PHCD owns Petaluma Valley Hospital (PVH) and is currently negotiating a definitive agreement to transition and lease the hospital’s operations to Paladin Healthcare. Its current lessee, St. Joseph Health, is continuing to operate PVH to give the District time to reach an agreement with Paladin.
District and St. Joseph are currently discussing and developing agreed-upon terms of an operations transfer agreement. Our expectation is that all parties will work expeditiously to reach the necessary agreements.
For more information on the due diligence process PHCD undertook to select its new long-term operation, please click here.
PHCD’s Board of Directors and CEO are committed to helping the community stay up-to-date on the process and engaged in our progress.
Petaluma Valley Hospital Operations Transition Updates
These updates are aimed at providing information and an official perspective to all Petaluma Valley Hospital (PVH) medical staff, employees and volunteers on the work being undertaken by all three parties involved in this transaction. It is the expectation of the District that all three parties and their representatives make themselves available for important meetings and calls to keep the momentum and accomplish our common goal of a smooth transition. Please do not hesitate to contact Ramona Faith if you receive any information that is contrary to these communications or if you have concerns.
To review all of our updates, please visit our blog.
LATEST UPDATE: January 4, 2018
In lieu of our regular Update, we share an editorial published in the Argus Courier on January 4, 2018 from our CEO, Ramona Faith and PHCD Board President Elece Hempel.
Resolutions for PVH in 2018
The end of every year is a time to reflect on the year that was, and think of hopes and wishes for the coming year. Looking back, it’s easy to see what makes Petaluma a tremendous city and community. Families and businesses find it a desirable place to be, and we witnessed our community at its best when we came together in the most productive and heartfelt way to aid our friends in the north and east who suffered extreme loss from the devastating fires.
We are very proud of how our hospital, Petaluma Valley, responded in the time of crisis. As we’ve gone back to business as usual here in Petaluma, the experience was an important reminder of how beneficial this hospital is to our community and our county. Just last month, PVH received an “A” grade in the Hospital Safety Score by the Leapfrog Group, an independent national nonprofit. The Hospital Safety Score was developed by the nation’s leading experts on patient safety and validates PVH’s commitment to its patients and its community. It was the highest-scoring community hospital in Northern California.
The Petaluma Health Care District, your public agency working to ensure local access to health care and wellness services, has been striving to secure a new operator for PVH for the last two years. St. Joseph Health entered into a 20-year lease in 1997 and provided the community a larger health system, greater financial stability and expanded regional resources.
Unfortunately, and to our surprise, SJH abruptly ended negotiations for a new lease after nine months in 2016 because we couldn’t agree on fair market rent; a non-compete clause assuring that SJH would not compete with the hospital by offering services in Petaluma that could and should be offered through PVH; and maintaining women’s health services.
After pursuing a second RFP process, the District selected Paladin Healthcare, one of three bids received, based on its thorough proposal that aligned with community-identified priorities, demonstrated its strengths as an organization, and articulated a strong vision for PVH.
Paladin’s bid was a 20-year lease with an option for a 10-year extension. Paladin asserted that core services would be maintained, there would be heightened awareness and focus on sustaining quality, it would bring new services based on community need and physician input, and it was interested in cooperating and collaborating with SJH.
Our ability to secure this lease with Paladin faced significant challenges in 2017 while SJH continues to operate the hospital post lease expiration.
The information technology system at PVH, comprised of critical health documentation functions like medical records, is the biggest obstacle to Paladin’s ability to take over operations. SJH upgraded the hospital’s Meditech IT system several years ago. During that upgrade, the system moved from a standalone platform to a SJH-integrated system. The District, Paladin and SJH have been discussing how to develop a new IT system for PVH.
Transferring an IT system with a hospital is standard practice, oftentimes with the existing operator leasing back the existing IT system to the incoming operator while a new upgraded IT system gets up and running. SJH hasn’t agreed to leave a functioning IT system for a new operator since the current system is now part of a remote system. Developing a new system will cost millions of dollars and take 12 to 18 months.
In light of this, Paladin has restructured its offer from a lease to a management agreement proposal with the District because of the costs and complications involved with creating a new IT system, as well as the ensuing delays relative to transferring hospital operations. The District just received and will be reviewing this offer in January. Up to this point, a management agreement has not been considered due to the financial risk it places on the District and this community during these unpredictable times of rapidly changing health care economics and government policies.
The IT challenge needs to be resolved before Paladin — or any new entity — will come in and operate PVH. This major and costly issue for all three parties coupled with the uncertainty PVH doctors and staff are voicing about the hospital’s future are hurdles to tackle, reengage and resolve in 2018.
Throughout this two-year process, we’ve experienced a head-on collision with the changes in health care related to business, politics, technology and how care is delivered. It has caused us to think differently about adaptability and a long-term plan to ensure PVH’s vitality well into the future. Health care delivery will continue to change, but local access to core hospital services still needs to be provided to Petaluma residents. This includes a quality emergency room and the hospital services required to support an ER. PVH sees 18,000 ER patients annually, making it one of the busiest emergency providers in the county.
Keep in mind that California doesn’t allow free-standing ERs that are not attached to a hospital, and PVH does not meet the criteria to be deemed a critical access hospital, like Adventist Health Clearlake, Healdsburg District Hospital and Redwood Memorial Hospital in Humboldt County, a SJH-owned hospital. Regardless, we believe core services of the hospital should remain available and be sustained in Petaluma. We are steadfast in our aim to maintain and potentially augment these vital services at PVH.
On behalf of the District Board of Directors, we will work very hard in 2018 to tackle the difficult task of navigating the regional health care needs, balancing those with sweeping changes in health care delivery, and defining PVH’s future under these circumstances. We understand the community’s, physician’s, and employee’s concerns about an uncertain future and are listening to what they have to say, and we want to continue being open with the process and its challenges. With the holiday season behind us, we look forward to discussions with SJH to address the IT barriers and reviewing Paladin’s management agreement proposal.
One thing is for sure, this community needs and deserves a cooperative and collaborative process and a resolution for PVH – a critical asset in Petaluma serving all of Southern Sonoma County.