Due Diligence History

In 2014, PHCD launched a due diligence initiative to identify viable options for the continued operation of PVH after the lease expires. This process included a thorough evaluation of the following: current and future health care needs in our community; hospital operations and finances; current health care landscape locally, regionally and statewide; future trends in health care delivery; and future partnerships.

PHCD completed the first phase of gathering community input in March 2015, which included 1:1 stakeholder and focused group interviews of community, business and health care leaders, physicians and hospital staff. The purpose for undertaking the interviews was to understand the current strengths and barriers to meeting future health needs of the community, and to know the community’s perspective on priorities for hospital services in anticipation of the end of the current hospital lease. To view the the full report on these interviews, click here.

In May 2015, PHCD engaged in a formal Request For Proposal (RFP) process to identify a preferred operator of the hospital. The RFP provides a structure which allows the Board to differentiate between potential leasers or buyers and to give each responding organization an opportunity to articulate what makes them an attractive option for the community. The District has received multiple responses from interested parties, one of which is SJH, the current lessee. To review the RFP, click here.

In October 2015, PHCD closed the window for the submission of new proposals from potential operators and announced that four responders to its RFP will be invited to continue participating in the due-diligence and bid process. The potential operators are SJH, Sutter Health, Prime Healthcare Services, and Strategic Global Management. Over the next 60 days, the responding operators will complete their due diligence and refine their bids. During this 60 day quiet phase, PHCD is reaching out to the Southern Sonoma County community for input on prioritizing service offerings and final selection criteria that will inform the District in its discussions and negotiations regarding the future operatation of PVH.

In January, 2016 SJH and Prime Healthcare Services were chosen by PHCD to submit refined proposals for lease options to operate PVH.

In April, 2016 PHCD suspended negotiations with Prime Healthcare Services to focus out lease negotiations efforts with SJH.

At the April 19, 2016 Board of Directors meeting, members decided to revisit the feasibility of PHCD operating Petaluma Valley Hospital independently. Concurrently, the Board continued to concentrate on discussions with SJH. Should these discussions reach a standstill, PHCD will have the opportunity to re-engage with Prime Healthcare Services and its affiliates.

In October 2016, PHCD and St. Joseph Health officially ended negotiations regarding the future lease and operations of PVH. Multiple factors influenced this decision, including the inability to reach a workable agreement. PHCD is disappointed at this outcome, but will now concentrate efforts on working collaboratively with SJH on a transition plan. SJH has agreed to remain in full-service operation until September 1, 2017 or a mutually agreed-upon transition date to another operator. No changes to services or care delivery are expected during the transition period, and PVH is fully prepared to continue meeting the needs of patients and their families.

PHCD opened a second RFP process in Nov. 2016 and selected Paladin Health as the recommended operator of PVH under a long-term lease agreement. 
Due to complexities around the hospital’s Electronic Medical Record (EMR) system, Paladin proposed a management agreement rather than a lease agreement, which the District could not accept due to the financial resources required  for such an arrangement.   
SJH informed PHCD in spring 2018 that they were creating a joint operating company with Adventist Health that would offer an acceptable solution for providing family birthing center and women’s health services at PVH.   The joint operating company (NewCo) is currently under regulatory review.  PHCD and SJH have re-engaged in discussions.   It is the hope of both parties that NewCo will be approved by the Attorney General and a long term lease agreement to operate PVH will be reached.  

On October 31, 2019, the California Department of Justice Attorney General denied the proposed joint operating company combining St. Joseph Health and Adventist Health. While our intent for Petaluma Valley Hospital was to negotiate a long-term lease with the new joint operating company, we will revisit our discussions with St. Joseph Health on next steps.

St. Joseph Health continues to operate our hospital. To stay informed on the status of this process,  please visit our page dedicated to keeping our community updated on the process and listing ways to engage and receive updates.