Sebastopol’s Sonoma West Medical Center: Financially viable or ‘shell game?’

Executives at Sonoma West Medical Center in Sebastopol say the hospital is on track toward greater financial stability, even as hospital critics warn of ongoing economic trouble.

Ray Hino, the medical center’s CEO, said this week that operating losses at the hospital were brought down to $47,000 in March from $400,000 in February. Hino said that financial statements show the hospital has about $130,000 in cash on hand and that the operating losses for April are about the same as in March.

“It’s still going to take us several months to become profitable,” Hino said.

Hino said that the medical center is seeking “bridge financing” from a Southern California bank, to be paid off as the hospital becomes more profitable. He said one of the conditions for the loan is that the medical center be profitable by $100,000 a month by the end of the year.

Hino said 83 surgeries were performed at the medical center in March - 17 more than in February.

The medical center reopened in October as a 25-bed acute-care hospital with inpatient services and a new emergency room. Formerly known as Palm Drive Hospital, the facility was shuttered in April 2014 after filing its second bankruptcy since 2007.

But critics looking at the same financial statements say the hospital continues to struggle financially, while the hospital district that helps support it has more than $30 million in debt and liabilities.

“It’s a shell game, what they’re telling you on the books,” said Dan Northern, a vocal hospital critic and former Forestville fire chief.

Northern said the district has been losing money since it was formed in 2000. The hospital has seldom been sustainable financially, he said.

“Let’s face it, it should be an urgent care center, that’s what’s needed there,” he said.

Dan Smith, chairman of the board of directors of the medical center, said the hospital’s “financial picture is improving” as revenue continues to grow and overnight hospital stays also increase.

“Business is looking like it’s on track,” said Smith, who has given millions of dollars of his own money in loans and donations to the hospital.

Gary Harris, a lead member of Taxpayers Against Unfair Taxes, said he and other residents along the Russian River corridor have serious concerns about the financial viability of the hospital. TAUT is conducting a voter petition aimed at detaching a large geographic area from the health care district, which contributes a quarter of its parcel tax revenue, about $1 million, to the hospital annually.

Harris said TAUT already has gathered the required number of signatures for the petition, 25 percent of the registered voters, or a little more than 2,000 voters, who live in the segment of the district that is proposed for detachment. The area includes residential parcels within the Monte Rio, Guerneville and Forestville school districts.

“Say they manage to sign this bridge loan but they don’t perform. The district is going to be on the hook,” Harris said.

Harris acknowledged that even if Russian River residents in the three districts succeeded in detaching from the taxing district, they would still be liable for helping pay off the district’s existing bond debt of about $20 million.

Harris said many Russian River residents do not use the hospital and can travel to Sutter Santa Rosa Regional Hospital much faster than they can to the Sebastopol hospital. He said also that many Russian River residents are Kaiser Permanente members.

“The 18 months that the hospital was closed really didn’t affect us that much,” he said. “With the percentage of people here that are already going to the new Sutter or Kaiser, it didn’t have an affect on us.”

But Smith said the medical center is accomplishing exactly what it set out to do - becoming a short-stay surgery hospital that “saves lives.”

“We’re performing the mission that we’ve set out to do,” he said. “We’re definitely saving lives every day.”

You can reach Staff Writer Martin Espinoza at (707) 521-5213 or martin.espinoza@pressdemocrat.com. On Twitter @renofish.