There continues to be a fair amount of confusion surrounding Palm Drive Hospital including information in the newspaper that does not represent the facts as we know them. Here are some of the major topics:
It has been represented in multiple places that Palm Drive lost $64 million over the last 13 years.
The only reliable source of information for financial reports for hospitals is the Office of Statewide Hospital Planning and Development (OSHPD) that holds audited financials for all hospitals in California at : https://siera.oshpd.ca.gov/FinancialDisclosure.aspx
Their data holds financials for Palm Drive from fiscal 2002 (July 2001-June 2002) to fiscal 2013 (July 2012 to June 2013), which is the last full year of operations for the hospital. Here is what their data shows:
Year Net Revenue Profit/(Loss) 2002 $16,024,405 $1,279,494 2003 $18,591,347 ($1,654,641) 2004 $20,290,573 $377,280 2005 $21,498,803 $431,248 2006 $20,727,125 ($2,746,031) 2007 $19,504,502 ($3,504,508) 2008 $26,837,974 ($2,238,851) 2009 $28,746,720 ($174,013) 2010 $35,649,069 $5,062,821 2011 $32,175,917 ($83,035) 2012 $32,426,726 ($466,695) 2013 $33,543,151 ($1,425,624) Totals $272,473,161 ($5,142,555)
What this shows is that the hospital made money in some years and lost money in others with an overall loss of $5 million on $272 million in revenue (not the reported $64 million.) This loss represents 1.9% of revenue for this 11 year period.
We know that the large losses starting in 2006 were the result of closure of the ICU, a decision that was anticipated to save the hospital $1 million annually but ended up costing $3 million. This decision along with a few others drove the hospital into bankruptcy in early 2007. When the ICU was reopened in fiscal 2008 with Dr. James Gude, it sent the hospital on a growth path that resulted in a very small loss in 2009, a $5M profit in 2010 and a small loss in 2011. It wasn’t until 2012 and 2013 that the hospital got into serious trouble again.
While this is obviously not a stellar record, it illustrates that good management makes the difference between profits and losses and that the decisions of hospital leaders are consequential to financial performance.
It has been represented in multiple places that it will take ‘millions of dollars in building repairs and upgrades to reopen the hospital.’ Some newspaper opinion pieces have pegged this at $20 million.
The sources for the information below are the facility manager for the district and the Foundation’s ongoing study of needed facility repairs and upgrades.
The hospital facility manager testified in public session that after a study, he estimated the cost of facility upgrades to reopen in a similar condition as the hospital was closed to be ‘in the neighborhood of $250,000’
The Foundation has had a study underway by two facility experts for the past 2 months working with the district’s facility manager to identify not only required repairs but desirable refurbishing and future facility needs. This includes new floors, cabinets, and paint for areas like the emergency room, which is not a technical requirement of reopening but a desirable upgrade. The final budget for facility capital improvements is still awaiting bids from contractors and subcontractors but the preliminary budget is somewhere close to $1 million in year one, well within the Foundation’s plans.
Preliminary projections for future years are also in the $1million a year range for 5-7 years. It should be understood that these figures are also well within the anticipated capital improvement budget that the Foundation is developing and half of what the district would have available from tax revenue. They also do not reflect the possibilities for grants and other funding for solar, HVAC upgrades and other energy savings, all of which could lower costs.
It has been proposed that all we need in Sebastopol is urgent care with lab and imaging.
The source for the following information is the billing history for the Palm Drive Emergency Room physicians. (When a patient is treated in an emergency room, physicians bill their insurance based on the diagnosis of the patient so physician billing indicates whether the patient’s condition was of an urgent (low acuity) or emergent (high acuity) nature.)
These data for 2013 indicate:
Low Acuity High Acuity Total Visits (Urgent Care) (Emergency) 1,111 6,226 7,337 Ambulance Arrivals 1,243 Arrive by Other Means 6,094 Code Strokes 97
What this data shows is that only 15% of emergency room visits were rated as urgent (low acuity) by the physician on duty. Also, only 17% of the ER visits arrive by ambulance.
It also shows that 97 people were treated for possible stroke. (Not all code strokes turn out to be a stroke so we don’t know from this how many actual strokes there were.) It is also important to note that the prior year had only 76 strokes so more strokes were showing up at Palm Drive in 2013 likely because the word was getting around that Palm Drive had a nationally recognized stroke program.
The important conclusion to draw from this is that an urgent care would only be appropriate for a small number (1,111) of the patient visits that the Emergency Room had in 2013. This also indicates that having an urgent care would not generate anywhere near enough traffic to support a lab or imaging department.
This view is echoed by the proposal that Memorial Hospital offered to the district to run urgent care with a small xray outside of the hospital (no MRI or CT scan.) Memorial would want the District to provide $2.5 million in subsidies to run 24/7 urgent care, more than the taxes the district currently has available.
It is generally understood that urgent care only works financially in an urban environment where there is a sizable population of patients who do not have a family doctor, a condition that does not exist in Sebastopol. But what is more important is that urgent care will not deal with the 97 code strokes, or the 1,243 ambulances or the 6,226 emergency cases. They would have to go elsewhere.
It has been stated in various places that the Foundation is dragging its feet in presenting a financial plan to the District.
Developing a financial plan to restart a hospital is a complex and time consuming process and one not to be taken lightly. The Foundation has had Paul Selivanoff, a CPA with many years of experience in hospitals both in start up and turn around situations working on this process for over 3 months.
While many of the financial details that have been worked out give confidence that Sonoma West Medical Center will be a viable ongoing business with a positive bottom line, a number of startup questions remain to be finalized including:
Pre-opening personnel requirements
Medical and Laboratory Equipment start up costs
The district’s bankruptcy settlement plan
Timing of obtaining accreditation and Medicare billing
Options for factoring Accounts Receivable
Without reliable data for these and some other important questions, it is not possible to produce final, accurate start up capital requirements. While we are all anxious to see the hospital opened, it would be unwise to create the expectation that financial projections are complete until they actually are.
It has been stated in opinion pieces in the press that the Electronic Medical Record software that the Foundation is proposing to use is not Meaningful Use certified.
The HarmoniMD meaningful use 2011 certification is still active. The inpatient certification can be viewed at the following site: https://oncchpl.force.com/ehrcert/eh...ting=Inpatient
The outpatient certification can be viewed at this site:
https://oncchpl.force.com/ehrcert/eh...ing=Ambulatory
It is the intention of EHRI Inc. to certify HarmoniMD under 2014 standards once there is acceptance of the plan to reopen the hospital and acceptance testing with the hospital medical team has been completed but this process costs $25,000 and there is no reason to do it unless the hospital is going to reopen and use this software, both conditions that remain to be finalized.
However 2014 certification is not required for Meaningful Use Stage 1 as indicated in this link to CMS rules regarding certification under 2011 standards: https://www.cms.gov/Regulations-and-...ilityChart.pdf
In this document, we see that hospitals can become certified for Meaningful Use Stage 1 with 2011 certified software systems. This would allow the hospital to reopen and be Meaningful Use Certified Stage 1 even if the software was not certified under 2014 standards though there is no reason to believe this would be the case.
If you have read this far, hopefully you are a bit more educated about the hospital and plans to open Sonoma West Medical Center on the Palm Drive campus. If you would like additional information, feel free to email me or post here. I am happy to dialogue with anyone about this important subject.
An enlightened citizenry is indispensable for the proper functioning of a republic. Self-government is not possible unless the citizens are educated sufficiently to enable them to exercise oversight… Thomas Jefferson
Farmer Dan