With a new chief financial officer in place, and a new fiscal year ahead, the John C. Fremont Healthcare District is changing some of the ways it presents and monitors its budget.
CFO Jennifer Mitchell has a big picture metric to assess financial risk that she calls the “traffic light dashboard.”
“It’s just kind of a nice gauge tool and a quick snapshot on where we’re at,” Mitchell told the JCF Board of Directors June 24.
The red lights: An operating loss of $6.5 million approaching the end of the fiscal year; revenue $7.5 million below budget; and, most patient volumes below budget.
Yellow lights: A revenue cycle that is clunky; a new hospital project that can’t be allowed to go sideways; and a district still dependent on loans and non-operating revenue.
Green lights: Expenses are near budget; the district has $21 million in cash and investments; and the Measure O tax is a steady stream of money to build a new hospital.
That’s a lot of traffic lights for a county that prides itself on not having a single one.
Mitchell suggested it is a way to compare JCF to other rural critical access hospitals who use a similar system.
With two new board members it is also a way to set priorities and see the financial forest through the budgetary trees.
As the district closed out the fiscal year June 30, Mitchell is proposing more “real time” budget forecasting.
Mitchell echoed a now familiar lament that the previous budget, drawn up by former CEO/CFO Fred Vitello, was unrealistically aggressive.
Other hospitals adopted “real time forecasting” every quarter, she said, after the Covid pandemic because healthcare funding became so dynamic and “baked in” assumptions don’t always pan out.
“Things constantly change, and you want to be able to address those concerns,” she said, noting the election in November.
“Otherwise, you’re going to constantly be reporting out that you’re under performing because the information that you put in is not actually coming to light. And it could be for a variety of reasons,” Mitchell said.
CEO Stacey Kuzak confirmed the FY26-27 budget will be “pushed off for another month,” due to changes in the finance department and to meet with union leaders.
Mitchell, the CFO, said as they work to build a “thoughtful and comprehensive” annual budget, they will also be working simultaneously on a capital budget, exclusive of the new hospital.
“We’re going to have those two lanes going at the same time,” said Mitchell. The district will be seeking money for capital projects through the Rural Health Transformation Program.
That might include JCF collaborating with other rural hospitals in a partnership to update electronic health care records, which Kuzak called “a major gap” that has impacted the revenue cycle.
Construction delays
The construction schedule for the new hospital may get pushed back by at least nine months, as the district navigates various hurdles from state and federal partners.
Jim White, construction manager for the new hospital, told JCF’s Board of Directors the California Department of Healthcare Access and Information (HCAI) recently informed him that final approval may be delayed until August 2027.
“That was shocking news to receive,” said White, who said the delay will push out putting out bids for construction.
Approval from HCAI usually comes after three review cycles. White thought JCF had already completed one of those cycles but was told it was a “preliminary review.”
HCAI has already granted JCF a six month deadline extension, until June 30, 2030, for completion of the new hospital to comply with new California earthquake standards.
HCAI appears to be willing to provide additional deadline extensions.
Meanwhile, JCF is completing a financial audit and meeting regularly with representatives from the U.S. Department of Agriculture (USDA), which will provide the construction loan for the new hospital.
The loan will be backed by Measure O, the voter approved sales tax. But USDA wants to make sure JCF spends its money first, to see that it has “skin in the game,” White said.
JCF needs to submit a second “pre-application” with USDA because the first one expired after a year. The USDA approval process is expected to take six to 12 months.
White said the application is more than forms and filling in blanks.
“It’s really about financial stability, they want to make sure we are fiscally ready to take on the loan,” said White.
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