Healthcare officials pitch hospital sale

Petaluma healthcare officials are pitching the community on the sale of Petaluma Valley Hospital to a Providence St. Joseph Health affiliate, saying it is the only way to ensure the long-term survival of the city’s only hospital.

St. Joseph, meanwhile, promised to invest $100 million in the hospital if voters approve the sale to NorCal HealthConnect, the Catholic provider’s secular affiliate. The deal would require the future owner to keep the hospital and emergency department open for at least 20 years and provide all current services. The family birthing center would be required to stay open for at least five years.

Voters in the Petaluma Health Care District must approve the $52.6 million sale, which is on the November ballot as Measure CC. Health care district officials have been holding online public meetings to build support for the measure. The only notable opposition to the sale is from the Petaluma Staff Nurse Partnership, the union that represents Petaluma Valley nurses.

Elece Hempel, president of the health care district board, said at a Friday forum that the deal is good for the long-term viability of the hospital.

“It’s important to recognize that a 20-year commitment is a very solid commitment to ensure that we have core services and an active ER,” she said. “We’ve seen giant changes in even the last 10 years on how hospitals are operating and their margin is narrower and narrower.”

Hempel said that the deal before voters is the result of a five year search for a hospital operator. A failed ballot measure, she said, would continue that process, resulting in more uncertainty for the 80-bed facility.

“Not having the ballot pass would trigger a need for us to find and try to sway another organization into running the hospital,” she said. “We did that before. We had options.”

St. Joseph has operated Petaluma’s only hospital on an interim basis since its 20-year lease expired in 2017. The district entered talks with St. Joseph to extend the lease, but negotiations ended over financial terms, a non-compete clause and an unwillingness to provide some female reproductive services. St. Joseph Health merged with Washington-based hospital giant Providence Health in 2016.

The district then selected Paladin Healthcare to lease the hospital in 2018, but that transaction ended when the Southern California company was unable to invest in an expensive electronic medical record system. Providence St. Joseph and Adventist Health attempted to form a joint operating company that was in talks to take over the hospital, but state Attorney General Xavier Becerra denied the move.

Kevin Klockenga, CEO of St. Joseph’s Northern California region, said the company would invest millions of dollars into the facility beyond the $52 million purchase price. He said the company would replace the roof, upgrade the heating and cooling system, add a new electronic medical record keeping system and do required seismic upgrades.

“We’re very excited about this,” he said. “What’s really special about the purchase option versus the lease option is it really opens up the door to really allow us to invest in the hospital in ways that you wouldn’t do as a renter.”

Klockenga said the company is looking at adding new services at the hospital, but he declined to say which ones.

Petaluma Staff Nurse Partnership, the union that is in tense negotiations with the hospital operator, has previously come out against the sale. Jim Goerlich, president of the union, did not return messages seeking comment for this story, but the union’s website continues to advocate against the sale.

Klockenga said St. Joseph would like to conclude the contract negotiations with the nurses union as quickly as possible.

“Our nurses need to be paid more,” he said. “We’re anxious to get that done as quickly as possible because they are sitting today with compensation that’s below market and we need to get that resolved quickly.”

If the sale is approved, the public would no longer control the hospital and transparency would likely decrease, said Ramona Faith, the health care district CEO. But, she said, the district could use the sale proceeds to invest in healthcare programs in southern Sonoma County, including homeless, mental health and senior wellness services.

“It will create a substantial corpus available to fund operations and community health benefits for the district population,” she said.

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