The public district that owns Petaluma’s only acute-care hospital is charting a new course after negotiations collapsed with a leading organization to run the facility, setting a new target of June 2017 for a public vote to approve an eventual new operator and contract.
The new timeline gives interested hospital companies until Jan. 31 to submit a final bid, and gives the Petaluma Health Care District, which owns the hospital, until March to chose their front-runner, said Ramona Faith, district CEO. Five operators had signed non-disclosure agreements in order to access in-depth data on the hospital as of Tuesday, an early sign of interest in a possible bid, Faith said.
“What it tells us is that we have five interested parties,” Faith said, adding that it was still “no guarantee” that each of the bidders will submit an offer by the end of January.
The reopened process follows the end of negotiations last month involving 20-year operator St. Joseph Health, six months after the district revealed it was focusing its talks on the incumbent. The district announced last October that four organizations, including St. Joseph, had submitted bids to operate the 80-bed, acute-care hospital after the end of the current lease in January.
With the lease set to expire, St. Joseph has agreed to continue to operate Petaluma Valley on an interim basis until Sept. 1. Spokeswoman Vanessa deGier confirmed that her organization would not be returning to the table to negotiate over a future lease.
“We realized after nine months of negotiating that we were still apart on several terms, and additional negotiations weren’t going to change that,” deGier said.
The impasse reportedly centered on three main issues: financial terms, a non-compete clause and the ongoing providing of a female sterilization procedure called tubal ligation that was against the Catholic-based St. Joseph’s latest ethical and religious guidelines. Faith said it was St. Joseph that moved to end the negotiations.
The CEO noted that the relaunched process to secure a new hospital operator would be significantly shorter than the previous round, which included months of closed-door talks and at least one request for an updated bid from each of the four interested parties.
“The process took much longer because we were working on a deal with St. Joseph, who we have a 20-year history with,” she said.
An initial request for proposals went out in May 2015, approximately one-and-a-half years before the end of negotiations with St. Joseph. Sutter Health, Prime Healthcare Services and Strategic Global Management also responded to the RFP, and Prime joined St. Joseph in submitting a follow-up bid.
Faith declined to share the names of the hospital companies that have signed the new non-disclosure agreement, citing the ability of the public entity to keep those details confidential to avoid undermining the competitive process. Yet she spoke generally that the level of interest boded well for Petaluma Valley, acknowledging that public speculation had swirled as to who, if anyone, might step up to the plate after St. Joseph.
“We are going to continue to have a quality, community-based hospital. The only thing I can’t say is who the operator will be,” she said, noting that the district is seeking an offer to lease, not buy, the hospital.
Speculation over the future has extended to hospital employees, including whether their jobs will be secure under a new organization. The National Union of Healthcare Workers asked the district’s board of directors to ensure the hiring of employees it represents as a condition of any bid, and representatives of the California Nurses Association were on hand at a recent meeting to voice their own concerns.