NEW KID — New board member Randy Kaufmann bookended by Dennis Colthurst and Richard Power.

Palm Drive Health Care District is looking to define itself as it reaches the next chapter of its existence.

At the board of directors meeting on Aug. 5 at Sonoma Specialty Hospital, the board directed staff to craft a request for proposal for legal opinion of Measure W and changed a section of its bylaws.

The examination of Measure W was brought forward by Director Richard Power. Measure W is the ballot measure that was created to keep the doors open at Palm Drive Hospital, now Sonoma Specialty, by replacing the existing district tax with a $155 parcel tax.

The concern from Power was that the district may not be operating within the scope set forth in the measure and that the district may be open to a lawsuit alleging misuse of taxpayer money.

The change of the district’s scope comes after the possible sale of the hospital to AAMG, which is leasing it with an exclusive option to purchase. The district also recently had its bankruptcy plan approved and its bond refinancing closed on July 25. This has all been part of the effort for the district to exit the hospital business, which it stated as its intent during the bond refinance process.

Without a hospital to run, Power said a legal opinion would help clarify what the district can spend Measure W money on. This will be important as the district decides whether to pursue a number of options for its future purpose, from dissolution to promoting health more like a health action chapter.

He said he preferred outside counsel to render an opinion and estimated the cost to be between $20,000 and $30,000. There were no objections from the rest of the directors, with Director Gail Thomas the most vocal supporter of the idea. Director Eira Klich-Heartt was absent.

The district also changed part of its bylaws, eliminating the governing board of the hospital. More changes were included to the bylaws, but there was issue taken by Power that the bylaws still included fallback language should the district get back into the business of running a hospital.

The revisions were crafted by Palm Drive’s attorney Bill Arnone. He said he made the revisions to include a backup plan so that language would be in place if AAMG chooses not purchase the hospital.

Power said there would have to be changes made to the district should that happen anyway and felt the proposed language kept the district’s mission ambiguous.

The board’s position on detachment efforts was also brought up. The board had agreed that it would take no side on the matter at the onset of the Bodega Bay detachment effort, which was ultimately successful.

Both Executive Director Alana Brogan and Thomas appeared at detachment meetings in front of the Local Agency Formation Commission. Brogan spoke in favor of the district keeping Bodega Bay and Thomas advocated for the protest period extension sought by those wanting to stay in the district.

Brogan said that she “felt free to talk to LAFCO,” but Power chastised her, saying that her actions went directly against what the board established.

Thomas said that she wanted the extension in order to give enough time to listen to all sides and did not lean one way or another. A member of the public said that by advocating for the extension, Thomas had taken a position.

 Bankruptcy breakdown

Brogan also gave an update on what the district has to pay on its bankruptcy. The total payout is around $7.74 million, with $2.5 million to pay out by the end of the year. Much of that payout is due 90 days from June 19, when the plan was approved, or Sept. 17.

The district has saved $1.4 million for bankruptcy payments; the rest of this year’s payments will be taken out of operations money, the district said.

Next year, the payment to claimants will be significantly lower at $1 million. This is because of the way the bankruptcy plan prioritizes payouts, such as paying out all those with a claim of less than $10,000 and former employees, Brogan said. There is also the administrative cost of going through bankruptcy court, which cost the district roughly $340,000 in outside legal aid.

Horn’s return

Non-agenda public comment saw the return of former director Jim Horn. Horn is requesting records related to the Sonoma West Medical Center (SWMC), now Sonoma Specialty Hospital, involvement with Durall Capital Holdings and its subsidiaries.

The request for documents is in relation to the urine drug testing scandal last year in which SWMC was allegedly involved. Horn said his original request for documents made when he was a board director was insufficient. He was unable to obtain needed information as he said board members cannot sue the district they represent for records if they do not feel the records are complete.

Horn also said that he had contacted the FBI and the county district attorney to inform them of SWMC’s involvement in the testing.

Arnone said the 10-day window to respond to the request is Monday, Aug. 12, and he will have a response ready at that time.

Hospital Update

Sonoma Specialty Hospital CEO Matt Salas gave an update on what’s going on at the hospital.

He reported that the billing issue the hospital had was resolved. Billing will be handled by a third party that Salas said he knew to do a good job and was confident would do so for the hospital.

Previously, a lack of proper billing and the expiration of time to bill patients had resulted in a loss in the millions of dollars for the hospital.

“If you have a business that can’t collect money, you’re not a business,” Salas said.

Salas also said that the hospital will be looking to drive up staffing as patient referrals are rising from other medical centers. He said that it is realistic to think a census of 30 is in the near future based on the rise of referrals.

The hospital is also in the early planning stages to expand services to possibly include dialysis, Salas reported. Other services have also been brought up as ideas but haven’t been discussed seriously yet.

A member of the public asked if the hospital planned to work with Kaiser Permanente. Salas said they were open to the idea, though many in-patient services through Kaiser are quickly transferred to Kaiser-owned buildings as a cost-controlling measure. As a result, he would mainly look at providing out-patient services for Kaiser customers, such as radiology.

(3) comments


We passed Measure W to save Palm Drive Hospital. That's clear in the text of the measure: "To ensure survival of Palm Drive Hospital and access to local emergency, acute care, medical and physician services, and provide for ongoing expenses, repair and improvements to equipment and technology. . ." Unfortunately, the hospital and the emergency room and the acute care that we that we tried to save are now gone, and we will be paying parcel taxes for the huge operating and bankruptcy debts for decades to come. $7.74 million for this bankruptcy. And, the last operating debt figure I heard was around $27 million. That's close to $35 million. Think about that for just a minute. What could we do for our community if all that money wasn't already earmarked it for payout to banks and bondholders?


Or perhaps they will continue robbing the public purse, ie us. The deal is wait till the end, continue loss, then close for nothing. Let's thank dan Smith for this.


The census at this hospital as of this meeting date was 4-5 patients. Watch closely as AAMG decides to not exercise its' option.

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