Palm Drive weighs options for survival

SEBASTOPOL -- The Palm Drive Healthcare District, which oversees the financially embattled Palm Drive Hospital, is expected to consider and possibly vote Wednesday on two proposals from prominent physicians and the Palm Drive Health Care Foundation that aim to save the facility ahead of its impending closure next week.

The district board is set to meet at noon Wednesday to discuss the proposals. Following the second Chapter 9 bankruptcy filing in seven years for the 37-bed hospital, the district board once again is claiming insolvency and has approved a "substantial closure of services" set to take effect on April 28.

Howls of protest from residents, hospital staff and physicians concerned about western Sonoma County access to health care and emergency care resulted in two proposals, one from telemedicine specialist James Gude in conjunction with the foundation and another proposal by Michael Bollinger, an orthopedic physician who practices at the hospital.

A 71-page proposal by Dr. Gude, former district board president Dan Smith and the foundation would effectively shutter 35-bed inpatient ward of the hospital while preserving a two-bed intensive care unit, three inpatient beds and the emergency department. It would also create new lines of revenue in specialty care such as telemedicine, physical therapy, neurology and infusion and make a strong shift toward outpatient care.

The proposal by Dr. Bollinger would similarly close the inpatient ward, offering intensive care, radiology, laboratory and outpatient specialty services, and would allow physicians to lease the hospital for $1 a year. A third party would manage the facility.

Whether the proposals are enough to save the ailing hospital is not yet clear. The district and hospital Chief Executive Officer Tom Harlan have cited licensing concerns with the state. In order to operate an emergency room, all hospitals must have adequate inpatient services, along with labs, radiology, an ICU, and acute inpatient care and outpatient services are all tied to the same license.

Palm Drive Hospital last week was granted a $450,000 emergency loan from a U.S. bankruptcy court judge. It will help the cash-strapped hospital make payroll and meet operating expenses through bankruptcy proceedings, about a week ago. A final bankruptcy hearing is scheduled for May 1.

Over the year, finances at Palm Drive have deteriorated. Accounts payable for Palm Drive increased to nearly $6.5 million at the end of February from about $5.8 million in June 2013, according to Mr. Harlan. He cited an October audit of the hospital prepared by Moss Adams for the 2012--2013 fiscal years. Accounts payable increased by nearly 75 percent since 2012.

The hospital also owes vendors another $6 million, according to the Chapter 9 filing. Major creditors include Utah-based Innovasis, a developer of spine implant devices that is owed more than $1.6 million; San Francisco-based McKesson Technologies, which is owed just shy of $1 million; and PG&E, which is owed about $334,000. Total liabilities were $9.6 million, up 54.8 percent from fiscal year 2012 and even more in the first months of fiscal year 2014, hospital officials said.

The district board is meeting at the Sebastopol Center for the Arts at 282 S. High St.

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