Sebastopol hospital signs with Pipeline
Effective immediately, Sonoma West Medical Center has engaged Pipeline Health as an independent contractor to manage hospital operations and help resolve its on-going financial troubles.
Under the agreement, SWMC will gain an interim CEO and CFO, and have access to approximately 8 – 10 other Pipeline administrative specialists such as revenue cycle, IT, and data analysis directors.
“We absolutely believe this is the right choice,” said Dan Smith, SWMC board chairman. “It’s not a guarantee the hospital will be successful, but it will give us a lot of room to run.”
Pipeline is a management company that owns and operates hospitals and healthcare organizations including four in Southern California and and Howard University College of Medicine in Washington D.C. The company also partners with Los Angeles-based SRC Management, providing healthcare advisory services, with regards to financial operations, revenue cycle, supply chain and capital strategy.
Bringing Pipeline on board will eliminate the hospital’s need for expensive, outside, consultants currently under contract, Smith said.
Under terms of the agreement, SWMC will pay Pipeline $125,000 a month for the first six months, and $150,000 a month for the second six months, with a 5 percent yearly increase after that. The term of the agreement is for five years, with automatic renewal for additional one-year periods.
The organizational structure of the hospital will remain the same, with Palm Drive Health Care District, which approved the agreement Friday, as the governing body.
Luke Tharasri, Pipeline’s chief operating officer, will step in as the hospital’s interim CEO, and Pipeline’s chief financial officer, Robert Heinemeier, will step in as interim CFO. As both Tharasri and Heinemeier work for Pipeline, they will be held more accountable for financial results, Smith said.
The board had previously considered the appointment of Barbara Borbeck as CEO, replacing Raymond Hino who resigned June 26. Borbeck has been serving dual roles as the hospital’s chief operating officer and chief nursing officer.
Tharasri pointed out Pipeline has a track record of turning smaller, distressed hospitals around, including Howard. In 2014, Howard was facing bankruptcy, and two years later they are breaking even and on course to make a small profit.
“Our mission is to take these types of situations and make them successful,” he said.
Current monthly operating losses for SWMC are approximately $600,000, for which hospital officials cite lower-than-expected reimbursements from Medicare, Medi-Cal and private insurers. Tharasri said Pipeline has used their leverage in negotiating contracts for major insurers such as Blue Shield and Anthem. He also outlined strategies for turning the hospital’s finances around including vendor management, increasing the volume of emergency room patients, and reducing the length of hospital stays.
SWMC had considered other management entities before choosing Pipeline, such as Sutter Health, Providence Health and Services, and St. Joseph Health.
