Adventist Health has informed the Mendocino Coast Health Care District of its desire to restructure the agreement under which the health care provider leases its critical care hospital in Fort Bragg, the only hospital stretching along the 131-mile-long Mendocino Coast.
In a letter sent to Paul Garza last week, the district’s board chair, Adventist Health network president Eric Stevens proposed a 60-day negotiation period beginning immediately, under a provision that allows the lease to be restructured. The letter stated that if the district did not accept the proposal, Adventist Health would exercise its right to terminate the lease on June 30, 2025.
Garza agreed to the proposal on behalf of the district. In a joint press release from the district and Adventist Health, both organizations said that they “look forward to collaborating on a path forward to expand access to care.”
Adventist Health’s letter explained that its medical business, the operation of a general acute care hospital, “has achieved less than 5% EBITDA for the previous 12-month period.” The acronym means the hospital’s earnings before interest, taxes, depreciation and amortization.
Under the terms of the lease, if that under 5% threshold is reached, Adventist Health can terminate the agreement on specific anniversaries, including June 30, 2025. Termination could leave Mendocino Coast residents without a hospital.
Rather than invoking the termination provision, Adventist’s letter proposed a restructuring and negotiation period to give both sides a chance to “evaluate” their relationship. If a new agreement is not reached by the end of the 60-day period on Nov. 29, Adventist said that it “may terminate” the lease on the June 30, 2025 date.
In a statement, the district said that its Board of Directors will “explore every possible option to continue to provide access to healthcare services to residents on the Coast” and “keep the public apprised of the situation as we know more.”