Sonoma West Medical Center gets approval to collect Medicare bills

Sonoma West Medical Center announced Monday that it has been given the green light to begin collecting payments for treating Medicare patients, opening a pipeline to a critical source of funding for the Sebastopol hospital.

The accreditation, which is valid for three years, comes just two weeks after the hospital was surveyed by an accrediting agency acting on behalf of the federal Centers for Medicare & Medicaid Services.

“This is a very important step for SWMC to have passed Medicare accreditation so quickly,” Raymond Hino, Sonoma West Medical Center CEO, said in a statement. “We have only one priority here. That is to provide safe and excellent medical care to our patients. This very experienced administration is here to support that objective at all times.”

Medicare accreditation comes at a crucial time for the 25-bed hospital, which is seeking to shake its past as a struggling facility that has twice gone into bankruptcy. The hospital was shuttered in the spring of 2014 and reopened Oct. 30 as Sonoma West Medical Center.

Dec. 14, Hino notified staff that he was restructuring the hospital’s management team in a move aimed at weathering a difficult financial period while the hospital waited for Medicare authorization.

The “realignment” has led to the elimination of three of the hospital’s 19 managers, officials said. The entire management structure has been revamped, with many taking on new duties as “working managers” in the hospital trenches.

“We’re trying to have our managers be involved in operations on a daily basis; they’ll actually be taking shifts,” said Douglas Goldfarb, the medical center’s chief financial officer.

Last week, Hino said he was hoping to get Medicare accreditation before Christmas.

Receiving payment from Medicare is a key step that will help the hospital stabilize its revenue flow. The hospital is also starting to bill for patients who are covered by Partnership HealthPlan, the Medi-Cal HMO, and other private insurance companies.

The cost of running the hospital is about $1.2 million a month, of which $850,000 a month is the cost of the hospital’s payroll.

The elimination of the three positions saves the hospital $400,000 a year. ?Goldfarb puts the total savings of the management restructuring at $900,000 a year.

Dan Smith, chairman of the medical center’s board of directors and the hospital’s main financial benefactor, said the changes made in management were long-term in nature and not simply a response to the hospital’s current financial situation.

“It’s a step that was designed to streamline management for the long run; it’s not like we’re going to put those positions back later,” he said.

Smith said the hospital’s billing and collection contractor is in the process of sending out bills for patients covered by Medi-Cal and private insurance companies. “We’ve got multiple millions that will be billed in the next few weeks,” he said. On average, it takes private insurance companies up to 42 days to make payment once a “bill is dropped,” Smith said. Medicare pays much faster, he added.

Smith said he is personally contributing funds to help cover the $1.2 million monthly cost of operating the hospital. But funds also are coming from other sources, including “major gifts” from other hospital donors.

Jane Rogan, a hospital spokeswoman, said the hospital has seen more than 1,600 patients in the seven weeks that it has been opened.

You can reach Staff Writer Martin Espinoza at 521-5213 or martin.espinoza@pressdemocrat.com. On Twitter @renofish.