SEBASTOPOL - Palm Drive Hospital announced today that 16 positions would be scaled back or eliminated.

The cuts will save the 37-bed facility about $1.2 million annually.

The district hospital is currently in the midst of bankruptcy proceedings, and the cuts are part of several initiatives meant to "improve financial performance," according to hospital officials.

"Nobody is going to lend us money until we improve our financial position," said Neil Todhunter, who is serving as interim chief executive under a contract between the health care district and Tennessee hospital management company BRIM Healthcare Inc.

Mr. Todhunter has been preparing a financial plan for the hospital ahead of a Sept. 1 deadline for bankruptcy proceedings. (See the Aug. 21 story, "New Palm Drive CEO scrambles to stabilize hospital.")

Before the layoffs today, the hospital had 307 full- and part-time employees.

A majority of the affected positions are in administration and support areas. The hospital is currently looking for a line of credit to pay creditors and exit bankruptcy. Efforts to increase revenue through better insurance coding, billing, collection and other changes are also ongoing.