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Vote expected to close Palm Drive Hospital, at least temporarily


Even as nurses and doctors launch a last-ditch effort to keep Palm Drive Hospital open, its board of directors is poised this week to shut down the core of the money-losing Sebastopol hospital.

On Monday, the board is scheduled to vote on resolutions that would cease acute inpatient services, close the emergency department by April 28 and "suspend," but not terminate, the hospital's license.

Hospital officials said Friday that suspension of Palm Drive's license as a general acute care hospital would most likely require the hospital to shut down for a period while it transitions to a more sustainable health care model that could include an urgent care center and outpatient services.

"Palm Drive is the largest employer in Sebastopol, and the loss of 242 jobs will have a grave impact on the community," said Debra Hurst, a registered nurse who works in Palm Drive's medical surgical unit.

Hurst, who also is a union negotiator and member of the California Nurses Union, said she and other Palm Drive staff want hospital officials to delay Monday's vote.

"We want them to hold off on this vote until options they haven't explored have been explored," she said.

But the board's president said Saturday the hospital will be out of money before any long-term solution could be properly considered, much less put into place.

"We're not putting the vote off," said Chris Dawson, the board president, who added he and his colleagues would need time to implement the shutdown, including a plan that would "ensure the safety of our patients and that our employees are taken care of.

"The bottom line is we will be out of money in the next few weeks. We have to get this process in place as soon as possible."

Assemblyman Marc Levine, D-San Rafael, is among those in the Legislature trying to fast-track his bill that would give some relief to Palm Drive's bond obligations.

Doctors have drafted a proposal to take over control of the hospital, Hurst said.

On Friday, Dr. James Gude, a pulmonary and critical care specialist with strong ties to Palm Drive, urged hospital officials not to close the facility.

"I think it will be a catastrophe," Gude said Friday during a meeting at Palm Drive with hospital officials, including CEO Thomas Harlan.

In a preliminary proposal Gude drafted last week, he suggested that management of the Palm Drive facility could be put in the hands of the Palm Drive Health Care Foundation, a nonprofit founded in 1999 when a group of local investors rescued it from closure. The following year, voters created a public agency to buy the hospital and approved a property tax to pay for it.

Under Gude's proposal, inpatient services and the emergency department could be replaced with outpatient services and an urgent care center, possibly under current licensing.

"Rent it to us and let us run with it," Gude said.

Monday's scheduled vote on ending significant hospital services follows a board vote last week authorizing Palm Drive managers to put the hospital back into bankruptcy. The hospital previously filed for bankruptcy protection in 2007 and emerged in 2010 when it sold $11 million in bonds to pay off debt and underwrite future improvements.

Dawson said while he didn't know how the vote would go on Monday, the information directors had been given on the hospital's financial situation was sobering.

"Nobody is happy about it, but this is what has to happen," he said, noting that each member of the five-person board had indicated at Tuesday's emergency meeting that the hospital had run out of viable options to stay open right now.

Hospital officials have said they need to jettison inpatient services that are draining Palm Drive's finances. The health care trend of moving from inpatient toward outpatient services has resulted in fewer overnight stays, even as both private and government insurance reimbursements decline.

In the past five years, private insurance payments at Palm Drive have tumbled 26 percent because the economic recession has reduced the number of people with insurance and insurance companies are paying less of a patient's medical costs.

Even as more North Coast residents sign up for insurance under the Affordable Care Act, many are choosing to be treated at larger hospitals for procedures that require overnight stays.

Palm Drive's administration, led by Harlan, argues that it has looked at every possible financial and business permutation to keep the hospital running. But every scenario has come up short financially, he said.

Administrators have set up an email address at thefuture@palmdrivehospital.com and are urging the public to send in comments and suggestions about the hospital's direction.

Last week, hospital officials said Palm Drive's intensive care unit is losing $930,000 a year and its clinical laboratories are losing $800,000 a year.

While emergency services exceed budgeted expectations, they are inextricably linked to money-losing inpatient services. In California, hospitals cannot operate an emergency department without licensed acute inpatient beds, Harlan said.

A spokesman for the California Department of Public Health said last week that the agency is "in communication" with the hospital regarding its proposal to eliminate inpatient services.

Corey Egel, the CDPH spokesman, said the hospital could not operate under its general acute care license if did not provide 24-hour inpatient care. The hospital could suspend or cancel its license, he said.

Egel said that Palm Drive Hospital could continue to operate as an outpatient facility, but these services would not be operating under the hospital's general acute care license.

To maintain such a license, the hospital must have a governing body and an organized medical staff that provides 24-hour inpatient care, Egel said. It also must provide medical, nursing, surgical, anesthesia, laboratory, radiology, pharmacy and dietary services.

Gude urged hospital officials to find a way to make the transition to an outpatient/urgent care facility without closing the doors. Shutting the hospital down, even temporarily, would lead doctors to go elsewhere and affiliate with other hospitals, he said.

State Sen. Noreen Evans, D-Santa Rosa, called Palm Drive a casualty of an evolving health care system.

She said closure of Palm Drive's emergency room would leave coastal communities without an emergency room and force people to travel to Santa Rosa.

"Eight minutes is critical when you're having a heart attack," Evans said.

Evans said she is monitoring the situation at Palm Drive and will help hospital officials navigate the licensing and regulatory hurdles that may arise as a result of a transition in services.

"I'm ready to help them in whatever way possible once they figure out the direction they want to go," she said.

Some Sebastopol residents decried the possible loss of Palm Drive as an emergency and inpatient facility.

Persia Woolley, 78, a resident at Burbank Heights & Orchard senior housing, said she suffered a stroke last year. She said the care she received at the hospital was top-notch.

The hospital, she said, is a "healing" hospital that is worth saving.

"It may not be as fancy and as up to date and as chrome-plated as the big industrial medical places are, but it's human," she said. "I'd rather have a doctor or nurse who holds my hand than a hospitalist who never looks at me."

(Staff Writer Elizabeth M. Cosin contributed to this report. You can reach Staff Writer Martin Espinoza at 521-5213 or martin.espinoza@pressdemocrat.com.)