In the end, it was Matt Rees by a nose.
“It was very close with one other candidate,” revealed David Ordoñez, a member of the governing board of the Southern Humboldt Community Healthcare District, referring to the decision-making process that led to last week’s naming of the 47-year-old Rees as the district’s new chief executive officer. “I was supportive of the other candidate until the day before the [closed session] vote.”
Ordoñez said the final interview with Rees, who has served as the district’s chief financial officer on an interim basis since last August, changed his mind. “It was the way he was able to communicate with the board. The communication was so clear and reciprocal and productive. He’s someone we can talk to who will listen to us.”
Also tipping the scales for Ordoñez was the fact that Rees has been a hospital CEO before — most recently at Mayers Memorial Hospital in Fall River Mills, Calif., a town east of Redding, where he ran the show from 2010 to 2015. And he’s held other CFO positions besides the one at Jerold Phelps.
“I was convinced the next CEO needed to have a financial background,” including CFO experience, Ordoñez said,
“Health care finances is such a tangled jungle,” he explained. “It’s a nightmare of confusing rules and regulations [and] of billing codes that change daily. So a CEO has got to know finances to be really effective.”
Board member Gary Wellborn confirmed that after the field was narrowed to five candidates last month — the recruitment search was carried out by Donald J. Whiteside of HFS Consultants, a Bay Area executive recruiting firm — “it came down to two.”
“It was a difficult decision. Both were very competent. I liked them both,” said Wellborn, who added that the decision to go with Rees, as close as it was, was nonetheless unanimous.
Wellborn said the fact that Rees was already on board, albeit as a contract employee, gave him an advantage. “The staff had already worked with him. They were familiar with him and trusted that he would do a good job.”
Rees’s involvement with the California Hospital Association, an advocacy group, was one more positive sign, Wellborn added, because it indicated that he was plugged in to the “outside [health care] network.”
“We’re very isolated up here. If you don’t have the contacts, you’re sheltered. You need outside contacts. There are changes going on in health care daily.”
Rees, whose hiring is slated to be made official at the hospital board’s regular monthly meeting this Thursday, will be paid a base salary of $210,000 a year — more than his predecessor, Harry Jasper.
The reason for the bigger salary, presumably, is Rees’s greater experience as a CEO. Aside from the five years at Mayers Memorial, Rees was CEO of Pershing General Hospital in Lovelock, Nev., located 90 minutes outside of Reno, for seven years — from 2003 to 2010.
In terms of his CFO background, he held that position at a hospital on the Navajo Reservation in Arizona from 1999 to 2001 and then later at Milford Valley Health Care Services in southwestern Utah. That last facility was “similar in size to Jerold Phelps,” Rees remarked.
And, in an echo of what just transpired at the health care district, Rees first served as CFO at Pershing — for ten months — before moving into the CEO position.
In an interview last week, Rees pointed to a “record of successes” in his two previous CEO incarnations — successes that took the form of financial turnarounds. At Pershing General, for example, gross revenue tripled after five years of his leadership, from $6 million to nearly $18 million. At Mayers Memorial, meanwhile, gross revenue went up from $22 million to roughly $30 million while Rees was in charge.
From a financial perspective, things were downright shaky at Mayers Memorial when Rees took over. “They talked with a bankruptcy attorney one month before I started,” Rees recalled.
Rees took a number of steps to right the ship, including borrowing money from the state to pay off $3 million in debt that had piled up and “cancelling some contracts with surgeons that were non-profitable.”
“We recruited new surgeons to come into town where we could make some money. Some of the same surgeons [that had been at the district before] came back but under different contracts.”
When asked how things are financially at Jerold Phelps, Rees said: “It’s in decent shape. There are things we can do to improve.”
One thing that clearly needs to change, in Rees’s view, is patient volumes, which he said have been down “for the last couple of years.”
While “inpatient volumes are down a little bit, clinic visits are really down,” he said. “They were up around 500 a month and they’re now down to 300 to 350 [a month]. My job is to get those volumes back up to where they were.”
Rees already has a specific idea about how to encourage more people to come in — through a voucher program that he plans to propose to the board in the near future.
“We’ll give vouchers to members of the district [that will cover] co-pays and anything else left over after insurance pays. It’s a way to tell the community that we appreciate their tax support, [that] we’ll give you a break because you’re a member of the district.”
Voucher programs are evidently not unknown. Rees said another rural hospital — he didn’t specify which one — also offers vouchers to its patients.
To qualify for a voucher, Rees said patients would need to furnish proof — such as a copy of their phone bill — that they reside in the district.
On another matter, Rees expressed a desire to start making better progress toward a goal that the district has had for some time: building a new hospital.
“We need a replacement facility where we can better serve residents,” he declared.
While he noted that some earthquake retrofit work has been done on the existing building, lots more will be required to get in line with the state seismic standards for hospitals that are coming online.
“Why put all this work into this old building? It will cost more to go into a new building but it will last a lot longer.”
Rees sees the need for a two-track approach: “Doing what we have to do to the old building [so that we] meet seismic deadlines. And working as quick as possible” toward the goal of building a new facility.
Noting that in California it typically takes four to five years to design and build a new hospital — a process that requires review and approval from the state — Rees said that as a first step, “We need to decide where to do it.”
“The board has been talking about a couple of locations. I want to do some strategic planning with them.”
Finally, Rees said there’s a need to rectify the fact that the hospital “has had some [medical] providers leave recently.”
“One or two providers went out on medical leave. We need to get them back or replace them,” he said.