Palm Drive Hospital board votes on plan to reopen shuttered facility

Members of the Palm Drive Health Care District could give final approval this evening to a business plan aimed at reopening Palm Drive Hospital, which was shut down almost one year ago.

The district board will consider a management service agreement for the Sonoma West Medical Center, a 25-bed hospital and emergency department whose financing depends largely on the success of several high-profile outpatient services dubbed “institutes.”

The proposal is being spearheaded by the Sonoma West Medical Foundation, formerly the Palm Drive Health Care Foundation.

The foundation projects that after an $880,589 loss during the first year of operation, revenues will steadily increase and new services at the hospital are expected to generate 20 percent of net revenue.

Medical center officials said they expect the hospital will clear expenses by a little more than $1 million in the second year and $3.4 million in the fifth year. A “no-wait” emergency department is expected to generate $498,132 in the first year and $943,523 by the fifth year.

But critics say the medical center’s revenue estimates are too optimistic.

Jim Horn, a former district board member and professional engineer, said many of institutes’ services were previously provided by specialty physicians with prior relationships with Palm Drive Hospital. Horn said that while some extra revenue would be expected by the creation of institutes, “they’re not going to get three or four million more.”

Horn also said the medical center’s revenue expectations are way off for the proposed “no-wait” emergency department, a streamlined department that features an observation area. New revenue would come from an increase in inpatient admissions from the emergency department, which last year brought the hospital 500 inpatients.

“They’re assuming in the plan that they will get 250 new admissions a year, but there’s no evidence or argument why that would happen,” Horn said.

The hospital was closed last April and is currently making its way through a second chapter 9 bankruptcy proceeding.

Jim Maresca, president of the district board, said the board has tried to come up with a hospital proposal that “all the members can support.”

He said that he’s examined the financial spreadsheets “underneath the spreadsheets” and that he’s satisfied that the revenue projections are reasonable.

“In any new enterprise, you have to have some assumptions,” he said.

But he said whether the revenue projections pan out as expected remains to be seen.

The meeting tonight is scheduled for 5:30 p.m. at Palm Drive Hospital conference room, 501 Petaluma Ave., Sebastopol.