Deal for Palm Drive clinic falls through

Sonoma Valley Hospital has withdrawn a proposal to take over Palm Drive Hospital’s rehabilitation therapy service, which, along with the hospital, closed in April.

Sonoma Valley Hospital operates its own rehabilitation services in Sonoma, and it sought to assume management of Palm Drive’s West County Hand and Physical Therapy Center. Management at Sonoma Valley Hospital said the deal would have required a much larger investment than originally projected.

Under the terms, Sonoma Valley would take over management of the west county clinic for an initial period of 18 months, after which Palm Drive would reserve the option to take the lease back and reimburse Sonoma Valley for some of its expenses.

Michelle Donaldson, chief revenue officer for Sonoma Valley, said that after further study, it became clear that the initial investment was “significantly more than what we originally thought, and we weren’t in the position to invest that much capital.”

Donaldson said information technology costs were much higher than expected.

“That’s the most significant thing that drove the cost up,” she said.

Sonoma Valley Hospital is an 83-bed, full-service, acute care district hospital located in the city of Sonoma. The hospital operates a hand and physical therapy center in the city.

Daymon Doss, Palm Drive Hospital’s executive director, said one sticking point was Sonoma Valley’s desire for a longer-term contract. Sonoma Valley officials wanted a management contract that lasted 36 months, while Palm Drive officials proposed two 18-month contracts.

The shorter-term contracts would have allowed Palm Drive Hospital to bring the physical therapy facility back under its control should the hospital reopen in the near future, Doss said.

Donaldson said while the contract length was a “discussed issue,” it was not a critical obstacle.

“I wouldn’t say that it was the tipping point,” she said.

Doss said the district will now reconsider an alternate proposal for the physical therapy facility that was offered by former employees of the facility.