Legislation planned to help Palm Drive refinance debt
SEBASTOPOL — The California Nurses Association and North Bay Assemblyman Marc Levine on Saturday protested the potential closure of Palm Drive Hospital, two days before the district board that oversees the cash-strapped facility is set to take a vote on whether it should move forward with “substantial termination of services and closure of the emergency department,” effectively closing the long-struggling hospital.
In an announcement late Friday afternoon, the nurses union said closure of Palm Drive would have negative impacts on the immediate and surrounding communities.
“Without a local hospital, residents of Sebastopol and western Sonoma County will be at greater risk,” the union said in a release. “A full 85 percent of all patient discharges at Palm Drive were patients over 50, 68 percent are over 60 or older.”
It also said that “death rates increase when emergency rooms close” and that access for lower income, rural residents will be severely impacted in the region.
Assemblyman Levine (D-San Rafael) had been crafting legislation that would enable Palm Drive to refinance its bond debt. On Saturday, he said he would hasten such efforts with AB 582, noting that closure of the hospital would have a broader impact on the local economy, not just access the health care services.
“We must recognize that this is the largest employer in Sebastopol,” he said. “The hospital’s continued operations are crucial to the economic vitality of the city and West County as a whole. For these reasons, I am authorizing AB 582. This bill would allow Palm Drive Hospital to lower its interest costs. This bill will enable the hospital to live within its budget and to continue providing health care services to the community.”
Palm Drive has some 240 employees, all of whom received a notice warning of potential layoffs of 50 or more positions, in compliance with the state’s Worker Adjustment and Retraining Notification (WARN) Act about a week ago.
While the nurses, scores of employees and residents scramble to try and save the hospital, a report from health care consultant Alvarez & Marsal, obtained by former board candidate Jim Horn through a California Public Records Act request, further details the steep financial woes facing the facility. It is licensed for 37 beds but has been staffed for only 12 beds to help offset staffing costs.
Palm Drive “has a critically low cash balance,” according to the report, prepared just last month. After payroll funding on March 13, the hospital had a cash balance of just $17,000, the report said. After March 21, collections were forecast to be $498,000, while payroll taxes, benefits and physician payments of $438,000 were due to be paid, according to the report. Only $35,000 was budgeted to pay vendors.
“It is unlikely that (the hospital) will be able to sustain service with critical vendors over the next six weeks,” the report said.
The board for the Palm Drive Healthcare District said closure of the acute-care and emergency operations could occur as soon as April 28. At its meeting this coming Monday, the board is expected to take up the resolution regarding shuttering services, which comes less than a week after voting unanimously to declare fiscal emergency and begin Chapter 9 Bankruptcy Protection proceedings.
The hospital has been staring at operating losses of $4 million to $5 million a year, and the institution owes vendors about $6 million, according to David Cox, interim chief financial officer and also CFO for Marin General Hospital. In January alone, the hospital reported a loss of $356,200, while through the fiscal year, ending July 1, it has lost more than $1.2 million.
Inpatient volume has seen a sharp decline, dropping from roughly 12 patients per day to as low as seven a day. That may seem like a small change in patient headcounts, but it represents a more than 30 percent decline in volume, hospital CEO Tom Harlan said at last week’s meeting.
In an attempt to save cash, Palm Drive canceled its support agreement with the Prima Medical Group to operate its outpatient clinic, resulting in a savings of $23,000 per month, according to the consultant’s report.
The health care district is meeting on Monday at 5:30 p.m. to vote on the resolution of ending services at the Community Church of Sebastopol, at 1000 Gravenstein Highway North.
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