PD Editorial: Sebastopol’s hospital still in critical condition

With a potential sale to a private company, Sebastopol’s beleaguered hospital may be headed back to the future.

As Staff Writer Martin Espinoza reported this week, Palm Drive Health Care District trustees approved a letter of intent to transfer ownership of Sonoma West Medical Center, the land it sits on and the equipment inside to Americore Health, a recently created hospital management, investment and acquisition firm. The unanimous vote initiates a 120-day exclusive bargaining period that could bring almost two decades of public ownership to an end.

Sonoma West, or Palm Drive Hospital as it used to be known, has been fighting for survival for much of that time. Its resilience is a tribute to generous benefactors and a group of tireless supporters committed to keeping a hospital open in Sebastopol.

Despite efforts to stabilize the 25-bed hospital, it has struggled to overcome a drop-off in the patient count, declining reimbursements from public and private insurers, cash-flow problems and increasing competition from larger hospitals in Santa Rosa. Operating losses have at times approached $500,000 a month.

Confronted with yet another financial crisis, it needed a cash infusion this week from Americore, a Florida-based start-up looking to acquire rural hospitals.

A sale would require approval of voters in the Palm Drive Health Care District. If it’s completed, it presumably would keep the hospital open and relieve taxpayers from contributing to its operations. But a sale might not provide much relief for the health care district, which has $22 million in long-term debt. The tentative sale price, according to the letter of intent, is $1. Americore also would assume the hospital’s liabilities.

Since the mid-1990s, when Nashville-based HCA, the nation’s largest for-profit health care company, announced plans to close Palm Drive 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 health care district two years later. The district’s voters twice approved parcel taxes, and the hospital tried different business models, explored affiliations and coped with management turmoil while searching for financial equilibrium.

In 2014, after two bankruptcies, Palm Drive Hospital closed.

It reopened in 2015 as Sonoma West Medical Center under the management of a nonprofit foundation formed by local physicians, but it continued to struggle. Again, revenue failed to match projections, and the operators soon found themselves needing emergency loans to stay afloat. Eventually a management company was hired to run the hospital and, more recently, Russian River area residents succeeded in leaving the health care district.

Americore believes it can restore the hospital’s financial health by bringing in new services and creating what one company official described as a “world class strip mall” offering a variety of health services under Sonoma West’s roof. That isn’t much different than past business plans that didn’t pencil out.

Many people fear that an earthquake or flood could prevent west county residents from reaching a Santa Rosa emergency room. We salute their efforts to save Sebastopol’s hospital, but we remain skeptical that there’s a path to financial health.