CEO: 'I see this as a real turning point;’ $6 million in projects
SEBASTOPOL — Mired in bankruptcy proceedings just three years ago, Palm Drive Hospital is poised to return to stability with the sale of $10 million in bonds that will enable it to move into the black and establish a fund for long-delayed improvements, the hospital said.
The board of directors voted unanimously to sell the bonds last week, which will enable the community hospital to pay off approximately $2.2 million to its creditors and about $3 million to the county for a bridge loan, Neil Todhunter, interim CEO, said.
By the end of the current fiscal year, the hospital expects an operating loss of approximately $514,000, Mr. Todhunter said. In 2007, the hospital was beset by nearly $6 million in operating losses and filed for bankruptcy as a result.
The hospital entered into a three-year, $250,000 annual agreement with Tenn.-based Brim Healthcare Inc. last year, and finances have since improved.
The hospital will no longer be forced to rely on a parcel tax that generates roughly $3.5 million annually as a result of selling the bonds, Mr. Todhunter said, and next year the hospital anticipates a gain of about $125,000 from operations that do not include revenue from the $155 per-parcel tax in West Sonoma County.
About $600,000 to $700,000 of revenue from the parcel tax goes toward government obligation bonds, Mr. Todhunter said.
“I see this as a real turning point for the hospital,” Mr. Todhunter said. “We have stabilized our expenses. The revenue we receive now from our services is now mostly covering the cost of providing service.”
The hospital will also be able to direct approximately $3 million toward “much-needed” capital improvements in the immediate future — including an electronic health records system, an enhanced monitoring system for the emergency room and new patient beds for the medical surgical department.
A litany of other improvements are expected in the future as the hospital becomes more stabilized and as it seeks to expand services in West County.
“We’ve identified just shy of $6 million in improvements,” Mr. Todhunter said. “We will be able to do that over the next five years.”
Despite the improved financial outlook of the hospital, multiple shakeups have centered on the CEO position.
Last month, the hospital and Brim announced that Richard Robinson, currently the CEO of Women’s and Children’s Hospital in Louisiana, would take over as CEO at Palm Drive on a $275,000 salary starting no later than April 29.
However, last week Palm Drive distributed a letter from Brim announcing the abrupt withdrawal of Mr. Robinson as the CEO and declined to reveal why beyond saying it would seek another candidate in an “expeditious manner.”
Brim was hired after a 3-2 vote by the board to oust then-CEO James Russell, at which point Mr. Todhunter was named by Brim as the CEO. In a release in late March, the hospital said Mr. Todhunter had declined to seek the position permanently. He will now remain in the position while another CEO is sought by Brim.