Sonoma West Medical Center buyer does not fulfill agreement to inject money

A startup seeking to purchase Sonoma West Medical Center has not yet fulfilled its agreement to inject much-needed funds into the cash-strapped Sebastopol hospital, bogging down negotiations over the sale, hospital officials said Friday.

At a Feb. 15 board meeting, the public health care district that owns Sonoma West approved a “letter of intent” to transfer the hospital, its property and the equipment inside to Americore Health, a Florida-based hospital management, investment and acquisition firm.

In exchange for entering into negotiations with the hospital, Americore was expected to provide an infusion of $500,000, officials with the hospital and the Palm Drive Health Care District, which owns the hospital, said Friday.

That money has not been received, they said.

“They have not in fact delivered on that. They provided some but not at the level that was expected,” said Gail Thomas, a Palm Drive board member and district treasurer.

The development comes just as the hospital is ending its business relationship with Manhattan Beach-based Pipeline Health, which has been providing management services to the medical center since last summer.

At a meeting Thursday, the hospital tabled consideration of management subcontracts that had been drawn up between the medical center and Americore, which was supposed to take Pipeline’s place. The medical center’s subcontracts must be approved by the district.

Dan Smith, president of the hospital’s board, said the hospital was still in talks with Americore and he could not comment on the nature of the negotiations. Smith confirmed that Americore had not provided the hospital with funds to meet its financial obligations. The software entrepreneur, who has given millions of dollars to the troubled hospital in donations and forgivable loans over the years, said he has once again provided some of his money so the hospital could pay some of its bills.

Grant White, president, CEO and founder of Americore, could not be reached Friday for comment. His voicemail was full and was not accepting messages, and he did not respond to an email sent late Friday afternoon.

At the Feb. 15 district board meeting, White assured the district board and public that his company would transform the hospital into a thriving medical facility supported by strong revenue from innovative services.

White, whose background is in investment banking, said he had put together a team of health care experts capable of saving the hospital. Sonoma West has struggled since it reopened in late 2015, roughly a year and a half after the closure of Palm Drive Hospital. At the time it closed, the district filed its second bankruptcy, which has yet to be settled. Its first was in 2007.

Plagued by financial strain and leadership turnover, the team that reopened the hospital stepped aside last year and brought in Pipeline. The hospital paid Pipeline about $125,000 a month to operate Sonoma West.

Pipeline is now owed approximately $800,000, hospital interim CEO Luke Tharasri, who works for Pipeline, said Thursday at the district meeting.

According to the hospital’s most recent financial records, Sonoma West Medical Center owes its suppliers $6.24 million, according to a hospital official who requested anonymity because they were not authorized to discuss the matter publicly.

Smith, who spearheaded the hospital’s reopening and has donated at least $9 million of his own money over the years, said the hospital’s finances were “difficult” but “manageable.”

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