Local bank freezes EPHC’s line of credit
Eastern Plumas Health Care will be taking its banking elsewhere after Plumas Bank froze the hospital’s line of credit.
On Feb. 14, hospital Chief Financial Officer Jeri Nelson received a letter from Plumas Bank Chief Credit Officer Kerry Wilson. She wrote that the impending MediCal cuts “will have a substantial adverse impact on the current financial position of (EPHC),” and that the bank must freeze EPHC’s $500,000 line of credit.
In response to the dilemma, the EPHC board of directors voted to open three bank accounts with Bank of the West in Truckee at the July 26 board meeting.
“I hate taking the business elsewhere,” said Nelson. “I’m happy that the Bank of the West has been very accommodating.”
EPHC will have a savings account, a general operations account and a direct deposit account with Bank of the West. The bank also gave the hospital a $500,000 capital equipment line of credit for emergency situations.
According to Nelson, when Plumas Bank read in the newspaper that the hospital’s skilled nursing facility was at risk of shutting down, they contacted Nelson immediately.
They set up a meeting with her to understand what the MediCal cuts to skilled nursing facilities would look like to the partnership between the two businesses. Nelson tried to answer their questions, but she said at the time even she didn’t know the answers.
However, Nelson said despite her efforts to explain the hospital’s situation, the bank authorities handed her Wilson’s letter at the end of the meeting as if it were “a foregone conclusion.”
Nelson said she thought the bank was afraid that if the cuts went through the hospital would draw on the credit and take out all of the funds immediately.
“I would never do that,” she said. “I’m a professional.”
Nelson said the hospital doesn’t owe anything on that line of credit. She thought the bank’s action could be a result of regulations at headquarters in Quincy, and with EPHC being in potential financial jeopardy, the bank might see a risk to its business as well.
However, Wilson stated in the letter that the hospital has previously been concerned about finances and the MediCal mandate “will create substantial stress on an already fragile position.”
“We are fragile. We always have been, but we’ve never been better,” said Nelson. “We actually made money last year.”
The hospital will cut its ties with Plumas Bank next month. However, Nelson said nothing would change for the hospital’s finances other than which bank it uses.
Andrew J. Ryback, president and chief executive officer of Plumas Bank, stated, “Due to strict confidentiality and privacy laws I cannot comment on the specifics of Eastern Plumas Health Care; however, I can share that Plumas Bank has a vested interest in the success of all the businesses and families in our service area and our goal is to support as many as we can by providing practical, helpful financial services.”
Ryback went on to say that Plumas Bank would continue to support Eastern Plumas Health Care in several ways.
“We realize how vital this facility is to our community,” Ryback said. “We have visited with our state government officials regarding Assembly Bill 97 urging the continuation of MediCal support for hospital skilled nursing facilities.”
He said that to raise awareness of the situation, Plumas Bank has added the information to its website and Facebook page urging others to contact their state officials.
“We also contribute monetarily toward EPHC Foundation fundraisers,” Ryback said. “We realize all California hospitals are struggling and we will continue to support EPHC.”