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Secular operator proposed for Petaluma hospital

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Providence St. Joseph Health has proposed a Washington-based subsidiary take over operations of Petaluma Valley Hospital, the latest twist in the search for a long-term operator that has stretched into a third year.

The proposal would have Western HealthConnect, the secular branch of the Catholic health care provider, operate Petaluma’s publicly owned hospital after multiple succession plans have hit roadblocks.

The Petaluma Health Care District, which owns the McDowell Boulevard facility, held a board meeting this week to discuss the latest proposal, said Ramona Faith, the district CEO. She said the district received the proposal around the beginning of the year.

“It sounds positive for us, but it’s too early to tell,” she said. “We need to learn more about this entity.”

Providence Health and Services, based in Renton, Washington, created Western HealthConnect in 2012 to operate its non-Catholic hospitals. Providence combined with St. Joseph Health in 2016.

St. Joseph has operated Petaluma Valley Hospital since 1997, originally on a 20-year lease, and on an interim basis since the lease expired in 2017. The company was expected to renew its lease, but negotiations broke down over financial terms, a non-compete clause and St. Joseph’s unwillingness to continue offering some female reproductive services.

The Health Care District then launched a search for a new operator, settling on Southern California-based Paladin Healthcare. But the company was unable to invest in an expensive electronic medical recordkeeping system and bowed out of the running.

Another proposal, a combination of Adventist Health and Providence St. Joseph Health that would run the two companies’ Northern California hospitals, was seen as a way for Petaluma to keep female reproductive services, including tubal ligations, at the city’s only hospital. But that deal fell apart when Attorney General Xavier Becerra in November denied the Joint Operating Company (JOC) request.

Christian Hill, director of communications for St. Joseph’s Northern California region, said Western HealthConnect would first need to create a California subsidiary that would manage Petaluma Valley Hospital. He did not have a timeline for completing a deal.

“We’re committed to the community of Petaluma,” he said. “This is an opportunity for one of our entities to continue to operate the hospital.”

Hill said the new company would continue to operate and maintain services as they currently exist at Petaluma Valley Hospital. He said the current employees would become employees of the new company, which would honor existing labor contracts.

Faith said the district needs to take a closer look at Western HealthConnect. Other remaining questions include how long it would take to form a new California subsidiary of the company.

“We are keeping our options open,” she said. “We very much want to move forward and identify the best solution for us.”

Elece Hempel, president of the Health Care District board, said the district has hired consultant Jonathan Spees to help it navigate the negotiations. The board directed Spees to seek more information from St. Joseph about the latest proposal, she said.

She said she wanted to know whether the proposal for Western HealthConnect to operate the hospital would meet the same headwind with the state attorney general’s office.

St. Joseph has not paid the district rent for the hospital since its previous letter of intent expired in November, Hempel said.

Any new operating agreement would have to be approved by voters in the Health Care District, and Hempel said the district is eyeing a November ballot measure.

“We’re on a quick timeline,” she said. “We’d want to have an agreement in place by August so we can take it to voters in November.”

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