When Richard Polheber came to Sonoma County last fall to interview for Palm Drive Hospital's top post, the veteran hospital executive said he was surprised to see such a small region supporting so many hospitals.
Polheber had spent many years working in Tucson, Ariz., where only four hospitals served the needs of a metro-area population of about 1 million. Sonoma County, with less than half that population, has three major hospitals and four smaller district hospitals.
The math simply didn't add up, he said, and there was little chance a small hospital like Palm Drive could survive by duking it out with the area's heavyweights: Kaiser Medical Center, Santa Rosa Memorial Hospital and Sutter Medical Center.
"When I interviewed here, I told them I don't believe in competition," said Polheber, who is now Palm Drive's CEO, adding that he made it clear he was a collaborator, not a fighter.
And yet a highly competitive battle is being waged by Santa Rosa's three major hospitals, a fight for paying patients that is causing district hospitals across the county to forge alliances with larger hospitals, physician groups or community health centers.
The moves are driven by the growing pressure to contain operating costs, the evolution of the health care industry — from high-cost hospital beds to outpatient care — and significant changes in the way hospital services will be reimbursed under the new federal health care law.
Meanwhile, the race to capture the pool of patients with private insurance not already covered by Kaiser is heating up as Sutter Health moves forward with the region's first hospital in 20 years and Memorial Hospital continues to move forward with innovative medical initiatives and services.
For Sutter, the state-of-the-art, $284million facility could usher in a new era for what has been the oldest of the area's hospitals. That metamorphosis has brought worry and fear among some district hospital executives.
When asked if the new hospital would put other local hospitals out of business, Mike Purvis, Sutter's chief administrative officer, said, <NO1><NO>"not intentionally.<NO1><NO>" He added that <NO1><NO>small hospitals are at greatest risk because they are designed to operate under the old hospital model, a system that could be toppled by the Affordable Care Act and other health care trends.
In September, less than a week after Sutter Health broke ground on its county-approved medical center north of the Wells Fargo Center for the Arts, Healdsburg District Hospital, Palm Drive and the California Nurses Association filed a lawsuit against the county and Sutter Health. They claimed the new facility was poorly placed and would result in the "down-sizing or closure" of district hospitals and other medical facilities.
Evan Rayner, Healdsburg District Hospital CEO, would not comment on the status of the pending lawsuit. Purvis acknowledged the growing rivalry.
"It's a very competitive market," Purvis said. "And how it feels is I have to be on the edge of my seat."
The stakes for hospitals are high, as illustrated recently when a community adviser to the finance committee of the Palm Drive Hospital board publicly decried efforts to keep the 37-bed hospital open.
George Moskoff, a Sebastopol business consultant, and other critics said the hospital, six months after emerging from bankruptcy, continues to bleed money. They argue that although 60,000 residents live within the hospital district and subsidize its operations through a parcel tax, the majority are Kaiser-insured and another large portion are treated by physicians affiliated with Sutter Health.