THE ARC OF THE COVENANTS
Northern Inyo Hospital District (NIHD) CEO Christian Wallis acknowledged this week that NIHD would most likely not meet the conditions of its bond covenants this year, meaning the fate of the hospital and district may very well be in the hands of New York bankers before long.
He made these comments during a presentation to the Inyo County Board of Supervisors on Tuesday.
Wallis presented along with Chief Financial Officer Andrea Mossman and Compliance Officer Patty Dickson.
Mossman, who jokingly referred to herself as “CFO and Bearer of Bad News” laid out the stark numbers.
In order to meet the bond requirements, NIHD needs to have a minimum of 75 days cash on hand and a debt service coverage ratio of at least 1.1.
Currently, NIHD has 65 days cash on hand and a negative debt service coverage ratio of -0.7.
In terms of cash on hand, NIHD currently has $22 million but Mossman projects that figure to decline to $18 million by the end of the fiscal year.
“To be safe, that number should be at $28 million,” she said.
So what does this mean?
Bondholders would have the opportunity to either a.) Work with the existing administration and staff to come up with a viable recovery plan, or b.) Call the bonds, take over the administration of the hospital and call the shots (in terms of services offered, et. al.).
NIHD’s woes have been exacerbated of late by the federal government’s slashing of Medi-Cal reimbursements.
NIHD had been expecting reimbursement to total $17.7 million. Instead, it will come in at $12.2 million.
Wallis broke down the macro picture this way. NIHD will spend $123 million this year and bring in $103 million. Typically, the federal reimbursements are counted on to fill in the gap.
But if your gap is $20 million and they’re giving you $12 million, you’ve got a problem.
Another problem, anyway.
The origin story, as illuminated by Compliance Officer Dickson, is the District’s existing debt, accumulated and subsequently refinanced and pushed down the road since 1998.
That debt stands at approximately $50 million, with taxpayers directly on the hook for $40 million of that figure.
Amidst all the bad news, Wallis tried to offer Supervisors a silver lining.
He said patient satisfaction and quality of care metrics are good, and that the contract with Mammoth Orthopedics Institute has shored up that department following the Dr. Bo Loy debacle and subsequent exodus of former providers.
As he told Supes, “we want to skate to where the puck is” in terms of growing business and services, but this will take money and renovation of substandard infrastructure.
He thought it might take a $10 million to $15 million investment.
But the Supes are not dupes.
Generally speaking, if someone is $50m in the hole, do you hand them $10m thinking you’re gonna get it all back?
That is 2 a.m. Craps table logic.
The other interesting tidbit from the Supes meeting came from the state of Death Valley National Park presentation by Acting Deputy Superintendent Abigail Wines.
Wines talked about how the annual Dark Sky Festival was getting talked up in some circles as the Coachella of stargazing.
The event had previously drawn 6,000 people and Wines said Park staff was concerned it couldn’t handle any more.
The solution: The Park decided not to advertise it beyond a little local advertising in the Inyo Register.
The result: It drew the same crowd as last year, about 6,000.
So if you don’t want anyone to know about something, put it in the Register!
But I didn’t include this piece of information just to make a cheap joke.
Because the next day I listened in to the Mammoth Lakes Tourism Board meeting, and MLT is already gearing up to renew its Tourism Business Improvement District (TBID) in 2028.
The arguments for maintaining the status quo were rote and self-satisfied. There was no hint of dissent.
In terms of sloganeering, “Visitation = Vitality” is the leader in the clubhouse. “Our Town, Our TBID” was viewed less favorably.
Slogans not considered include, “War is Peace,” “Freedom is Slavery,” and “Ignorance is Strength.”
But the most relevant slogan might be “Who controls the past controls the future. Who controls the present controls the past.”
One presentation I did appreciate at MLT this week was then one where they talked about calculating the effectiveness of their ad campaigns.
They crunch some numbers and create some equations and make some assumptions and presto, they present you with the ROI (Return on Investment) of their ad spend.
Which was calculated at about $120 per every dollar spent.
This is conservative and pedestrian when compared to the go-go Urdi years, where he would claim ROI of $270 or more.
I’ve always wondered, if the ROI provides such an exponential return, why we don’t just spend infinity on marketing?
What’s clear is that MLT needs to teach NIHD something about marketing and economics.
Finally, I tuned into the NIHD Board meeting on Wednesday evening in time to hear a presentation by Chief Medical Officer Adam Hawkins about the state of the orthopedics department.
He attempted to dredge up a bunch of stats to indicate that numbers are all back to normal after a brief blip. And he made the presentation while omitting mention of Dr. Bo Loy entirely in his slide deck (the name did pass his lips once in his address to the Board).
Who controls the present controls the past.
I turned the meeting off in disgust. Too much time at the Crap table …
