Although a state agency says the Del Norte Healthcare District has no authority over Sutter Coast Hospital, district board members say constituent concerns have motivated it to take on a watchdog role with the hospital over the past several years.

Amber King, vice president of advocacy and membership with the Association of California Healthcare Districts, said a healthcare district would have authority over a local hospital if it had a lease agreement with the hospital. It would be the district’s responsibility to ensure that the hospital is carrying out its contract.

The two agencies with authority over the hospital would be the California Department of Health Care Services, which would oversee the hospital’s medical services, and the California Department of Public Health, which would oversee its licensing, King said.

According to Dwayne Reichlin, who retired from the Del Norte Healthcare District after 32 years last month, Sonny Hussey, owner of Snoozie Shavings Inc., donated the land so “Sutter would be able to jump-start the building of the hospital.”

Hussey’s widow, Beverly Hussey, sued Sutter Health in 2014 alleging the corporation was violating terms of its lease agreement by planning to transfer ownership of the hospital and downsize to a 25-bed Critical Access facility.

In 2015 Beverly Hussey settled her lawsuit with Sutter Health, which stated that it would not seek a Critical Access designation or operate Sutter Coast Hospital through a process called regionalization.

Healthcare district board Chairman Dr. Greg Duncan said Wednesday the healthcare district had won a preliminary junction stemming from a lawsuit in 2012 blocking Sutter from Critical Access, however it became too expensive to litigate.

The Del Norte Healthcare District has always had a collaborative relationship with Sutter Health, Duncan said. However, when the local Sutter Coast Hospital voted to dissolve itself in 2011 that relationship broke down, he said.

“When the hospital board, with the exception of me, voted to downsize to Critical Access and triple prices on Medicare patients, I say there was a further breakdown,” Duncan said. “The community was obviously concerned; there were many articles in the newspaper. The healthcare district was a public agency that people looked to for help to try to stop that and to maintain the status quo and thankfully that was achieved.”

Reichlin joined the Del Norte Healthcare District Board of Directors in 1986 as it was finalizing negotiations with Sutter Health to manage the community’s hospital. The district board managed Seaside Hospital on A Street near where Oceanfront Lodge sits today, Reichlin said. That was the district board’s original function, but Reichlin said members decided that it was “probably not feasible for us to try to run our own hospital.”

“We shopped around for an organization that might be interested in coming to Del Norte County,” Reichlin said Tuesday, adding that the healthcare district spoke with two or three different hospital groups before deciding on Sutter. “They were small. They were only managing about five hospitals at the time. They didn’t own any hospital they just had management agreements with healthcare districts much like us.”

With Pelican Bay State Prison in the planning stage as well, Sutter Health representatives told the healthcare district the company would explore building a new hospital and managing it, Reichlin said. The hospital would be owned by a local hospital board and operated by a general manager, he said.

According to Reichlin, the healthcare district and Sutter Coast Hospital under then-CEO John Menaugh had a wonderful relationship for about 20 years. The district didn’t have to do much oversight on Sutter “because Sutter did exactly what they said they would do and everybody in the community was happy with them.”

But over those two decades Sutter Health grew, Reichlin pointed out.

According to its website, Sutter Health currently operates 24 hospitals, has 4,259 licensed general acute care beds and 10 walk-in care centers. More than 5,000 doctors are members of the Sutter Medical Network, according to the website.

Reichlin credited Duncan and his colleague on the healthcare district board Dr. Kevin Caldwell for spearheading the community effort to halt Sutter Health’s efforts at regionalization and downsizing to a Critical Access hospital. But, he noted, the relationship between the two entities has become an “us against them kind of thing.”

“I don’t think it’s healthy for the community, but (Sutter Health) hasn’t done anything to try to assure people in the community,” Reichlin said. “Maybe they’re trying now, I don’t know, but since about 2006 it’s been all about laying people off and shrinking the size of the hospital and Critical Access and regionalization. It’s all about taking things away from the community rather than trying to add benefits to the community.”

Clarke Moore, who had been on the Del Norte Healthcare District board of directors from 1996 to 2016 and is now on the Sutter Coast Hospital Board of Directors, said he was initially on board with the battle against regionalization and downsizing the facility to Critical Access, but found out after the vote was taken the information the Healthcare District received was inaccurate.

“The statements that if we went to Critical Access was 15 beds maximum,” said Moore, who was a nurse and respiratory therapist running the cardiopulmonary department for 15 years at Seaside Hospital. “I’m a clinician. I do know this community; 15 beds would never be enough. Twenty-five is a different story and there’s a huge difference between the two. That was the basis I went into that suit under.”

Moore said there was also a question at the time about who owns the hospital.

“Sutter Health owns the hospital,” he said. “The people who bought it, who financed it, who paid for it, they’re the people who own it.”

Since Sutter halted its regionalization efforts and its efforts to become a Critical Access facility, the healthcare district has focused its efforts on examining the hospital’s billing practices as well as out of network costs related to Envision Healthcare, Sutter Coast Hospital’s emergency room provider.

Following a joint resolution last year between the healthcare district, the Crescent City Council and the Del Norte County Board of Supervisors, Sutter Coast Hospital began re-examining its contract with Envision Healthcare. Sutter Coast Hospital terminated its contract with Envision Healthcare and on Tuesday a new provider, Sound Physicians, began operating its emergency department.

Duncan noted he and Caldwell began examining those issues at their constituents’ request.

“Billing practices are a very frequent concern that our constituents have brought to us that’s why we’re helping on that issue where ever we can,” Duncan said. “We’re not taking this on our own initiative. At least what I’m trying to do is live up to my promises that I made to the community when I ran for office, which is to hear their concerns and do everything I can to address them.”

When asked about recent requests from hospital board representatives for a three-way collaboration with the healthcare district and the Del Norte County Department of Health and Human Services on recruiting a psychiatrist to the area, Duncan said the latest request came just before the district’s Nov. 27 meeting. Since it wasn’t on the agenda for that meeting, the healthcare district board could not discuss the issue, Duncan said.

Duncan also said he wanted to make any collaboration between the two entities open and transparent. He spoke to an early request at collaboration that came from the Sutter Coast Hospital board in August.

“We want collaboration to come back,” Duncan said. “We wanted to meet with the whole (hospital) board of directors. They came up with two people meeting with junior board members and a subcommittee. What they’re offering is not nearly as productive as just having regular meetings, but they took a vote on that.”

Duncan also said even though issues involving Sutter Coast Hospital take up a lot of the healthcare district board’s time, the district is addressing “everything in parallel.”

“Our big partner has been Open Door (Clinic),” Duncan said, adding the district is working with Open Door on expanding its dental clinic and adding an MRI system. “We have not set anything aside. It’s a lot of work to try and do everything, but I can’t think of a single example of some project that’s been set aside because we’re trying to answer all the community’s concerns about the hospital.”

Reach Jessica Cejnar at jcejnar@triplicate.com .

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