Sonoma West Medical Center gets capital ‘infusion’ from Florida company
Sonoma West Medical Center announced Wednesday it has obtained “a capital infusion” of $1 million from a Florida-based company that hopes to profit from the hospital’s laboratory operations.
The funds, which the medical center’s CEO described as an “investment,” would enable Sonoma West Medical Center to keep the hospital running and pay back money owed to key vendors, said John Peleuses, the hospital’s CEO.
“We are not out of the woods yet, but we have some breathing room,” Peleuses said Wednesday evening, during a special meeting of the Palm Drive Health Care District, which owns the hospital and provides it with crucial financial support.
Peleuses said the money was coming from Durall Capital Holdings, an operator and manager of general acute care hospitals and outpatient services. It owns two hospitals and two laboratories in the southeastern U.S.
Peleuses said Durall would take over management of the hospital’s laboratory services and provide some “intellectual capital” that could help the hospital become more financially stable. The terms of the $1 million infusion are still being negotiated and it’s not clear how laboratory profits will be dispersed between the two parties, Peleuses said.
He said an agreement is expected to be finalized sometime Thursday and the funds transferred to the hospital as soon as an agreement is signed.
The news comes a day after the hospital was preparing for a possible closure, said Dennis Colthurst, president of the hospital district board.
Tuesday, the hospital stopped receiving new patients and its in-patient census had dropped as low as two people. Emergency crews reported ambulances being turned away from the hospital.
Colthurst said the hospital was not receiving new patients Tuesday because the future of the hospital was in question.
“We were anticipating closure,” said Colthurst. “We were ready to pull the trigger.”
During the special meeting Wednesday, Peleuses said the hospital’s anesthesiologists, who are owed $146,000, had “quit yesterday” so no surgeries could be performed. The hospital was forced to stop taking certain patients at its emergency department.
Peleuses said the hospital will try to get the anesthesiologists to return to work so that surgeries can resume. He said he hoped to get them to agree to take partial payment on the money they owe them.
The $1 million it hopes to get by Thursday will not cover the hospital’s current debt, Peleuses said during the meeting, but it “could get us to the next level.”
Since its reopening in the fall of 2015, the hospital has struggled to make a profit and pay off its mounting debts. As of February, the hospital faced more than $6.8 million in outstanding bills.
Last summer, the hospital brought in Pipeline Health, a Manhattan Beach-based health care firm, to manage the hospital. Pipeline ended its management contract with the hospital last month, with the hospital owing it about $800,000.
After Pipeline’s departure, the hospital negotiated with several health care companies, including Americore Health, a Florida-based hospital management, investment and acquisition firm and The KPC Group, a health care management company with facilities in Southern California. Both firms walked away from talks about taking over the hospital.
Durall is the latest company to be courted and hospital officials said Wednesday they hoped talks would result in a concrete agreement this time.
During the public comment period of Wednesday’s meeting, a group of former employees blasted the district for its failure to repay all or part of nearly $1.3 million in mostly paid time off it owes 216 employees who were laid off when the hospital, then called Palm Drive Hospital, closed in spring 2014. At the time, the district filed for bankruptcy and the former employees became one of several bankruptcy creditors.
Sarina Ferguson, a former physical therapist and a member of the employee committee in the bankruptcy dispute, essentially told the district there was no point in sinking more money into a hospital that has little chance of surviving. Ferguson, who is owed a little more than $8,000, said the district should make a priority of paying back former employees, some of whom had worked for Palm Drive Hospital for several decades.
“We feel the hospital has run out of options and the district and Sonoma West Medical need to come to grips with reality,” Ferguson said.
She said the district should move forward with a bankruptcy exit plan and present it to the court “so the former employees can be paid. Even if this means selling off all of the hospital assets.”
You can reach Staff Writer Martin Espinoza at 707-521-5213 or firstname.lastname@example.org. On Twitter @renofish.