Palm Drive weighing affiliation proposals from five suitors

SEBASTOPOL -- The Palm Drive Healthcare District has received proposals from five health care organizations for possible affiliation, as the 37-bed hospital overseen by the district seeks a larger entity to assist in providing long-term financial stability.

Adventist Health, the Marin Healthcare District, St. Joseph Health System--Sonoma County, Catholic Healthcare West and HealthTech, the current operator of the hospital, all submitted proposals to Palm Drive  after the hospital in August solicited offers on potential partnerships.

That there were multiple proposals  bodes well for Palm Drive, according to Nancy Dobbs, board president. Palm Drive had initially sought proposals from seven  health care organizations, the other two being Sutter Health and the University of California, San Francisco.

The board at Palm Drive, which just last year emerged from bankruptcy protection, has concluded that a stand-alone hospital would be too difficult to operate, a point that has been echoed by district hospitals across the county and the country. 

Earlier this spring, Palm Drive and Adventist Health entered into discussions on possible affiliation. The Roseville-based group's Northern California network, which includes five hospitals from Vallejo to Mendocino County, now proposes that Palm Drive affiliate with its St. Helena Region, which includes  St. Helena Hospital Napa Valley and St. Helena Hospital Clear Lake, formerly a once-troubled district hospital itself.

The proposal, by far the most specific,  includes a line of credit of $6 million over the next three years for improvements, marketing, physician recruitment and renovations. Palm Drive would be obligated to repay only interest at a rate of 5 percent on a monthly basis, the proposal says.  It also proposes a five-year term, for which the Palm Drive board would pay a fixed annual fee of $1.7 million to Adventist Health for all services, plus certain incentive fees.

Palm Drive would also be granted permission to use the words "St. Helena Region Member" as part of a re-branding strategy. It also suggests a name change to possibly Palm Sonoma Hospital, which would indicate a wider regional reach, according to the proposal.  Other aspects include additional physician recruitment, practice management, service line support, patient care support and expanded services and contracting services.

Palm Drive currently pays its current operator, HealthTech, about $700,000 a year, which includes the CEO's  and CFO's monthly salaries and the monthly service fee,  according to the hospital.

Marin General Hospital, the largest district hospital in the North Bay,  suggested an affiliation similar to one it reached with Sonoma Valley Hospital earlier this year, which includes shared services for finance, planning, human resources and strategy, among others.  As a larger district, Marin General has said it intended to seek smaller districts to the north to create economies of scale.

Marin General, with annual revenues of $300 million, proposes to provide Palm Drive with executive leadership, governance support and management support. The CEO of Palm Drive would become a member of Marin General's management team in  a dual relationship but would still report to the Palm Drive board. Marin General also proposes to provide the Sebastopol hospital access to the Prima Medical Foundation, which would in turn help with physician recruitment and retention, according to Marin General.

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