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Paladin, St. Joseph work through Petaluma hospital transfer agreement


The Petaluma Health Care District board last week decided to postpone submitting a ballot measure for the new Petaluma Valley Hospital lease to provide more time for the current and future operators to work out a complex transfer of operations agreement.

The district earlier signaled an intent to set a public vote on June 6 to ratify the operating agreement with Paladin Healthcare, the district’s preferred choice to take over the hospital from St. Joseph Health. March 10 was the deadline to submit a measure for the June ballot.

The transfer of operations agreement needs to be in place before Paladin can finalize its lease for the publicly-owned hospital, said Ramona Faith, CEO of the health care district. She said she hoped the agreements would be finalized by June, in order to put the contract to a vote in August.

“We don’t have a defined timeline,” she said. “We need more answers before going to the public for a vote.”

A 20-year lease with St. Joseph expired in January, and the organization has agreed to operate the hospital until the transition to Paladin occurs. The Catholic healthcare provider was considered a front runner to continue operating the 80-bed hospital, but talks on extending the lease broke down last year over financial terms and women’s reproductive health services.

After reopening the bidding process, the district announced last month that Paladin had been selected as the top bidder to run the hospital. Pipeline Health and KPC Group also submitted bids.

Petaluma Valley would be the first northern California hospital for the El Segundo-based Paladin Healthcare, which operates four southern California hospitals and has a management agreement with Howard University in Washington, D.C.

Two Paladin officials visited Petaluma this week to meet with key stakeholders including doctors and hospital foundation board members. Gary Frazier, Paladin’s senior managing director of business development, told a stakeholder group that the company has traditionally sought to turn around struggling hospitals, but did not see that model in Petaluma.

“When we got wind of Petaluma, it had nothing to do with the thought that we could turn this hospital around, what Paladin has traditionally done,” he said. “We saw this gem. This hospital is very well run. We’re excited to be here.”

Barry Wolfman, president of Paladin, said the company is committed to investing in the hospital and growing services.

“You can’t cut your way to success,” he said. “Our interest here is to grow and provide value to the community.”

Wolfman said he believes the hospital “will be profitable on day one.” He said Paladin plans to operate Petaluma Valley as a standalone hospital, in contrast to the arrangement St. Joseph had with its hub of Santa Rosa Memorial Hospital.

Wolfman said that there is still a role for the Petaluma Valley Hospital Foundation, which raises money for equipment at the hospital. But since Paladin is a for-profit company, that role will likely be different than the one the foundation served under the nonprofit St. Joseph.

Paladin plans on being in Petaluma for the longterm, Wolfman said, noting that the company and the health care district are negotiating for a 20-year lease.

“We’re not here to make a quick buck,” he said. “We came here to provide a service to the community.”

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