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Your hospital is at risk

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Petaluma Valley Hospital does a terrific job serving this community. Publicly owned by the Petaluma Health Care District, capably operated (temporarily) by St. Joseph Health following the expiration of a 20-year lease agreement, and staffed by a highly skilled team of doctors, nurses and support staff, Petaluma’s hospital gets consistently high marks by patients and rating agencies alike. By all accounts, PVH is a gem.

Unfortunately, this wonderful public institution is now at great risk. An opinion piece in last week’s Argus-Courier, co-authored by PHCD’s CEO Ramona Faith and Board President Elece Hempel, contained this startling news: the company that the district selected more than a year ago to manage the hospital under a long term lease agreement, Paladin Healthcare, is backing away from that potential commitment after waiting far too long to obtain digital patient medical records from St. Joseph.

Paladin, a for-profit health care firm operating hospitals in Los Angeles and Philadelphia, can hardly be faulted for its decision. It is, after all, impossible to effectively manage a hospital without patients’ medical records. Under ordinary circumstances, during a transition in management the current hospital operator leases the hospital records system to the incoming operator. Paladin was ready to accept those records but, for reasons that are not entirely clear, St. Joseph says it will cost millions of dollars and 12 to 18 months to achieve this. A year has elapsed without any progress on this critical matter, leaving the hospital’s future in limbo.

Paladin has since offered to operate the hospital under a fee-for-service management contract. But that is unlikely to happen since the publicly-owned district is in no position to take on all of the risk because it lacks the financial resources to absorb any losses. Unlike most other health care districts, which are funded from property taxes, the PHCD receives no property tax revenue. South County residents might consider themselves fortunate to pay no taxes to support their hospital. Then again, such savings would offer scant comfort should the hospital wind up closing its doors.

Last week, a handful of PVH doctors, understandably frustrated with the stalled transition process, decided to lash out at St. Joseph, complaining bitterly about the loss of various ancillary hospital services over the years. While we can understand the doctors’ exasperation with the hospital’s current state of uncertainty, wishing and hoping that the former health care landscape and economic structure of the 1990s is going to miraculously reappear is a profound waste of time.

Also, assigning blame during a crisis only hampers constructive dialogue on finding solutions. On the whole, St. Joseph has done a good job for Petaluma over the last two decades and may well be a critical player in the long term sustainability of the hospital.

If some of the doctors wish to place blame for the hospital’s woes, there is plenty to go around. The Affordable Care Act is under vicious attack by Republicans in Washington, and as a result of the recently-approved tax reform bill, Medicare and Medicaid payments are likely to decline, meaning that hospitals and doctors will get less money.

PVH doctors could also blame Kaiser Permanente, which insures approximately 55 percent of Petaluma’s population and has for years diverted a sizeable number of patients away from PVH’s lucrative outpatient services. Kaiser patients may not care too much if Petaluma’s hospital goes away until the day they need emergency care. Then, when having a local emergency room means the difference between living and dying, they’ll surely think a lot differently about their local hospital.

The overriding goal for the Petaluma community and its locally-owned health care district is to ensure we have continued access to a high quality emergency room together with core healthcare services. But the face of the healthcare industry is changing rapidly across the country and those changes are only going to accelerate in coming years. As a community, we need to understand this reality and adapt to it.

To do so, PHCD should put all options on the table. First and foremost would be to reestablish negotiations with St. Joseph on the matter of a lease agreement or even a possible sale. Previously, district officials went into the negotiations with an inflated sense of the Petaluma hospital’s value to the St. Joseph system. Asking St. Joseph to sign a non-compete agreement was, in retrospect, not realistic and contributed mightily to the breakdown of talks in late 2016.

Providence Health, St. Joseph’s new parent company, has many competing priorities and Petaluma Valley Hospital is not, alas, at the top of their list. Last month, the Wall Street Journal reported that Providence/St. Joseph was in negotiations to merge with St. Louis-based Ascension. If approved, the merger would produce the largest hospital organization in the nation with 191 hospitals and nearly $45 billion in annual revenues, the newspaper reported.

Reestablishing negotiations with St. Joseph now will be much easier than waiting around until after the merger. For St. Joseph to remain in Petaluma, the community may need to accept that the money-losing obstetrics unit needs to go. The Novato Community Hospital has no obstetrics unit and non-Kaiser patients in Novato have their babies at Marin General, with few if any complaints. Such a model can and should be replicated in Sonoma County.

The district should also consider selling the hospital. If that’s what it takes to keep a quality hospital operating in Petaluma, then so be it. Such an agreement could include a stipulation that the new owner would sell the facility back to the district if they were unable to continue operating.

As district officials continue their pursuit of an ever-elusive solution to this wildly complex public health care quandary, we encourage everyone involved, including physicians, to support continued negotiations with St. Joseph and the careful exploration of all other alternatives available.