Burns: How to solve hospital dilemma

Uncertainty is the watchword for 2020. We speculate about when the pandemic will end and life gets back to normal. When will our kids go back to school? Will the economy recover? Will Donald Trump win reelection?

At this point, no one really knows the answer to any of these questions.

But in a year of nerve-racking uncertainty, there is a November ballot proposition aimed at finally extinguishing years of uncertainty over the fate of Petaluma Valley Hospital: Measure CC.

Petaluma’s hospital is an extraordinarily vital community institution which we should not take for granted. Its importance became readily apparent during the devastating wildfires of the last few years and was further underscored this year during the coronavirus pandemic.

Still, for the last several years, the hospital’s future has been in a state of perpetual limbo. That’s because no health-care organization could be found to operate the facility under contract with the Petaluma Health Care District, a small public entity which owns the building.

Following the expiration of a 20-year lease management agreement with St. Joseph Health in 2017, negotiations aimed at having the Catholic healthcare provider continue operating the hospital broke down over financial terms and St. Joseph’s decision to discontinue providing women’s reproductive health services which are at odds with the institution’s religious precepts. The district subsequently launched a robust multi-year search for a new operator but that failed when no qualified applicants came forth. Leasing a hospital from a community health district, it seems, no longer makes good economic sense for health care providers.

While St. Joseph has continued to operate the hospital on an interim basis throughout, its uncertain future has hampered physician recruitment, employee retention and long-deferred building improvements.

Early this year, as frustrations continued to mount, the district and St. Joseph came back to the table for one last try and a new idea: Providence Health, St. Joseph’s parent company, had a secular affiliate managing another non-Catholic hospital in the northwest; perhaps the affiliate company could also manage and operate PVH.

Initially, it sounded like a great plan. But it wasn’t long before negotiations ran aground over who would pay for a host of costly but very necessary capital improvements to the hospital building.

As the renter, St. Joseph could not feasibly invest money in a building it didn’t own; such costs should be borne by the property owner. But the district could not afford to pay for improvements to its property because, unlike most other community health care districts, residents here pay no property tax to support health care services. Without any property tax revenue, and the bulk of the district’s operating budget derived almost exclusively from lease payments, there was little money available for capital improvements.

So, according to St. Joseph CEO Kevin Klockenga, “We decided to flip the conversation from a lease to a prospective purchase.” Within a few months, the district had agreed to sell the hospital to Providence St. Joseph’s secular affiliate, NorCal HealthConnect, for the appraised fair market value price of $52.6 million, provided the hospital continues operating for at least another 20 years. Measure CC on the November ballot would allow the sale to proceed — by law, the local electorate must ratify whatever agreement is forged by their elected district representatives.

Elece Hempel, the district’s board president, told me that the proposition makes good sense for Petaluma residents. “This ensures we have a hospital for another 20 years,” she said. “They are going to invest $50 million in infrastructure improvements and will also invest in the nurses and other employees at the hospital.”

If the sale goes through, the hospital will be offering several new programs and services, said Hempel. To ensure transparency, she added that a community representative from the Health Care District will sit on the hospital’s new board of directors. Kaiser Permanente patients suffering a major medical emergency can still be treated in a timely manner at the PVH’s emergency room.

As a result of the sale, the public health care district will receive an infusion of more than $50 million to help address a wide variety of community health issues including mental and behavioral health, homelessness, senior wellness and health equity. Hempel told me the district can leverage this money to obtain community health grant funding from regional and national nonprofits outside the county.

Measure CC is clearly a win-win for the community and the very talented people who have been operating our hospital for the last 23 years. It’s supported by numerous community and business leaders and doctors, and no argument was submitted against the measure.

However, in an Argus-Courier guest commentary last week, the PVH nurses’ union president publicly advocated against voter approval of the measure, presumably to pressure St. Joseph to settle what has become an extraordinarily protracted multi-year contract negotiation. St. Joseph has acknowledged their employees deserve better and recently awarded all nurses a 5% pay increase as a good faith gesture with a promise for more money once a contract is finalized.

No one can argue that the nurses don’t deserve better pay and benefits, especially with what they have had to contend with during the pandemic. But tying the contract negotiations to this very well-crafted ballot measure would only extend the crippling uncertainty over the hospital’s future.

Soaring costs and dwindling revenue streams, coupled with economic uncertainties and ever-shifting national health care budgets make operating a hospital today an extraordinarily difficult proposition. The dramatic and often unpredictable changes in healthcare are causing hospitals to close nationwide.

Preventing that from happening here is now up to local voters.

(John Burns is former publisher of the Petaluma Argus-Courier. He can be reached at john.burns@arguscourier.com)