Sebastopol health care district seeks to convince voters on plan to lease and sell hospital

A plan to lease and potentially sell Sebastopol’s district-owned hospital, which has struggled financially for years, cleared a key hurdle this week and is now headed for a special election next month.

On Monday, the Palm Drive Health Care District approved a lease agreement with Modesto-based American Advanced Management Group for operation of the site as a long-term acute care hospital without an emergency department. The agreement includes an option to purchase the hospital.

Residents within the district will be asked to vote on the plan by March 5, and district officials have scheduled a series of town hall meetings to outline the lease agreement and potential sale. Ballots went out Monday in the district encompassing Sebastopol, Graton, Forestville, Bodega Bay and other west county communities.

Operating the hospital as a long-term acute care hospital is the best way to preserve all but emergency services at the ?facility, including laboratory, intensive care unit, radiology and surgery, said Dennis Colthurst, president of the five-member Palm Drive Health Care board of directors.

“It just sounds like it’s going to be a great fit for the community,” he said in an interview Tuesday.

Under the federal designation as a long-term acute care hospital, the facility is not allowed to operate an emergency department, said Gia Smith, CEO of American Advanced Medical Group, or AAMG.

Palm Drive board member Jim Horn was the lone opposition vote Monday. He has joined three other former board members in an opposition argument on the Measure A ballot, contending that voters should be able to see the final agreement before casting their vote.

The district levies an annual tax of $155 per parcel to support the hospital.

AAMG has been operating the facility, now called Sonoma Specialty Hospital, under a management services agreement since September.

The hospital is currently in a 6-month transition phase, collecting the data necessary to earn its designation as a long-term specialty hospital from the federal Centers for Medicare & Medicaid.

Sonoma Specialty Hospital replaced Sonoma West Medical Center, a management group that sought to operate the facility as a full-service hospital since it reopened in 2015. Sonoma West Medical is currently going through liquidation bankruptcy proceedings.

Smith and Matt Salas, Sonoma Specialty Hospital’s chief financial officer, said Tuesday that operating the facility as a full-service hospital was financially difficult because it had to compete with the county’s three major hospitals, Sutter Santa Rosa Regional Hospital, Kaiser Permanente Santa Rosa Medical Center and Santa Rosa Memorial Hospital.

As a long-term medical facility, Sonoma Specialty Hospital will be able to attract chronic and critically ill patients who require extended hospital stays, Smith said. Under current federal rules, extended stays at general acute care hospitals are not covered by Medicare.

“Those patients could be transitioned here. It helps other hospitals,” said Smith, adding that the cost of such long-term stays are often absorbed by the hospital.

Under the lease agreement approved on Monday, AAMG would rent the hospital for $275,000 a year under two-year terms for up to six years. The hospital would be used as an acute care facility with urgent care and other medical services, and could be purchased at any time during the lease.

The purchase price for the hospital is set at $5.2 million during the first two years, with $4 million to be paid to the district at the time of purchase. A reappraisal is triggered if the purchase is not executed during the first two years of the lease.

The hospital currently has five patients and its census is being kept low during the transition phase, while the AAMG seeks federal designation as a long-term acute care hospital.

One of those patients is Cathleen Diltz, 67, of Lake County, admitted to the Sebastopol hospital Jan. 8 with sepsis and pneumonia from St. Helena Hospital, where she was on ventilation and in intensive care.

Diltz had a stroke and had to have her leg amputated prior to arriving at Sonoma Specialty Hospital, said Shelleen Denno, the hospital’s medical director. At the Sebastopol hospital, Diltz is receiving speech, occupational and physical therapy, as well as wound care because of her amputation.

On Tuesday, Denno told the Lake County resident she was recovering well, partly because she was eating well. “I love to eat,” said Diltz, lying back in her hospital bed.

After listening to Denno discuss her treatment plan, Diltz said, “I go from surgery, to rehab to home.”

The lease and potential sale of the hospital must be approved by simple majority of residents who live within the Palm Drive Health Care District. The district has begun holding town hall meetings to inform residents about the terms of the lease and potential sale, including one Wednesday, from 6 to 8 p.m. at Salmon Creek Elementary School. The other meetings, from 6 to 8 p.m., will be held Monday, Feb. 11, at the Graton Fire Department; Wednesday, Feb. 13, at the Sebastopol Community Cultural Center; and Monday, Feb. 18, at the Bodega Bay Grange.

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