Officials with Sonoma West Medical Center say the Sebastopol hospital is facing an immediate financial crisis over debt payments that has led them to call for a discussion late this week over whether to begin drawing up plans to close the cash-strapped facility.
The move comes at the outset of a new campaign by hospital officials to raise funds to pay off some of the debt. Also, last month the hospital’s owner and financial supporter, the Palm Drive Health Care District, formally put out a notice seeking a buyer for the facility, which was re-opened in 2015 after being closed as a result of chronic financial problems.
District officials insist the medical center is working through its cash-flow problem.
But while improvements to billing and collecting are yielding positive results, hospital representatives said, monthly debt payments continue to overburden the facility.
“We have kind of a set amount of money we know we have to pay every month — that amount is what’s dragging us down,” said Barbara Vogelsang, Sonoma West Medical Center’s chief nursing officer and chief operating officer.
Vogelsang said the SWMC board is expected to meet Friday to discuss whether to “go to the district with a plan to close the hospital.” It’s a discussion, she said, that should be had as the hospital continues to struggle with debt payments.
Closure of Sonoma West Medical Center would leave western Sonoma County without a full-service hospital and emergency room services.
Vogelsang said it costs about $1.8 million to run the hospital each month, a figure that includes operations costs, payroll and current bills. In May, the hospital collected almost $1.9 million, she said.
But debt payments cripple the hospital’s ability to break even, Vogelsang and other hospital supporters said. Those payments totaled more than $632,000 in May and are expected to drop to $250,000 this month and in July before doubling this fall.
“It’s incredibly frustrating to be this close to being OK and having that old debt looming over our head,” Vogelsang said. “We’ve made changes to a lot of our staffing, eliminated a few positions and decreased our overtime cost by one half.”
Dennis Colthurst, president of the Palm Drive Health Care District, which owns the hospital and supports it financially, said the hospital is nearing financial stability.
“We’ve come so far, through all the negative press and negative comments, the hospital is very close to a cash flow, being in the black,” he said.
The former Palm Drive Hospital closed in spring 2014, when the related health care district filed for bankruptcy. It reopened under a new name in October 2015 but struggled through a series of management and leadership changes and was running monthly deficits of about $1 million until last spring, when it was rescued by a cash infusion from a Florida-based company that sought to profit from the hospital’s laboratory operations.
The toxicology program generated about $31 million between July 2017 and February 2018; the hospital’s share was $10 million, or about $1.25 million a month.
But that partnership was ended this year and is now at the center of a high-stakes court fight initiated by Anthem Blue Cross.