Small Sonoma Hospitals in Financial Peril
Once a "fixture of stability" in their respective towns, the five small hospitals in Sonoma County are facing growing financial difficulties in a health care environment ill-suited to their survival, the Santa Rosa Press-Democrat reports. Since 1995, these hospitals -- Sonoma Valley, Petaluma Valley, Healdsburg General, Sebastopol's Palm Drive and eastern Santa Rosa's Warrack -- have all "either switched owners, downsized, been ditched by a corporate suitor or gotten hitched to a more wealthy partner." Officials at Healdsburg estimate the hospital's 2000 losses at $2 million, while Palm Drive officials believe theirs to be $1.9 million. While Sonoma's hospitals have suffered from the same problems of reimbursement and rising health care costs that have affected nearly all state hospitals in recent years, the Press-Democrat explains the specific ways in which the county's small hospitals have been hurt:
- HMO Cost-Cutting Measures: Towards the end of the 1990s, HMOs in the county took several steps to reduce costs, including encouraging patients to seek outpatient care in less expensive medical offices instead of small hospitals. This left the hospitals "holding on to beds [and equipment] for which there was reduced use, which proved hardest on small hospitals with less flexibility to offer different services."
- The Uninsured: The smaller hospitals draw a higher percentage of Sonoma's roughly 75,000 uninsured patients, whose medical expenses often go unreimbursed.
- Leverage: Because they treat relatively few patients, small hospitals have "little bargaining power when negotiating with insurers for reimbursement levels."
Last week, the Nuestro Hospital Group, which owns Healdsburg, announced the closing of the facility's maternity and intensive care units, in addition to laying off 65 of its 300 employees and reducing in size from 43 beds to 15 beds. "We tried every way to stay a full service hospital, but we reached the point where we had to stop bleeding money," Dr. Dan Rose, president of the Nuestro Hospital board, said. Palm Drive is considering closing its emergency room at night. The model for a successful small hospital, however, may be Petaluma, which moved "toward a management by lease arrangement" with St. Joseph's Health System in 1997. While the deal was criticized when first proposed, many experts now believe the move was "prescient"; Daymon Doss, CEO of Petaluma Health District, said that while the hospital still faces many financial problems, without the agreement, "Petaluma Valley's reserve funds would have been exhausted" by last year. "The five hospitals are changing more by circumstance than by choice -- others might have chosen our model if there was an opportunity to do so," he added, (Rose, Santa Rosa Press-Democrat, 3/4).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.