PD Editorial: Reviving hospital won’t be easy

Palm Drive Hospital struggled financially for years before declaring bankruptcy and closing its doors in April.

Even a cursory look at the balance sheet shows a hospital in critical condition. The intensive care unit posted losses of more than $900,000 a year, hospital officials said last spring. Losses from the Sebastopol medical center’s clinical labs exceeded $800,000 a year.

According to an audit presented to the board last week, patient revenue dropped by a third in the final year of operation, and Palm Drive’s net losses approached $17 million in the two fiscal years before it closed.

The audit concludes that there is “substantial doubt” about the hospital’s “ability to continue as a going concern.”

Yet an effort to reopen the hospital is taking shape. It gained momentum with a decision by the Palm Drive Health Care District Board to allow a local foundation to begin painting, making repairs and other work needed to resume operations as early as April 6. If the plan is approved, a newly formed nonprofit group would assume management and rename the hospital Sonoma West Medical Center.

There’s plenty of reason for skepticism - but not surprise.

Since the mid-1990s, when Nashville-based HCA announced plans to close the hospital, citing financial losses, there’s been an almost perpetual campaign to keep it open. A west county group called 35 for Palm Drive bought the hospital in 1998 and sold it to the newly formed Palm Drive Healthcare District two years later. The district’s voters twice approved parcel taxes as the hospital tried different business models, explored affiliations and coped with management turmoil while it searched for financial equilibrium. But it wasn’t able to overcome a declining number of patients, reductions in reimbursement from public and private insurers and competition from larger hospitals in Santa Rosa.

Despite the persistent troubles, the decision to close was controversial. And, in November, district voters turned out an incumbent board member who was skeptical about reopening the hospital and picked two new board members who want it reopened.

The Sonoma West Medical Center plan includes a 24-hour emergency department and a focus on outpatient surgical and medical services including orthopedics, urology and integrative medicine. It also has a 25-bed medical/surgical unit, which was cited as a major contributor to the hospital’s losses in the past.

Raymond Hino, the CEO for Sonoma West and the hospital foundation, said the goal is to attract physicians who “don’t want to work at Sutter or Memorial or Kaiser and are looking for a place where they can … practice the type of medicine that they want to practice.”

That sounds a lot like strategies that fell short in the past.

So it’s not surprising that reopening the hospital also is proving to be controversial.

For Sebastopol and the surrounding area, the benefits are clear. Palm Drive was the city’s largest employer, and the value of easy access to emergency care is obvious. Opposition is strongest in distant parts of the far-flung health care district, where residents are less likely to use the hospital and more likely to resent paying the parcel taxes that help support it.

The new plan includes about $1.5 million a year from the parcel tax, but the bulk of that revenue will be needed to address $22 million in long-term debt and $11 million in bills left unpaid when the hospital declared bankruptcy. Voters aren’t likely to provide any more.

Palm Drive has a core of energetic supporters and generous benefactors who may get its doors open once again. We wish them success, but it’s difficult to see a path to financial health.