Closures from the Perspective of Mayors, "more than 90 percent [of the 130 mayors reporting] felt it had substantially impaired the community's economy."

MAINTAINING HOSPITAL SERVICES

Quantifying these impacts is challenging, but a study done for Trinity County by Chico State in 2004 provides some good indicators. This study focused on the impacts on property values due only to senior residents leaving and new seniors choosing not to move there if the County's hospital closed. Trinity County is larger than we are and has half-again as many people, but its similar distance to the next nearest hospital makes for a relevant comparison.

Their conclusion? "If the hospital were to close in 2004, the median home value … would only increase by 8% [in 10 years]. …. If the hospital were to remain open, median home value in 2014 would increase by 52% …." Trinity County managed to keep their hospital, and in March, 2017 (according to Zillow) their median home values were higher than predicted by the Chico study.

NEW HOSPITAL IMPACTS

Many studies have shown that the impacts of building a new hospital in rural small towns are very positive, in addition to the sharp but temporary boost provided to the local economy during the construction phase: The new facility provides up to date equipment which improves quality of care. Physician and other employee recruitment and retention are significantly enhanced, also improving quality of care. Other major employers see similar enhancement of their ability to recruit and retain skilled staff. Local businesses experience growth. Local property values increase.

WHY IS A CT SCANNER IMPORTANT AND WHEN WILL WE GET IT UP AND RUNNING?

For patients who come to our ER, CT scans can determine whether they can safely go home, should be held in our facility for treatment and/or observation, or should be transferred to another facility. In the absence of this diagnostic capability, current standards of care require that we transfer some patients to a facility with a CT scanner to rule out the possibility of a more-serious condition. Right now, more than half of patients transferred on to other hospitals for scanning, many of them elderly, find they could have been treated, or released after an observation period right here in our own hospital, if a CT had had been available.

Once our CT scanner is operational, many transfers will be avoided, and if transfer is indicated the receiving facility can read our electronically transmitted CT images to prepare for immediate treatment when the patient arrives. For patients with time-sensitive conditions such as heart attacks, internal bleeding, and appendicitis, this can greatly improve their chances for recovery. We'll be able to administer the clot-buster drug to stroke victims, when indicated, within the "Golden Hour". Community members with non-emergent diagnostic needs will also benefit, as they will be able to schedule scans prescribed by their local doctors or by specialists outside the area right here in Garberville, avoiding travel time and expense.

CT scanner technology is only a few decades old. The first commercial CT scanner in the United States was installed at the Mayo Clinic in 1973, and by 1980, 85% of U.S. hospitals with 500 beds or more had CT scanners. According to the National Center for Biotechnology Information (NCBI) "Computed tomography (CT) has been a boon for medical care. By generating detailed anatomical pictures, the technology can improve diagnoses, limit unneeded medical procedures, and enhance treatment." Conditions such as strokes, appendicitis, blood clots, and internal bleeding and organ injuries can be diagnosed quickly without surgery. To avoid unnecessary exposure to ionizing radiation from CT scans, we have selected a state-of-the-art low-radiation CT scanner, and our Medical Staff is developing policies and procedures to eliminate unnecessary scans.

A survey of several Critical Access Hospitals in the West which have recently acquired CT found they had each experienced net annual revenues of $300,000 or more directly from the scanners, as well as increases in ancillary services such as acute hospital stays and lab work. These potential increases represent local income for services which our residents would otherwise have had to obtain from distant locations.

We have purchased a CT scanner, bought the property adjoining our ER entry doors, selected a modular structure to house the CT scanner, developed the site plan and applied for a building permit. We hope to offer CT scans by early summer this year (2017).

WHY DOES LAB WORK SEEM TO BE SO EXPENSIVE AT SHCHD?

Pricing of laboratory tests at our facility is based upon many factors including volumes of each individual diagnostic test performed, the cost of the supplies used to run those tests, required performance validation and resting, the required licensed Clinical Laboratory Scientists to be on call 24 hours, seven days a week, and many other factors.

In addition, we care for everyone, regardless of their ability to pay. Some tests are sent to a reference laboratory, others are required to be performed in-house related to the emergency function we provide through the Emergency Room. Of note, our pricing structure is within the range charged for the same services at other medical service providers in our region. Of eight frequently ordered tests and panels, our charge is below the highest rate you would be charged by at least one of the other four hospital-based laboratories in our area.

It is important to consider, too, that when more of our local community utilizes our laboratory facility and the number of individual tests increases, the cost of performing each test can be reduced. This is why we regularly monitor and adjust pricing in laboratory services, as well as other areas of our complex operation.

In addition, we provide those who reside within our district with some relief through the use of the Voucher Credit program. Each individual, based on the size of their household, can claim up-to $125.00 per year to be used toward services performed at our facility.

WHY DO WE HAVE SO MUCH TURNOVER AMONG PHYSICIANS, AND WHAT CAN WE DO ABOUT IT?

The bad news is that there is a nationwide shortage of physicians. Rural communities, especially ones as remote as ours, have a harder time recruiting and retaining doctors and other practitioners than more populous areas.

The good news is there are programs to help us maintain physician and other practitioner coverage even in the face of these shortages. When all else fails, we can contract with physician staffing services which provide experienced, reputable physicians on short notice. Our beloved Dr. Pleatman, who worked one week per month for years in our ER and saw patients in our clinic, too, was one such traveling physician.

The best news is that recent legislation cleared a huge hurdle for us: Rural hospitals and hospital-based clinics in California (but not urban or suburban facilities) can now hire doctors directly, as is true in every other state. We used to be forced to hire doctors through an intermediary agency, putting all of California at a huge disadvantage in physician recruitment. The requirement made it especially burdensome to hire doctors through programs such as the student loan repayment and the H-1B.

The H-1B program allows expedited immigration processing for qualified foreign doctors. It is slated to be curtailed for doctors from six named countries, but it will continue to provide physicians and other highly skilled medical practitioners from around the world. Another federal program offers education loan credits to new doctors who work for three years in remote and rural areas. Dr. Matuszkiewicz worked for us under that program; not long after fulfilling his commitment, he and his family moved to Berkeley.

Playing in to physicians' career decisions are factors such as relative modernity and comfort of the hiring facility, convenient networking with others in the medical field, proximity to educational and cultural activities for both the doctor and his/her family, airport access, a variety of housing options, along with compensation and opportunities for advancement. Southern Humboldt County ranks low in many of these criteria.

On the other hand, we offer our area's natural beauty, moderate climate, and wonderful outdoor recreational opportunities. We have vibrant non-profit institutions, and we offer a variety of educational and cultural opportunities for all ages through the Mateel Community Center, the Redwood Playhouse, and the newly-empowered Community Park.

Recent improvements at our existing facility such as our new mammogram and radiology equipment and the upcoming CT scanner already make SHCHD a more attractive place to work; studies around the country show that having a new hospital will give us a big boost in staff recruitment and retention.

The bottom line is that staffing will always be a challenge here, and we will use every available strategy to continue providing the best healthcare possible for our Southern Humboldt residents and visitors.

WHY CAN'T WE DELIVER BABIES HERE?

Obstetrics is a service nearly everyone wishes we could offer locally as we did in times past.

County vital statistics figures reveal that the average number of babies born to Southern Humboldt mothers each year is 95. Cost analyses of obstetrics programs indicate even 200 babies per year would not be enough to support a labor and delivery program.

Labor and delivery programs require 24/7 on-call access to doctors, nurses, anesthesiologists, and certified midwives with demonstrable experience in perinatal care. Even if affordable, serious staffing shortages in these professions exist nationwide. Dedicated labor and delivery rooms as well as access to a surgical suite suitably equipped for Cesarean deliveries are also required. For hospitals that do other surgeries, these requirements are not as difficult, because they already have much of the necessary infrastructure and some of the necessary staff. At SHCHD, this is not the case.

Hospitals around the country have closed because they tried for too long to maintain services that were draining their hospitals of the funds needed to survive. Mendocino Coast Hospital quickly found itself in serious financial trouble when the surgery center it built did not receive the number of surgical patients predicted. In these uncertain times, attempting to provide labor and delivery services just too risky, as it could endanger our ability to provide any services at all.

That said, both Redwoods Rural Health Center and our Community Clinic would like to be able to provide more pre-natal, post-partum, and infant care.

HOW DOES THE VOUCHER PROGRAM WORK AND WHAT ABOUT OWNERS OF MULTIPLE PARCELS?

POLICY/PROCEDURE:

The purpose of this policy is to provide those property owners who have paid the Southern Humboldt Community Healthcare District (SHCHD) special tax, their dependents, or renters of a property on which the special tax is paid, with a parcel voucher credit redeemable in the amount of the SHCHD tax paid, for medical services provided by the District.

PROCEDURE:

Persons who support SHCHD through payment of a Special Assessment on their property tax bill(s) receive a parcel voucher credit for each tax paid, usable toward healthcare services provided at Jerold Phelps Community Hospital, its emergency, laboratory, x-ray, and mammography departments, and/or the Southern Humboldt Community Clinic. The person responsible for payment of the tax may choose to use their parcel voucher credit for themselves and their dependents or to pass it along to persons residing on and renting the parcel. Parcels with multiple rental units receive a single voucher credit. How that voucher credit is disseminated is the decision of the person(s) responsible for the payment of the tax.

Tax years run from July 01 through June 30 of the following year. You may apply for a parcel voucher credit from the day the tax year begins through September 30th of the following year, three months after the end of each tax year (i.e. July 1, 2017 to September 30, 2018 for the tax year 2017-2018; July 01, 2018 to September 30, 2019 for the tax year 2018-2019, etc.).

Credits are valid for up to two years, beginning July 01 of the tax year of issuance through June 30 of the following tax year and can be used to cover insurance co-pay and deductible amounts and uninsured patient-related costs, though they cannot be used in lieu of claims processing that must be filed with an insurance company, Medical, Medicare, or any other third-party claims. Credits may be used as payment of patient account balances from January 01, 2016 forward.

No refunds will be given for parcel voucher credits not redeemed for services and there is no actual cash value to the parcel voucher credit.

Parcel voucher credits may not be sold or transferred. They are exclusively for use by the property owner(s), renter(s) and their dependents in lieu of cash.

HOW THE PROCESS WORKS

When you desire to use a parcel voucher credit, request the discount when arriving for an appointment or when making a payment for medical services.

Property owners will present a copy of their tax bill showing the SHCHD special tax along with state issued identification. Note that owners who reside outside of the district boundaries (absentee owners) are eligible to receive parcel voucher credits in the same manner as resident owners.

If you are not the property owner, you will need to provide proof of residence and permission from the owner:

  1. Present a copy of the current tax bill with the name of the owner along with a statement from the owner containing the names, addresses and phone numbers of both the owner of the taxed parcel and the person who lives on the parcel. The statement must also include a list of individual(s) eligible to use the parcel voucher credit.

  2. In addition, you must show proof of residence in one of the following ways:
    1.   Utility bill with the physical address and renter's name
    2.   State issued ID with physical address and renter's name

Our business office will track parcel voucher credits and their use by parcel number with one voucher issued per parcel.

EXAMPLE:

On January 2, 2018, John Smith requests his $125 voucher credit for the tax year beginning July 1, 2017. He also has a $50 credit remaining from his July 2016-June 2017 voucher, for a total of $175 in voucher credits. In March 2018, Mr. Smith receives an invoice advising that his insurance has paid its portion, leaving $225 for the district services he received on his recent visit. Mr. Smith is able to apply his current 2017-18 $125 voucher and his remaining 2016-17 credit of $50, reducing the amount he owes to $50.

OTHER INFORMATION:

    •  District property owners should consult their income tax preparer regarding tax implications of this benefit.

Properties within the healthcare district boundaries are included within the following zip codes:

    •  Alderpoint  95511
    •  Blocksburg  95514
    •  Garberville  95542
    •  Miranda  95553
    •  Myers Flat  95554
    •  Phillipsville  95559
    •  Piercy  95587
    •  Redway  95560
    •  Weott  95571
    •  Whitethorn/Shelter Cove  95589

If you have questions, phone the SHCHD Billing Manager at  923-3921  or phone our billing office at  855-800-7032  during regular business hours.

DO OTHER COMMUNITIES HAVE TO FUND THEIR OWN HOSPITALS?

Many hospitals in densely populated areas do not rely on public funding, but remote and rural hospitals like ours do not have a sufficient volume of business to be financially sustainable.

There are basically three ways to manage and finance the operations of hospitals in California: for-profit companies, private non-profit corporations, and governmental entities.

  1. Mad River Hospital is run by a private, for-profit company.
  2. Redwood Memorial Hospital in Fortuna and Frank R. Howard Hospital in Willits are examples of hospitals operated by nonprofit organizations --St Joseph/Provident and Adventist Health respectively --, both of which are religious-based.
  3. The Southern Humboldt Community Healthcare District is a governmental entity, a special District governed by a publicly elected board of directors.

Our hospital and clinic both used to be privately owned. The District was formed because private ownership became financially unfeasible. Public funding help was needed to keep the hospital from having to close its doors, as is the case for virtually all remote and rural hospitals. For more information, read the history of our hospital elsewhere in the FAQs.

WHY DO YOU NEED A PARCEL TAX AND A CAPITAL CAMPAIGN, TOO?

The question we ask our constituents in Special Tax Measure W is "Shall the Southern Humboldt Community Healthcare District renew its expiring parcel tax to continue providing local access to hospital emergency care, physician clinic services, other healthcare programs and services, including a new hospital and new or improved healthcare facilities? The renewed tax will be at a new rate of $170 per year on all qualified parcels, annually providing $1.63 million dollars per year for 45 years beginning July 1, 2018."

This parcel tax will provide collateral for the loan that pays for the property, the new building, and the remodeling needed at our current building.

The capital campaign will help to fund what is not covered in such a long-term loan: the cost of furnishings and equipment not integral to the building, which are paid through shorter term financing. A successful capital campaign is also important to demonstrate to future lenders and grant writers that our community is behind this vital project.

IS THE PARCEL TAX TOO EXPENSIVE?

A hospital in Garberville saves time and money when you need medical care. Whether it's a lab test, an X-ray, or an ER visit, obtaining services here saves hours and 100 miles or more of travel expense for most District residents. Of course, we can often combine errands when we drive north, but sometimes we can't. If you get 30 miles to the gallon in your vehicle and pay $3.00 per gallon for gas, every trip from Garberville to Fortuna costs about $10 in gas alone. According to AAA, driving a mid-size sedan 15,000 miles per year costs about $.57 per mile for gas, maintenance, and insurance, etc. By their calculation, one round trip from Garberville to Fortuna costs about $57.00.

Added to this monetary cost are the dangers of delay of treatment and of driving in bad weather, the possibility of road closures like the ones we've experienced lately, the inconvenience, and the impact of lost work time, etc.

Also, studies show that maintaining a viable hospital in a rural small town protects and enhances property values and the economic vitality of the community.

The study conducted by Chico State University in 2004 regarding the impact on property values if Trinity County lost their hospital shows that the cost of parcel taxes we will pay to ensure that we continue to maintain a hospital here will be outweighed by the positive impact on our property values. For further information, see our answer to the FAQ "What happens when small towns lose their hospitals, when they maintain their hospital services, and when they build new hospitals?"

Here in Southern Humboldt, many taxpayers can benefit from credits for medical services equal to the parcel taxes they pay through our Voucher Program. For more information, go to the FAQ section of on our website at www.SHCHD.org.

WILL THE NEW PARCEL TAX MONEY BE ENOUGH?

A couple of factors work together to make our new hospital a feasible project even in these uncertain times.

1. We are a designated Critical Access Hospital (CAH). This designation is applied to hospitals around the country in areas where their closure would eliminate critical access to medical services in the communities they serve. This designation may come under more stringent guidelines to cut healthcare costs; hospitals within 15 miles of other hospitals may be disqualified. Our designation is safe because we are more than 50 miles from the nearest hospital, Redwood Memorial in Fortuna.

CAHs receive Cost-Based Reimbursement for the services we provide to Medicare patients and, to a lesser extent, to MediCal patients. Cost-based reimbursement, in a nutshell, covers our direct costs such as our doctors' and nurses' salaries and benefits, and the drugs, and supplies we use in patient care, and also our indirect costs such as administrative staffing, repair and maintenance, depreciation and other expenses.

The Centers for Medicare & Medicaid Services, CMS, is part of the Department of Health and Human Services (HHS). CMS has set goals for moving compensation for healthcare services from volume-based to value-based payments over the next few years, with increasingly strong payment incentives for demonstrated quality of care. This major shift is a step on the path toward CMS's ultimate goal of providing capitated payments through Accountable Care Organizations (ACOs). These payment strategies may be employed in conjunction with our Cost-Based Reimbursement over the next several years.

2. If we pass Measure W, we qualify for a long-term loan from USDA. WIPFLI, a major accounting firm nationally recognized for its expertise in healthcare funding, conducted a feasibility study that validates this qualification.

Put as simply as possible, here's how it works.

In our private businesses, we report our income, our direct costs, and our overhead to determine how much income tax we will pay. Part of our tax deductible overhead costs are interest expenses for borrowed operating capital and major equipment purchases, etc. Another important part of overhead is depreciation, a non-cash expense. For example, when we invest in a $10,000 piece of equipment with a predicted useful life of 5 years, we can declare $2,000 per year as the cost of its depreciation, and this deduction helps us save the money we'll need to replace that equipment when the time comes.

With cost-based reimbursement, rather than a tax deduction, we get cash back for our depreciation and interest expenses. In our case, 40% of our construction project costs will be depreciable over 25 years, providing $1.2 million in cash back for the first 5 years after construction is complete and declining gradually over the life of the loan. Because of the changes in funding mechanisms mentioned above, it's imperative that we build as soon as possible so the cost of the new building will be incorporated into our capitation calculation. For equipment with a shorter useful life, we will depreciate more rapidly, recouping our costs in cash over a shorter time period. Likewise, all the interest we pay will also be given back to us in cash, year by year.

So the $170 per parcel that we landowners will pay, totaling $1.63 million per year, provides collateral for the debt, but it does much more! Much of that money also comes back to our Healthcare District to pay competitive wages for all levels of staffing, to help cover the costs of the Emergency Department services for which we are not able to collect payment, and to continue maintaining our facilities and equipment so we can continue to provide topnotch healthcare in Southern Humboldt long into the future.

INDEPENDENT CONFIRMATION OF FINANCIAL FEASIBILITY

Planning Dashboard - 2016 Baseline + Project for Southern Humboldt Community Healthcare District:

WIPFLI Feasibility PDF

Measure W Voting Results

The tax to provide collateral for building a new hospital has been rejected by a shockingly wide margin. Still, the Governing Board and the staff of the District are united in our commitment to do whatever is necessary to continue providing healthcare beyond 2029, and we will redouble our efforts to obtain community support for this project.

We learned as we worked on this campaign that win, lose, or draw, we have a lot of work to do to acquaint our community with who we are, what services we provide, and how we do it. Our goal is to provide the information our friends and neighbors need to realize that this is, indeed, our community’s Healthcare District.

Toward that end, we are looking forward to a busy summer. We will be sharing stories about our employees and the work they do. We’ll host an event in our courtyard where community members can meet our providers, tour our current facility, and learn about our plans for the new hospital. We’ll be tabling weekly at the Garberville Farmers’ Market, varying both the subject focus and the individuals manning the table.

We’ll also continue sharing information about the planning process, and about the complex regulatory environment within which we are working to accomplish our goal of building a healthcare facility that will be state of the art when it opens and that will serve our community well for the next 50 years.

And we will be asking those who share our commitment to join us in these efforts. Small rural hospitals throughout the United States and the state of California have closed when their communities failed to support them.

These next few months will be critical in determining the future of our community’s healthcare.

VOTING ON MEASURE W

Measure W, the parcel tax to enable us to build a new hospital, will be brought before the voters in a special election May 2, 2017. This is a mail-ballot-only election; no polling places will be open, and to vote, you must return your ballot to your County Elections Office in person by May 2, or by mail postmarked on or before that date.

You need not be a property owner to vote. All citizens 18 years or older who reside in the SoHum Community Healthcare District are eligible to cast their votes on this important community issue.

You have until April 14 to register to vote or, if you're registered elsewhere, to update your registration to your current residence address.

You can register online at www.sos.ca.gov/elections/voter-registration.

You can also pick up a paper voter registration application at your county elections office, library, Department of Motor Vehicles offices, or U.S. post office. It is important that your voter registration application be filled out completely and be postmarked or hand-delivered to your county elections office at least 15 days before the election.

The following communities are part of the Healthcare District. Starting from the north in Humboldt County they are Weott, Fruitland Ridge, Myers Flat, Miranda, Phillipsville, Alderpoint, Redway, Briceland, Garberville, Harris, Benbow, Shelter Cove, Whitethorn, and finally Piercy, in Mendocino County. Zip codes are 95511, 95514, 95542, 95560, 95571, 95587, 95589, 95553, 95554, and 95559.

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WHO BUILT OUR HOSPITAL, AND WHEN?

Local lore tells of doctors delivering care in our area in the early 1900's on horseback or via horse and buggy, and a little later there was apparently a small hospital near the north end of Garberville, but medical care began in our current location in 1949.

When Dr. Leland Loewen and his wife Elvira arrived in town in the late 1940's, Dr. Loewen practiced in a Garberville hotel room until he and his wife moved into the home they built on Elm Street. At the outset, this structure included a doctor's office with an emergency room where they would occasionally keep patients overnight. That space now houses SHCHD's administrative offices. In 1952, Dr. Loewen extended the building further, adding a six-bed hospital which now houses our clinic at the corner of Cedar and Elm streets.

In 1960, Dr. Loewen left to become an orthopedic surgeon, and he sold the facility to his business manager Roy Schmunk and Dr. Jerold Phelps, who had been practicing with him for about five years. Four years later, they opened a new hospital addition which had surgery and obstetrical suites. By 1970, the basic footprint of the facility was as it exists today. The hospital was at the northeast side, the clinic was in the southwest corner, and there was a dentist office in the northwest corner where the employee breakroom is now. Ownership of the facility was still in private hands.

Ten years later, in 1980, the hospital officially came under the ownership of the newly formed Southern Humboldt Community Hospital District, while the clinic remained privately owned. Special district community hospitals had been forming throughout the State of California for decades, funded by shares of county property tax revenues as were community services, fire department, recreation, and other special districts. Unfortunately, 1980 was also the year that Proposition 13 came into effect, and that, combined with the decline of the logging industry, meant that only a fraction of the tax funding the community had expected to rely on for the hospital actually materialized. That is why, in 1986, the community passed a special assessment to support the hospital.

Another crisis in healthcare was also building, as medical billing and regulations made private practice increasingly difficult for rural doctors. In 1995, at the request of Drs. Jerold and son Mark Phelps, the District took over ownership and management of their clinic and changed its name to the Southern Humboldt Community Healthcare District, a pioneer in this strategy to maintain medical services in remote and rural communities.

Since then, we've been in the forefront of rural healthcare advocacy. In 2002, the District was recognized as a Critical Access Hospital. This federal designation, which was granted due to our distance from other hospitals, entitles us to receive payments for treating Medicare and MediCal patients that are based on our costs to provide that service. This designation has been crucial to keeping our doors open while the majority of rural California hospitals were forced to close.

Over the years our district and hospital, like similar facilities throughout rural America, have coped with ever-increasing regulatory complexity coupled with an increasingly challenging financial and staffing environment. We have added services as we could to meet community needs, such as mammography and the skilled nursing facility. In some cases such as obstetrics, we have been forced to discontinue services due to prohibitive costs and/or regulatory requirements. Now we are approaching another major transition as state standards for hospital construction require that we build and occupy a new hospital by 2030.