Palm Drive Health Care District seeks to sell Sonoma West Medical Center

Stock SectorMay 16, 20186min10

The Palm Drive Health Care District is seeking bids for the purchase of its Sebastopol hospital, a move brought on by ongoing financial struggles and debt, district officials said Tuesday afternoon.

A request for proposals, which was released Tuesday, seeks a buyer who will operate Sonoma West Medical Center as an acute care hospital or “other health care” facility, said Alanna Brogan, executive director of the district.

Officials said district and hospital staff have taken a number of steps to improve operations and revenue collections at the hospital, but old debt continues to cripple the hospital.

“We’ve done a lot to improve revenue, we just need to know what our options are going forward,” Brogan said.

Closure of Sonoma West Medical Center would leave West County without a full-service hospital and emergency room services.

Brogan said the need to sell the hospital became clear after the hospital’s lucrative but controversial lab services were suspended. Those services were called off earlier this year after insurance giant Anthem Blue Cross accused the hospital and health care district of participating in a business fraud scheme with a Florida-based medical laboratory company.

Anthem said the scheme resulted in more than $13.5 million in improper payments to the medical center. Hospital and district officials deny the allegation.

According to hospital financial data released Tuesday, the hospital took in $1.5 million in revenue in April with operating expenses of $2.3 million, an operating loss of $800,000.

Dennis Colthurst, president of the district board, said he had hoped the district would not be forced to sell the hospital under the current circumstances. The financial difficulties facing Sonoma West Medical, formerly called Palm Drive Hospital, are not uncommon for rural hospitals across the country. Many of them struggle to compete against larger health care providers such as Kaiser Permanente and Sutter Health.

Colthurst said he wanted the facility to remain as a full-service hospital with an emergency room and insisted it would succeed with the right health care provider at the helm. He said district voters have repeatedly made that clear.

“At the end of the day, the West County needs a hospital with an emergency room with full services for the community,” he said. “To me, having the emergency room is vital.

“We’re just testing the waters to see what’s out there, and to see if a strong buyer comes along and has the capital to help lift it up a little bit and bring in patient business, such as surgeries — that would be great.”

But district board member Jim Horn, a strong critic of the hospital’s current management organization, Sonoma West Medical Center, Inc., said he thought it was unlikely a large health care organization would be willing to operate the facility as a hospital.

He said district and hospital supporters have had informal talks with health care providers in the area for the last year to no avail. He said that when the Petaluma Avenue hospital first closed in April 2014, district board members sought to get someone to operate it as an urgent care center with radiology services, but received no response.

Horn said the district may ultimately be forced to issue another request for proposals allowing the buyer to operate the hospital as something other than a medical facility.

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