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Palm Drive Hospital on the Ballot - Support vs. Skepticism


Palm Drive Hospital on the Ballot
Support vs. Skepticism

Opinoins very widely on whether Palm Drive Hospital should re-open as the new Sonoma West Medical Center. With so many to-notch large hospitals close by, can this small hospital succeed under new management and revised services? Is it necessary? Can it be financialy sustainable?


Answers, Not Slogans

The Doc and The Cop. What a catchy slogan- so easily remembered. It certainly rolls off the tongue more easily than “Professional engineer with impeccable financial analytical skills and knowledge of hospital infrastructure and operations.”

We have three nice guys running for the Palm Drive Health Care District Board of Directors. All three have unique knowledge and experience to offer. The key question is, “Who possesses the most relevant skills and knowledge needed at this critical time in Palm Drive Hospital’s history?”

Unfortunately, it appears as if this crucial question has been lost in the popularity contest that this election has been simplistically reduced to.

The Foundation’s latest proposal, on the surface, paints a bright future for the facility. Of the three candidates, only Jim Horn has been asking, “Where are the numbers to back it up?” Only Jim has been asking, “Is this proposal free of conflicts of interest?”, as he seeks to separate the facts from the fluff. 

He has been demonized for not being an obedient true believer- for questioning “The Plan”. Because he has had the courage to ask tough questions and untangle the financial maze, he has been labeled an “obstructionist” and “opponent of opening the hospital”. He understands that a hospital cannot survive on rhetoric and “projections”. If you want your parcel tax dollars watched closely and spent wisely, Jim knows how and is committed to doing so. He brings twelve years of financial management and oversight experience from his tenure on the Gravenstein Union School District Board of Trustees.

Jim recognizes that West County residents comprise the vast majority of the Palm Drive Health Care District. He is the only candidate that consistently considers the needs of those beyond Sebastopol’s city limits. Jim is in favor of reopening Palm Drive, if financially feasible. He also understands that non-hospital based health care options may be more appropriate for those District residents in outlying areas or those living in closer proximity to other hospital facilities.

If you break your arm, call a doc. If you see a bad guy, call a cop. But if you need to financially resuscitate a dead hospital, or provide appropriate, relevant health care options for Sebastopol and the West County, call someone with the experience and essential skills needed to get the job done. Call Jim Horn.

John Eder, Sebastopol City Council
Council Liaison to Palm Drive Hospital


October in an election year is always “silly season” when people make all sorts of allegations and statements unrelated to facts.  This year is no different for the residents of West County with the Palm Drive District Board elections.  

Rather than spending time refuting false statements such as the oft repeated but untrue statement that it will take $20Million to rehab the building (PDH says under $200,000—we are budgeting $750,000), I want to extend my thanks to the President of the District Board, Marsha Sue Lustig, and the Vice President, Sandra Bodley for their clear statements in public town hall meetings and to me personally that they want to open our hospital.  Each of them has stated the obvious, that our community wants our hospital open and the Foundation has the only plan proposed to do so.  

I also want to thank District Board member Jim Maresca for his unfaltering support to open our hospital.

To deny our community a hospital and an Emergency Room in the face of overwhelming popular support—evidenced by 2000 Open Our Hospital signs on front lawns and roadsides-- would be tragic.  Some loud voices infer that the parcel tax will stop if the hospital stays closed; that is not true.  The District Board made it clear that with or without a hospital, they will continue to collect the tax even if it is for non-hospital options for the district.   Without the hospital, residents will still pay a tax but without the benefit intended.

The Foundation has an outstanding plan for reopening our hospital as Sonoma West Medical Center— a “Mayo clinic” with Emergency Room, Hospital, Surgery, Laboratory, Imaging, and specialty research “Institutes” bringing out-patient services directed at our community’s expressed needs:  Neurology (memory, Alzheimer’s, headache, stroke), Neurosurgery, Orthopedics, Urology, Rheumatology, Endocrinology, multiple facets of Women’s Health, and Integrative Health Services.  We will continue our hospital’s reputation as first in California, fifth in the nation for patient safety. We will resume our nationally recognized stroke program, and continue to lead in telemedicine bringing world-class specialists to consult in our hospital.  We plan private patient rooms where family can stay. We will have organic  food and a dedicated in-patient hospice room.

A respected hospital administrator, Ray Hino, begins work November 1.  As the new CEO, he plans to open the hospital by the first week of April, unless he can do so sooner.  He has been in touch with licensing and accreditation and is assured that there are no problems in either area.  

Join in our effort to Open Our Hospital.  Through donations by our citizens to support our hospital, the Foundation hired nationally ranked experts and consultants to design a plan both attainable and sustainable.  This plan gives us a Medical Center and ER for many years to come.  Read our plan and dig into details;  please look at our website  We welcome opportunities to talk with anyone or any group, give private detailed presentations (including financial data), and hear all your ideas. 

There are those who would like to stir up controversy and suggest acrimony between the Foundation and the District Board, to divide our community. The truth is we are all working to unite our community around the common goal of quality health care centered on a hospital and emergency department and augmented by robust out-patient and outreach programs.  The River area, the coastal areas, and the rest of our district deserve the best health care we can devise.  Robust health care needs the hospital and ER as a center piece.  We want people to live and thrive in our district.

There is no reason our community should be denied a hospital by a few loud voices, by personality conflicts, or by efforts to divide us.  We have the resources, the viable sustainable plan, and the community commitment-- including leaders in business and on the District Board-- supporting Open Our Hospital.  Our community has spoken and the Foundation is working to do what you ask. 

Thank you

Gail Thomas, President, Palm Drive Health Care Foundation


Dear editor:

I would like to strongly recommend a vote for Jim Horn for the Palm Drive Health Care District Board in the upcoming election. Jim has been serving on the board in an interim capacity since July. He has been a true asset in the deliberations about the bankruptcy and the options that face the district.

Jim is an engineer with his own business in Sebastopol. He is most astute about fiscal matters. Jim has brought his considerable skills to the district, first in doing a comprehensive assessment of the Palm Drive physical plant and then in consistently being an active involved member of the finance committee of the board.

Jim is a man of integrity and independent good judgment. I think he is someone we want to be part of the decision making process about the options available to the health care district in providing health care services to west county. Jim’s wife was a nurse at Palm Drive hospital  before it closed, so  he is familiar with strengths and weaknesses of the hospital, and he is well versed in the history of the district.

Jim Horn is the candidate most qualified to serve as a board member for the Palm Drive Health Care District.

Sandra DeBella Bodley, Vice President - Palm Drive Health Care District Board


Why is the Sonoma West Medical Center a worthy of your support?

#1 Reason: Having An Emergency Department Saves Lives

Although only 15-20 minutes from Santa Rosa, SWMC will provide the only full-service ER west of the Laguna - saving vital minutes for critical cases in West County

Of the three proposals accepted by the District Board regarding what to do now that the hospital is closed – the Foundation’s proposal is the only one that proposes a plan for the empty building and that plan includes a full Emergency Department with required ICU and surgery beds

The proposal is the only chance to preserve the hospital’s operating license and keep 24/7 ER services in West County

Here Are 15 More Reasons To Support For Our Plan To Open Sonoma West Medical Center 

A five-member publically elected Board was tasked with overseeing the hospital’s complex operations. That did not work. We propose an over-sight board of 11-15 savvy, local stake-holders to improve over-sight and strategize growth. Eleven of these key business leaders have already been identified & nominated to oversee the hospital’s administration. This model has worked for other hospital districts

Detailed research showed that two expense items – Salary and Supplies – spiked way above state-wide norms representing all of the operating losses for 2012 and 2013. The oversight Board and new hospital administrators will bring those costs back into line and be on alert for future problems

Historically poor billing management is addressed with a specialized outside service, preserving on-time and secure revenue

The national trend to fewer hospital stays and more out-patient procedures is addressed by bringing at least six specialized Medical Institutes (Doctor’s offices) inside the hospital to provide not only patient care, but also education and research revenue

We have learned much from studying two bankruptcies and knowing what does not work and what not to repeat is powerful learning

We have a very good building that will require less than $1M in improvements to reopen

Our proposal assumes that the District Board provides $1.5M in financial support from the $2M available annually from our parcel tax (that’s 75% of their funding). The balance can be directed by the District Board to other health services in the District 

This $1.5M in funding requested from the District Board would be used for building improvements and equipment upgrades only – not operations – to increase the value of the District’s property every year as needed

We have hired a highly respected and very successful hospital administrator, Ray Hino, as CEO. Ray started work on Nov. 1st

Western Health Advantage, which offers a competitive and in some cases lower priced medical insurance than Kaiser, gives local employers a new group policy option that allows their employees to use their hospital of choice

SCAN (Senior Care Action Network) is a managed Medicare product priced to compete with Kaiser (actually a no premium, therefore less expensive, plan) with comparable benefits to Kaiser’s Medicare Advantage Plan. It allows seniors to stay local and use local physicians, labs, pharmacies and hospitals. SCAN is new this year but it is offering open enrollment now. It has been successful in Southern California for 35 years.

Lack of marketing is replaced with a strong marketing budget focused on specific service lines only available at SWMC for the tri-county region. Palm Drive Hospital had both excellent patient care (rated 5th in the US), broad telemedicine support and a rare stroke certification – none of which was promoted.

Our proposal includes a “No Wait ER” which is based on a unique protocol seeing patients within 

5 minutes of arrival. This model increased the market share in St. Helena’s ER by 50% because people would travel to get to an ER with rapid, quality care

Palm Drive Hospital’s ER saw over 7,000 patients a year, some without insurance. New ACA coverage will increase the number of patients who will be able to pay for a portion or all of their services

Bringing a full Medical Center back to Sebastopol creates almost 200 direct jobs and supports hundreds of peripheral jobs for a safer and more vibrant regional community.

Dr. Richard Powers and Dennis Colthurst


Challenges of West County Health Care

by Jim Horn

In April, the Palm Drive Health Care District declared bankruptcy for the second time and closed the Palm Drive Hospital. I was appointed to the District board of directors three months later, and I’ve worked ever since to restore health care services and pull us out of bankruptcy. To understand the tremendous challenges we face, we need to know some critical facts.

First, our Palm Drive District is large—nearly 300 square miles, stretching from the Laguna to the coast and from north of Petaluma to well beyond Guerneville, with 60,000 residents. The District itself is a public agency with an elected board and the ability to own property, run a hospital or other health care endeavors, and levy taxes.

Palm Drive Hospital sits near the southeastern corner of this sprawling area. Nearby Santa Rosa is home to three large hospitals, all backed by enormous, well-financed health care systems. Much of our River area lies closer to the new Sutter Hospital, at the intersection of River Road and Hwy. 101, than to Palm Drive.

In just the past decade, we’ve seen major changes in the American healthcare delivery and payment system. Health insurance is more widely available, thanks to the Affordable Care Act, with much greater emphasis on primary care physicians and outpatient services. For hospitals, fewer visits, shorter stays and reduced reimbursements are the rule.

In addition, there is a tremendous demand for community-based health care programs that are often more cost-effective than hospital-based care. For an excellent presentation on how other California health care districts are meeting these needs, visit the District’s website ( and scroll down to the links under “Exploring Community Health Service Opportunities for Palm Drive.” These opportunities include wellness and disease prevention, mental health services, senior services, and many others.

Of course, all health care options cost money, always a scarce resource (they don’t call economics “the dismal science” for nothing). For our District in particular, the financial picture is sobering:

• The District lost over $60 million in the last 13 years operating the Hospital. Roughly half of that loss was covered by our parcel taxes, the other half by increasing debt.

• Of that debt, about $18 million is secured by our parcel tax of $155/parcel per year. Currently, almost half of the $3.7 million we collect--about $1.7 million--goes to paying off this secured debt. This debt won’t be paid off completely until 2035.

• The remaining debt is unsecured and totals $9 to $10 million. About $1.3 million of this is owed to our own former employees, the rest to vendors ranging from small local businesses to giant corporations.

• Currently, the District has perhaps $1 million available to pay these unsecured creditors, or roughly 11 cents on the dollar. To exit bankruptcy, we must prepare a repayment plan that is acceptable to our creditors and to the bankruptcy judge overseeing our case.

• The District has one income stream (the parcel tax) and one tangible asset—the hospital building itself and remaining medical equipment. The building has a “book value” of about $13 million, although a formal appraisal hasn’t been done for more than a decade.

It’s not a pretty picture...

As many folks know, the Palm Drive Health Care Foundation proposes to reopen the Hospital under the control of a new non-profit corporation called Sonoma West Medical Center (SWMC). Although the Foundation hasn’t yet provided financial projections, we do know that, under the plan, SWMC would lease the hospital building and equipment from the District for $1/year. In addition, the District would be expected to contribute another $1.5 million/year towards maintenance and upgrades of the building. Thus, the District would contribute free use of its only tangible asset, along with 85% of the parcel taxes, to support the hospital and cover its past losses. The District would be left with only $500,000/year to cover its overhead, pay off its creditors, and invest in any health care initiative or service other than the hospital in Sebastopol. To me, it’s questionable whether the bankruptcy judge or the creditors would agree to this plan even if accepted by the District.

I hope this article will aid our community’s understanding of the complex and difficult road ahead.


It’s six months later and there is still much confusion and many opinions about the fate of the Palm Drive Health Care District. The District Board is in the midst of a second bankruptcy and exploring all options for delivering health care services. The Foundation is aggressively pushing a very questionable reinvention of the hospital.  The tax payers are still caught in the middle.

On top of all this, the November election for two vacant seats on the District Board of Directors is up in the air and a heated contest.  There is one independent, incumbent candidate and two candidates from the Foundation, one with significant conflict of interest issues. The election results will likely determine which direction the District will take.  

Don’t kid yourself, this dilemma is really all about money, lots and lots of money.  The District is millions of dollars in debt, about $20 million accrued through bond issues and $9 million in bankruptcy.  It will take more than $10 million dollars for old hospital building capital improvements. That’s a $39 million dollars burden for the taxpayers.

It is important to point out a few major reasons why the hospital is closed.  Since 2013 there was a 30% decline in patient admissions with nine straight months of an average daily census of nine patients.  Two-thirds (2/3) of the patients were on Medicare, MediCal or uninsured.  Medicare pays 90% of the costs for care and reimbursement rates will be going down.  MediCal pays 60% of the costs.  Forty percent (40%) of the Districts 60,000 population are Kaiser members leaving only 36,000 potential District residents to be served, excluding Sutter or Memorial members.

The Foundation proposal to reopen the hospital with a standby emergency room and mandated acute care hospital is extremely risky and the financial sustainability is significantly questionable. This will take millions of dollars, a little more than $9 million, for startup costs. This venture is predicated on parcel taxes, large sums of donations and establishing boutique, private practice services.  There is truly little to offer District residents outside the Sebastopol area.  

Let's look at the Foundation’s proposal.  A new 501c3 nonprofit corporation would be formed by the Foundation to “build a firewall” between the District and the Foundation in operating and managing the reopened hospital.  A 13 member self-appointed governing board would be established. The District Board, representing the public, would have absolutely no say or controls in how business would be conducted or by whom, but are expected to provide tax monies. Furthermore, public transparency and following the Brown Act are apparently not required of this corporation.

Call it what you want, the Foundation proposal is all about running the hospital with for-profit businesses owned by local physicians, local residents and Foundation members under the guise of needing an emergency room for Sebastopol.  Looks a lot like a showcase for private, for-profit enterprises on the backs of the taxpayers.

The standby emergency department, basically a triage and stabilization service, would continue to primarily serve Sebastopol, Occidental and Bodega Bay residents. Historically, eighty to eighty-five percent (80-85%) of the emergency room visits were actually urgent care problems which could be seen in the providers office. With the new, state-of-the-art Sutter hospital opening and a huge District Kaiser membership, the majority of River corridor residents will not use Palm Drives limited emergency services, a significant decrease in Palm Drive revenue.

Establishing a number of private physician specialty practices is intended to act as “magnets for patients” with inpatient services supporting their surgical procedures. These are not specialties meant for the taxpayers of a public nonprofit health care district but are intended to be revenue generators. Many of these providers are also a part of the physician owned, in house, for-profit telemedicine business.  

There are many benefits supporting telemedicine in rural areas great distances from major medical communities and facilities, not in urban areas like Sebastopol. In the Foundation proposal, telemedicine fills in for trained emergency physicians who are not required to be present  24/7 in a standby emergency room or specialists who are not immediately available in the community.  Palm Drive will be the “hub for telemedicine for Northern California.”  Where do the profits of these businesses and the private practices go?

The electronic medical records system the Foundation proposes is owned and operated by a local resident, physician and Foundation members.  There is no known documentation that this has been used in the United States.  It is questionable whether the system is currently certified and eligible to bill Medicare. 

As you can see, the taxpayers are between a rock and a really hard spot.  Most District residents are completely unaware how complex and costly establishing and operating a hospital is.  Many Sebastopol area residents are convinced an emergency room is necessary with no idea of what this really means to themselves or other District taxpayers. After all, forty-two percent (42%) of the parcel taxes come from the River Corridor residents who will not be using the Palm Drive facility and are not happy providing services for the wealthy Sebastopol area of the District. 

I still say, sell the facility to the Foundation.  Let the Foundation and Sebastopol pay for the private profit making hospital they want.  Let the rest of us pay off the debt, provide services to the entire District or remove ourselves from the Palm Drive Health Care District.

Hold on to your wallets, folks.  It’s gonna be a rough ride!

Jeanette Dillman