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Hospital talks back on track

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If breaking up is hard to do, then getting back together is even harder. The Petaluma Health Care District is just now learning that tough lesson.

Following a collapse of negotiations with St. Joseph Health, the operator of Petaluma Valley Hospital, the district spent more than a year speed dating other potential hospital operators. This all occurred while the district, which owns the hospital, and St. Joseph were locked in an awkward dance, brimming with angst and uncertainty, to determine how a final separation could be achieved.

Finally, last week, it was announced that the two parties had agreed to reopen negotiations. This is good news for the community and local health care providers searching for clarity on the future of Petaluma’s hospital.

Petaluma Valley Hospital does a terrific job serving the community. Staffed by a highly skilled team of doctors, nurses and support staff, Petaluma’s hospital gets consistently high marks by patients and rating agencies.

St. Joseph Health has capably managed the hospital on a lease since 1997. Several months before it expired in 2017, the district began talks with St. Joseph on extending the lease. But in October 2016, talks between the district and St. Joseph abruptly ended with the two sides headed for a complicated, messy divorce. Officials gave three reasons for the breakup: financial terms, a non-compete clause, and differences over women’s reproductive health services.

After a request for proposals turned up a trio of lackluster suitors, the district settled on the best of the bunch, Paladin Healthcare, a southern California operator specializing in running hospitals in large, economically distressed urban areas. But Paladin’s prospects dimmed when it became apparent that it could not provide a modern medical records system, while Petaluma Valley Hospital’s electronic medical records could not easily, or affordably, be extricated from St. Joseph’s integrated system.

Paladin offered to operate the hospital under a fee-for-service management contract. But the district was in no position to take on all the risk of operating the hospital since it lacks the financial resources to absorb any losses. Unlike most other health care districts across the state, which are funded from property tax revenues, the PHCD receives no property tax revenues.

Earlier this year, a new partnership between St. Joseph and Adventist Health to jointly operate their northern California hospitals seems to have given St. Joseph the flexibility to return to the bargaining table with local health care district officials.

So now, nearly two years later, we are back to where we started with the Petaluma Health Care District and St. Joseph Health trying to negotiate a long term lease of the hospital or even the possibility of the facility being sold to St. Joseph.

The overriding goal for Petaluma’s health care district officials is to ensure continued access to a high quality emergency room and core healthcare services. But the healthcare industry is changing rapidly across the country and those changes are only going to accelerate in coming years.

The district, whose operations are overseen by five elected officials, must consider all options, including the prospect of selling the hospital. If that’s what it takes to keep a quality hospital operating in Petaluma, then so be it.

St. Joseph has been a very good steward of Petaluma’s only acute care hospital, and there is good reason for this community to want it to continue operating the facility. It’s been a long, rocky two years, and the continued uncertainty about who will operate the hospital in future years has eroded its ability to recruit and retain the talent needed to ensure the kind of high quality care Petalumans are accustomed to receiving.

Still, the resumption of negotiations between St. Joseph and the health care district gives us hope that a new arrangement will be forged to restore long term stability to Petaluma’s hospital.