Paladin selected to run Petaluma Valley Hospital

The southern California company is in line to take over hospital operations from St. Joseph Health.|

A southern California healthcare company is in line to become the next operator of the publicly-owned Petaluma Valley Hospital.

The Petaluma Health Care District board last week selected Paladin Healthcare as its top choice from among three companies vying to take over operations from St. Joseph Health. The board must still reach a final agreement with the El Segundo-based healthcare company. District voters will also need to ratify the agreement on the June 6 ballot.

Pending those approvals, Paladin Healthcare, which operates four southern California hospitals and has a management agreement with Howard University in Washington, D.C., would take over the hospital by Sept. 1. St. Joseph, the current operator of Petaluma’s only acute care facility, was in negotiations to extend its 20-year lease of the hospital, but talks ended without a deal last fall.

Ramona Faith, CEO of the Petaluma Health Care District, said that Paladin was committed to maintaining core services at the hospital and investing in the facility. The company has pledged to continue employment for current hospital staff for at least six months and would honor existing union contracts, she said, and is looking to sign a longterm lease.

“Paladin Healthcare articulated a strong vision for the future of Petaluma Valley Hospital,” Faith said.

A union that represents Petaluma Valley Hospital workers said it was glad the preferred operator has made overtures toward employees, and called for an open negotiation process.

“We’re happy to hear the hospital district say that Paladin will honor our contract, and we look forward to speaking with them about the future of our hospital,” said Patricia Barnett, a radiology technician and member of the National Union of Healthcare Workers. “Right now, it’s critical that both parties be transparent during negotiations so that everyone can see what protections are being put in place to safeguard patient care and working conditions.”

Petaluma Valley Hospital would be the first facility in northern California for Paladin, which is looking to expand its footprint in the state, according to Gary Frazier, senior managing director of business development for Paladin Healthcare.

“What we are interested in are community hospitals. That’s our bread and butter,” he said. “What attracted us to Petaluma Valley is that it is a true community hospital. It’s about being part of a community.”

The company was chosen after a search process that was reopened after St. Joseph pulled out in October. St. Joseph has agreed to continue managing the hospital until Sept. 1 and work with the new operator on a smooth transition, Faith said.

Two other companies also submitted bids - KPC Health Inc. and Pipeline Health, which operates Sebastopol’s Sonoma West Medical Center.

Fran Adams, a healthcare district board member, said that Paladin’s commitment to keeping the current hospital employees was a factor in their successful bid.

“One concern has always been the employees of the hospital,” she said. “We were looking for verbiage to protect our employees. Paladin has always been respectful about keeping our staff.”

In addition to healthcare management, Paladin’s financial arm, Paladin Healthcare Capital, has completed more than 175 transactions totaling more than $4 billion, according to the company. Jo Thornton, a Petaluma Healthcare district board member, said that the company’s access to capital was attractive.

“I’m supportive of the Paladin proposal because it is allied with sound financial resources,” she said. “They have a solid financial arm, which comes with investment and risk protection to keep Petaluma Valley Hospital in operation during hard times.”

Faith said that the district would continue to negotiate with Paladin to reach a final deal to send to the voters in June.

Elece Hempel, the district board president, said the next step involves reaching out to the community to explain the district’s choice of Paladin to run the hospital.

“As we move into the next phase, we need everyone’s help to get voter approval,” she said. “We’re at the base of the hill. We have a long way to go.”

(Contact Matt Brown at matt.brown@arguscourier.com.)

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