Sebastopol hospital losing millions while it waits to reopen

Late last year, when supporters embarked on an ambitious plan to resurrect the failed Palm Drive Hospital, they set a target date of early April for the grand opening.

Five months later, the hospital remains closed, and neither hospital officials nor the state Department of Public Health have a firm date for when it will reopen under its new name, Sonoma West Medical Center.

Every month the hospital remains closed costs it another $1 million, roughly, according to hospital CEO Raymond Hino. The delays and daily expenditures are likely to put even greater financial pressure on the hospital when it finally opens, but officials said they are confident the hospital will succeed in the end.

“The complexity of opening a hospital, in terms of degree of difficulty, is off the charts,” Hino said. “Early on, we did not have an appreciation of how difficult it was going to be to reopen a hospital that had been closed.”

Critics say that since last year, hospital supporters have floated unrealistic time frames for retooling the hospital, which was shuttered in the spring of 2014 due to dramatic declines in both overnight patient stays and insurance reimbursements.

“They’ve consistently underestimated the time, cost and complexity of reopening the hospital,” said Sebastopol mechanical engineer Jim Horn, a former hospital board director who strongly questions the viability of the new hospital.

Horn said the delays put “enormous pressure” on the hospital, which initially is not expected to make any profit for several months. Horn pointed to the medical center’s own financial statements in July, which projected “cash” income of nearly $1 million in September, $1.59 million in October and $2.3 million in November.

“Even if they do start showing an operating profit six months from now, they’re still going to be several million dollars in debt,” he said.

State public health officials said they are working with hospital officials to rectify “deficiencies” found during its certification survey.

Jean Iacino, deputy director of the state Department of Public Health’s Center for Health Care Quality, said in an email Tuesday that his agency “is mindful of the community’s interest in the opening of the Sonoma West Medical Center. However, the hospital must be able to demonstrate its ability to remedy identified deficiencies.”

Before the state Department of Public Health came on the scene, the hospital’s facilities had to pass inspection by the Office of Statewide Health Planning and Development. Hino said that early projections for reopening the hospital turned out to be unfeasible because the hospital did not meet building code requirements. OSHPD did not grant approval until July 6.

“OSHPD projects typically last months or a year,” he said, adding that the agency “worked hard” to speed up the approval process, given that inspectors were reviewing an older building that contained many inherent problems.

State public health officials began their licensing survey July 27. Hino said state inspectors visited the hospital on nine days throughout the month of August and completed their initial inspection Sept. 1.

Among the issues state officials discovered were problems related to the hospital’s dietary program, infection control, preventive maintenance, surgery and pharmacy, Hino said.

On Sept. 11, the state delivered its report identifying a number of deficiencies, to which the hospital responded with a “plan of corrective action” that was submitted to the state Sept. 18. Hino said Tuesday that all issues have been resolved except a software problem involving components of the hospital’s pharmacy information system.

The problem, he said, lies in simplifying the way pharmaceuticals are tracked in the hospital, which requires close communication among three different technology systems: the facility’s electronic health records system, the pharmacy contract company that provides drugs and the hospital’s new automated drug dispensing system known as Pyxis.

“These three need to work together, need to be synchronized,” Hino said.

State Department of Public Health officials were at the hospital last Thursday and Friday and were scheduled to return on Monday. But Hino, recognizing that the systems needed more fine-tuning, called state officials and postponed the visit.

Hino said IT experts from all three systems will be working on the pharmacy software issue throughout the week and the earliest state officials could return would be next week.

“When the state was doing their survey last week, the system worked, but it’s cumbersome,” he said.

Hino said the hospital could open within days of receiving final state approval.

But even after the hospital opens, it isn’t likely to turn a profit until later in the year. Add to that the fact that the hospital must be recertified for reimbursement from Medicare. That can only happen after the hospital has admitted 30 inpatients, at which point an accrediting agency must come in on behalf of the federal government and inspect the hospital.

It could be several weeks, even after the hospital reopens, before it can be reimbursed by Medicare. During that time, the hospital will be able to bill insurance companies, such as Partnership Health Plan, as a noncontract provider, Hino said.

He insisted the hospital would succeed.

“Our goal is to provide the best-quality health care in the county, if not Northern California,” Hino said. “With these improvements, we believe we’ll be able to do that.”

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