The John C. Fremont Healthcare District’s Board of Directors approved a budget last week that shows the district will lose only $750,000 over the course of the next year.
If that budget forecast comes true, it would be a remarkable and stunning turnaround for a healthcare district that had a $7 million operating loss in FY25-26, and has been burning through its cash reserves at a quickening pace.
The new budget, for FY26-27, reflects some creative accounting, optimistic projections and the anticipation that perhaps, finally, the district is on the verge of solving revenue cycle troubles that have plagued it for years.
The budget was assembled by the district’s new Chief Financial Officer, Jennifer Mitchell, who works remotely from Alaska.
Mitchell’s budget presentation last week appeared to use money from the Measure O sales tax, at least on paper and in graphics, to offset operational losses.
But Measure O funds, which currently total $10 million, can only be used for the planning and construction of the new hospital.
By including those restricted funds in the analysis, it makes the district seem more financially stable and flush with cash reserves.
Mitchell described the new budget as a “living document,” that will be adjusted as the year progresses.
But from the outset, it frames the district’s daily operations as a relative break-even proposition, instead of the consistent operational loss it has been for the last year.
The overall approach is surprising given how district executives and the board have frequently criticized the previous budget for its “magical thinking.”
And yet, the new budget would appear to have some magic tricks of its own.
It projects net patient revenue of $28.7 million, nearly $6 million more than the previous fiscal year.
It anticipates salaries and wages of only $14.7 million, $2 million less than the previous fiscal year.
The Mariposa Gazette asked district officials to explain how they are forecasting more revenue and fewer expenses from the budget last year. The Gazette did not receive a response by its deadline.
Raises, for everyone
Last week the board approved pay increases of $648,000 for both union and non-union employees. Mitchell, the CFO, said those labor costs were already baked into the budget forecast.
The board approved a retro payout of $267,000 for 167 AFSCME employees, even though a union agreement established a cash-on-hand threshold that was not achieved. The board approved the payout anyway.
The board approved a 3 percent salary increase for 55 non-union employees that will cost $207,000 in an effort to show some kind of parity with union workers.
Finally, the board approved allowing nonunion employees the option of cashing out their paid time off (PTO). This would apply to CEO Stacey Kuzak, whose new contract includes two months of PTO, with an annual compensation that could reach $476,000.
Loans coming and going
The district must begin repaying a $9.3 million “distressed hospital loan” it received from the state two years ago through the California Department of Health Care Access and Information (HCAI).
Mitchell told the board the district has begun making monthly repayments of about $100,000. But a spokesperson for HCAI tells the Mariposa Gazette the monthly payment is actually $173,148.
CEO Kuzak said the district has delayed applying for loan forgiveness from HCAI until its cash reserves are further drawn down.
“They (HCAI) do question, ‘Why haven’t you spent this money?’” Kuzak told the board.
“Some things the district needs we haven’t spent the money on. We need to show we are serious about spending money and that we need loan forgiveness,” she said.
The district has earned about $1 million in interest from the HCAI loan.
If the district applied for loan forgiveness from HCAI and was denied, it must wait another year before it could reapply.
Meanwhile, the district is preparing to apply for a construction loan from the USDA to build the new hospital. The loan would be backed by Measure O money.
It is a paradoxical predicament hospital executives have been hinting at for months: The district needs to show a strong balance sheet for the USDA, even as it shows hardship to get its loan forgiven from HCAI.
Revenue cycle
For the last year, the district has struggled with a Sphinx-like riddle: With the hospitals and clinics generating greater volumes, why isn’t the district receiving more money from private and government insurers?
Sheila Pederson, a revenue cycle manager who has been on the job for six weeks, is beginning to find some of the answers.
For one thing, you can’t receive what you don’t ask for.
The district was under the impression that 90 percent of its claims to private and government insurers were being accepted.
Wrong.
In fact, the number of “clean” claims is closer to 73 percent, with 27 percent of the claims getting kicked back, mostly for billing errors, Pederson found.
During the most recent three month period, there were 11,140 claims for $9.8 million. But 3,943 claims worth nearly $4 million were denied. The denial rate appears to be trending downward, from 40 percent in May to 31 percent in July.
According to the district’s data, 65 percent of claims are ultimately being paid in full, 24 percent are paid partially and 11 percent remain unpaid and denied.
Pederson blamed a complicated system of platforms and data that don’t speak to each other and require manual entry at different points, which can introduce errors.
Emergency department and hospital coding is performed by a company called Warbird. But billing and claim generation is through a system known as TruBridge.
Quadax is another system that handles patient registration and billing and is also the platform for electronic funds transfer and remittance enrollment.
And all of it must work with an electronic health record system, known as eClinicalWorks, that is regarded by district officials as antiquated.
To some extent, the district has become a hostage to those systems.
“It like a washing machine that I can’t get them to stop and look for this financial discharge code,” Pederson said of Warbird.
Director Rob Fox asked, “And yet we are paying them for this service?”
“You can’t cut off something you can’t maintain,” Pederson replied. “We’ve seen revenue increases, we don’t want to stop that.”
Fox pointed out that vendors have a financial incentive to maintain control.
CEO Kuzak acknowledged the touchy dynamic.
“They have their fingers in things that blur the lines and its hard to see where they end and we start trying to regain that control,” said Kuzak.
The district is currently applying for a $2 million federal grant through CalRHT (California Rural Health Transformation), that would allow it to modernize its electronic health records system to a program widely known as Cerner, but now called Oracle Health.
Pederson said it would be a game changer and the revenue cycle problems “would go away.”
With Cerner, she said, “We will be able to move mountains based on the team you have.”
CMS is back
A surveyor with the Center for Medicaid & Medicare Services (CMS) was back at the hospital Aug. 6, following up on a survey from December 2025 that found “serious deficiencies” that had created a “material risk to patient safety.”
The follow-up survey of medical staff focused on the corrective action the hospital had taken since the initial inspection.
The revalidation survey of medical staff focused on implementation of MedTrainer, a program for the credentialing and privileging of providers, as well as the timely retrieval of requested medical staff files.
By Aug. 27 the surveyor was expected to provide JCF with either a Letter of Compliance or Statement of Deficiencies and a Plan of Correction.
Lawsuit settlement
The board voted in closed session to settle a lawsuit with LeeAndra Dupzyk-Dias, a former employee in the human resources department, who was fired in 2023. The terms of the settlement were not disclosed.
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