Palm Drive files for bankruptcy, plans to suspend services

Other storiesOptions for Palm Drive dwindle

April 7, 2014Nurses union, advocates protest potential Palm Drive closure

April 5, 2014Financial stress at Palm Drive detailed

April 4, 2014District declares Palm Drive ‘fiscal emergency’

April 1, 2014

SEBASTOPOL -- The board of Palm Drive Healthcare District, which oversees Palm Drive Hospital, voted Monday evening to "suspend" operations by the end of this month and filed for bankruptcy protection from creditors Monday afternoon to deal with the institution's "fiscal emergency" declared a week ago.

The board voted 4-1, with Jim Maresca dissenting, on a new resolution to "suspend, not surrender or terminate, the hospital's current license," closing all acute care and emergency services as of April 28.

Mr. Maresca said he opposed the closure of services because he wanted to wait and see for about a week what alternatives -- including several proposals from the hospital's physicians -- may emerge and how the district might proceed. 

The board also approved an amendment to the resolution to "provide the best continuous care possible" after April 28, which would likely come through working with county emergency officials and private ambulance companies to transport patients who might arrive at the hospital's emergency room. 

"Unfortunately, Palm Drive is out of money," said hospital Chief Executive Officer Tom Harlan about the bankruptcy filing. "We're unable to pay our vendors."

The number of patients the hospital was serving and the fractional rate of federal and state reimbursements for about two-thirds of patients was cited as the primary cause for bankruptcy and suspension of services.  Patient volume at the hospital so far in April is averaging 4.7 a day, head nurse Pam Read said at the meeting.

The Chapter 9 bankruptcy filing, announced at the district board meeting Monday evening by Michael Sweet, an attorney working with the district, was approved at a meeting last week and proceedings commenced today. 

Officials have said through the current fiscal year, ended July 1, the hospital has lost more than $1 million. The hospital filed for Chapter 9 in 2007 as it dealt with nearly $7 million in operating losses but emerged in 2010 after selling $11 million in bonds. 

Those funds are gone, and the hospital was left with just $17,000 in cash in the middle of last month, according to an analyst's report.

The hospital is licensed for 37 beds but has been staffed for just 12 beds to help offset staffing costs.

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