Petaluma’s most important public healthcare decision in a generation is being deliberated by elected officials that make up what is likely the city’s lowest profile and least understood body.
The future of Petaluma Valley Hospital, the city’s lone acute care facility, is squarely in the hands of the five elected members of the Petaluma Health Care District board, an organization whose meetings are typically sparsely attended and often held behind closed doors.
The district, which implements initiatives aimed at increasing public health outcomes in Petaluma, is also the custodian of the publicly-owned 80-bed hospital. For the past 20 years, the district has leased the hospital to St. Joseph Health, the Catholic healthcare provider that also operates Santa Rosa’s Memorial Hospital.
For at least the past two years, with the St. Joseph contract coming to an end in January of this year, the district has been engaged in talks, mostly away from the public’s view, to choose a successor to operate the hospital. Public boards are allowed to hold private meetings in order to discuss real estate deals and other financial transactions for which the public would benefit by keeping the negotiations confidential.
Early talks centered on renewing the contract with St. Joseph, but late last year those discussions abruptly ended when a deal could not be reached. Sticking points that the two sides identified included financial terms of the lease and women’s reproductive services, which St. Joseph was no longer willing to perform.
The breakdown of talks with St. Joseph prompted the district to relaunch its search for a suitable hospital operator. Three companies responded to a request for proposals — El Segundo-based Paladin Healthcare, Paladin spin-off Pipeline Health, and KPC Health.
In February, the district selected Paladin as its preferred operator, a choice that must be ratified by district voters. Since then, Paladin has been working with the district on a transition agreement. Once that step is completed, district officials say they can put the contract with Paladin to voters on a future ballot. St. Joseph has agreed to stay on until the hand-off is complete.
“This is probably the most important and critical decision this board is going to be making, period,” said Ramona Faith, the district CEO.
The district was formed in 1946 as the owner and operator of Petaluma General Hospital, a predecessor of Petaluma Valley Hospital. The district encompasses all of Petaluma, and much of the surrounding area, including Penngrove and the unincorporated area to the Marin County line and along Highway 37.
The district currently does not tax residents, and historically the district has not collected a tax. It would need to operate the hospital to tax residents. Instead, the district earns its revenue from rental properties, the hospital lease, investments, grants and as a distributor of Lifeline medical alert products and HealthQuest AEDs.
According to the latest district financial statement from 2015-16, revenue for the year was $2.05 million, including $1.2 million from Lifeline products, $130,000 from HealthQuest, $100,000 in rent from a medical office building, $94,000 in note interest and $62,000 in investment revenue. The annual lease payment from St. Joseph was $419,000. The lease arrangement included St. Joseph paying off $17 million in bonds.
Salaries for the district’s 15 employees — half of whom work as Lifeline representatives — was $815,000, including Faith’s salary of $206,000. Expenses for consulting and legal issues around the hospital transition totaled $400,000. The district paid $161,000 in programs and scholarships.