[caption id="attachment_35454" align="alignright" width="313" caption="Palm Drive Hospital"][/caption]

SEBASTOPOL -- The Palm Drive Healthcare District's recent vote to begin exclusive negotiations for affiliating with Marin General Hospital has the potential to help the long-struggling Sebastopol hospital stabilize, while creating an expansive network of alliances between numerous district hospitals across the North Bay that might otherwise have difficulty surviving.

Such is the view of the leadership at Marin General, which has long said it would seek alliances across the region, and the medical staff and board of directors at Palm Drive Hospital, which has been pursuing affiliations with a larger entity for several months, after is was agreed upon that the facility would continue to struggle on its own.

Palm Drive began affiliation talks with Adventist Health, and later expanded the list of potential suitors to include St. Joseph Health System--Sonoma County, Catholic Healthcare West, HealthTech, which currently operates the hospital, and Marin General. Catholic Healthcare West's proposal has been put on standby. Adventist Health pulled out of talks earlier this month.

"I would say all of the independent hospitals and district hospitals in our region we think are possible partners in some way," said Jon Friedenberg, chief fund and business development officer for Marin General. The potential affiliation with Palm Drive could mirror a similar relationship that was reached last year Sonoma Valley Hospital, which is also overseen by a health care district, Mr. Friedenberg said.

Mr. Friedenberg said Marin General isn't necessarily looking to form such partnerships now, but if a health care district approaches the hospital, it's certainly willing to have a conversation. He stressed that each alliance varies and that there is no blanket approach.

Marin General is now entirely overseen by the Marin Healthcare District in Greenbrae after Sutter Health parted ways with the hospital in 2010.  At that point, leadership at Marin General said that it would explore strategic relationships, particularly to the north, with a number of partners as a means of remaining competitive with the region's large organizations.

Those efforts include collaboration with UCSF and the formation of the Prima Medical Foundation with the Prima Medical Group and the recently renamed Marin-Sonoma IPA, which itself has expanded significantly into Sonoma County over this past year. Sonoma Valley Hospital gained access to that expanding physician pool, and Palm Drive could as well.

That's an attractive selling point for Palm Drive, which has struggled to retain primary care physicians, a theme felt throughout the health care industry, said Richard Powers, chief of staff at Palm Drive and who operates a private practice in Sebastopol. 

"As a medical staff, they are culturally compatible," Dr. Powers said of Marin General. "They're doing the same thing we're doing -- trying survive in a very competitive market, and they are extremely loyal to their physicians."

Dr. Powers, who is a part of the Sonoma County Primary Care IPA, also said an affiliation could benefit Marin General by giving it a larger footprint across the region, which in turn gives otherwise stand-alone hospitals better negotiating power with insurers on reimbursement rates.

"It makes them bigger, and to have a bigger geographic cover helps with insurance," he said.

Similar benefits have been cited by Marin General and Sonoma Valley hospitals following that shared services agreement, and Mr. Friedenberg said the expanding alliance brings numerous benefits to the hospitals involved.

"We hope to provide the hospitals with whom we are in alignment with the benefits of a larger system but none of the drawbacks of a system," Mr. Friedenberg said. "The governments and executive leadership will continue to be responsible for running their own hospital.

"It's alliances and alignments rather than a system," he added. 

That level of  autonomy was cited by the Palm Drive board as a key reason in moving forward with Marin General's proposal, which  allows Palm Drive to select its own CEO and CFO.  Whether the current HealthTech executives, CEO Richard Polheber and CFO David Glassburn, stay on board remains to be seen and will likely be determined in negotiations.  HealthTech's contract ends in November 2012. The Tennessee-based management company has said it would remain if Palm Drive asked it to, or it would assist in the affiliation process. 

In early 2010, Palm Drive emerged from Chapter 9 bankruptcy protection after selling off $10 million in bonds.

Next, Marin General will be asked to make a presentation to the public and an ad hoc committee will begin negotiations. A final decision could come within the next 30 days.