Meeting Summary (8-14-06)

Affiliation with St. Joseph Memorial Not in the Cards for SVH

Addressing the Sonoma Valley Health Care Coalition at its regular Monday meeting at Vintage House, George Perez, CEO of St. Joseph Memorial Hospital in Santa Rosa, extinguished any hope that Memorial would entertain a financial or operating affiliation with Sonoma Valley Hospital as a solution to the Valley’s need for a new viable hospital facility.

Perez, along with Mark Knight, St. Joseph’s Vice President of Strategic Services, was invited to address the Coalition, which is exploring a variety of options for a new healthcare system in the wake of the defeat of Measure C.

Bob Edwards, Co-Chair of the Coalition with Steve Pease, explained that numerous Coalition participants had asked whether taxpayer burden for a new facility might be reduced, and operating margins for the hospital improved, if the hospital entered into a joint relationship with Memorial, as has Petaluma Hospital and Queen of the Valley hospital in Napa. With interest in the subject high, the Coalition wanted to hear Perez discuss that possibility directly.

“I think we got the answer tonight,” said Edwards, who observed that “Though it wasn’t what we might have liked, at least we have laid that possibility to rest and the Coalition can focus on other Options. It’s part of what we are trying to do – working through information and options to see what will work best -- financially, operationally and for the voters. Part of learning what will work includes learning what will not.”

Perez distinguished Sonoma Valley’s situation from that of Petaluma and Napa hospitals, noting that the latter do not have the extensive seismic issues facing Sonoma Valley Hospital, with its implication of greater construction costs. He also said that the 80-bed Petaluma Hospital, like Napa’s and unlike Sonoma Valley, serves a far larger population (about 100,000 in its service area) and draws revenue from a greater pool of patients. Napa, he noted, also depends heavily on a very generous philanthropic income of some $12 million a year.

Pressed by several members of the audience seeking his opinion as to the threshold size of hospital which would be financially viable in Sonoma, Perez and Knight declined to speculate, noting there were many variables. Both said that in the current and anticipated health care environment, it will be difficult for small general hospitals to survive without taxpayer support of some kind. Small private for-profit hospitals are more likely to be successful, he noted, because they typically focus on high-margin or niche business and do not attempt to serve the medical needs of the general community.

Perez made it clear that constantly increasing costs and continually shrinking payor reimbursements, Memorial is not looking for additional relationships with other small hospitals, for financial reasons. “Though Sonoma has a high wealth base and is better off than many small hospitals, things are tough for small hospitals everywhere, and they have a very hard job,” he said. Noting that Petaluma lost $700,000 last month he said that small hospitals do not enjoy the benefits of high volume to stabilize ups and downs in patient load and revenue, and high fixed overheard costs can’t be reliably covered each month. He did not see that changing, given the on-going reductions in reimbursements from Medi-cal, Medicare and private insurers.

Like all speakers who have addressed the Coalition on a variety of topics since its inception on May, Perez and Knight devoted ample time to take numerous questions from the floor.

At the Coalitions August 21st meeting, attorney Mary McEachron will provide information and answer questions on eminent domain and restrictions pertaining to the use of the current hospital property. Also on the program will be an explanation of seismic code requirements by Michael Van Pelt, Principal, Van Pelt Construction Services, Suisun City, and Bill Dasher, S.E., Principal, DASSE Design, Oakland

On August 28, the Coalition will hear a presentation of a new hospital Option put together by the hospital and staff physicians. After a Labor Day break, Dr. Henry Grause and architect Michael Ross will return on September 11 to present the Coalition a two-pronged Option, including a newly developed proposal for a privately financed and operated hospital.

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