Press release from the Humboldt Area Foundation:

Humboldt Area Foundation, the Headwaters Community Investment Fund and the Redwood Region Economic Development Commission have finalized on a $1.8 million loan to help the Southern Humboldt Community Healthcare District. The district required a temporary loan to meet its operational needs while it awaits compensation from the federal government for Medicaid expenses; without the loan it may have had to temporarily close its clinic, which has 10 full-time employees.

“This is a great example of the power of community teamwork and creative finance,” said Humboldt Area Foundation Executive Director Patrick Cleary. “It was definitely an out-of-the-ordinary opportunity that will have real benefit for Southern Humboldt.”

The SHCHD provides healthcare services to the Southern Humboldt, Northern Mendocino and Western Trinity County areas, covering 75 square miles with a service population of 10,365 full time residents. It includes the Jerold Phelps Community Hospital and the Southern Humboldt Community Clinic in Garberville. It is the only 24-hour emergency room between Willits and Fortuna, a distance of 120 miles.

In 2002 the hospital received Critical Access Hospital (CAH) designation which is given to eligible rural hospitals by the Centers for Medicare and Medicaid Services (CMS). The CAH designation is designed to reduce the financial vulnerability of rural hospitals and improve access to healthcare by keeping essential services in rural communities.

“Health care is an important piece of our community’s infrastructure that supports both our people and our economy,” said Gregg Foster, executive director of RREDC. “As such, we are pleased to provide support to organizations like the Jerold Phelps Hospital.”

CAHs receive certain benefits, such as cost-based reimbursement for Medicare services. As part of the Medicaid “Intergovernmental Governmental Transfer” program (IGT), the federal government provides matching funds to states for all qualifying Medicaid expenditures. Local entities, like the SHCHD, contribute funding to support state Medicaid programs and are eligible for federal matching funds through the IGT program. To receive the IGT payment, the District must submit funds to the state from the District’s operating funds. The state then requests additional funding for the District for expenses not covered by Medi-Cal. The federal government provides the unfunded expenses to the state, which passes them back, along with the District’s original funds. This process takes approximately four months. This year the district is submitting approximately $1.8 million dollars, an amount that would have left it with insufficient working capital to continue operations as it awaited reimbursement. A combination of funding from Headwaters Community Investment Fund, RREDC and Humboldt Area Foundation will allow the district to continue its work. Because it is prohibited from borrowing funds to meet its IGT match, the SHCHD will repay the loan using accounts receivable and anticipated revenue from its property tax assessment.

“When [SHCHD CEO] Matt Rees told me of the challenges of coming up with the funds for the IGT payment, I quickly recognized this would need to be a team effort, and enlisted RREDC and Headwaters as partners,” added Cleary.

“This is the first use of the HWF’s Community Investment Fund (CIF) in a true participation loan with another lender,” said Kenneth Spain, executive director of the Headwaters Fund. “Loans from the CIF were previously made directly from the CIF to borrowers. This revised funding mechanism resulted in lower costs to Headwaters, required less time and allowed the borrower to work with a single lender, in this case, RREDC. The HWF Executive Director noted how the existing relationship with RREDC made the change to a participation loan much easier to make. Headwaters often funds loans and grants in partnership with the HAF, RREDC, the Arcata Economic Development Corporation and other local non-profits and foundations.”

About Humboldt Area Foundation:

Vera Vietor established the Humboldt Area Foundation in 1972. Since then, more than $80 million in grants and scholarships have been awarded in Humboldt, Del Norte, Curry and Trinity Counties. Humboldt Area Foundation promotes and encourages generosity, leadership and inclusion to strengthen our communities.

For more information on services provided by the Foundation please visit the Humboldt Area Foundation website at hafoundation.org or call (707) 442-2993.

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FULL DISCLOSURE: Outgoing Humboldt Area Foundation executive director Patrick Cleary is, with his family, majority owner of Lost Coast Communications, the Outpost’s parent company.