Palm Drive Health Care District hires outside management
MARTIN ESPINOZA
THE PRESS DEMOCRAT | July 8, 2016
In the latest move to save Sebastopol’s hospital from financial collapse, hospital district officials have handed over executive, financial and administrative responsibilities to an outside consultant with expertise in stabilizing hospitals and making them profitable.
On Friday, at a special meeting of the Palm Drive Health Care District, which provides funding and oversight for the hospital, board members approved a subcontract between the current hospital management group, Sonoma West Medical Center, and Pipeline Health, which owns and operates four hospitals in the Los Angeles area, as well as a university-owned hospital in Washington, D.C.
“Pipeline has an amazing track record,” said Dan Smith, president of the board of directors of the nonprofit Sonoma West Medical Center. “They’ve taken on hospitals in the heart of Los Angeles, in some of the most underserved communities, I would say, in America and made those hospitals successful in pretty short order.”
Under the agreement, Pipeline would be paid $125,000 a month for the services during the first six months. The fee would increase to $150,000 a month during the next six-month period. The fee would increase 5 percent annually each year thereafter.
Pipeline would also receive 50 percent of hospital earnings, though only after the hospital achieves an extended period of profitability and shores up $1 million in reserves. As part of its services, Pipeline will provide a chief executive officer, a chief financial officer and up to 10 other specialists, including an interim controller, revenue cycle expert, corporate medical director and senior financial analyst.
The agreement also stipulates that Smith, whose software company supplies the hospital’s electronic health record system, give the hospital a $3 million donation to help pay the hospital’s bills during the transition. That money will be allocated on a monthly basis and is already being spent, Smith said.
At Friday’s meeting, Smith pointed out the agreement between Sonoma West Medical Center and Pipeline does not place any financial obligations on the hospital district, nor does it make the district liable should the hospital ultimately fail.
“In the first month we expect to see improvement financially,” he said, adding that contracting with Pipeline eliminates the need for hiring a string of separate consultants.
In a presentation by Pipeline outlining the current management expenses, the monthly cost was $155,483 compared to Pipleline’s proposed $125,000.
At the meeting, the hospital board also approved designating Pipeline’s COO Luke Tharasri as the medical center’s new CEO, and Pipeline’s CFO as the medical center’s CFO. Under the contract, “senior executives” will be required to spend a minimum of 40 hours a week of onsite time.
“We want to get this done right immediately,” Tharasri said.
You can reach Staff Writer Martin Espinoza at 521-5213 or [email protected].