Pipeline resigns, Americore Health falls through
In a surprise turn of events, Dan Smith, benefactor of Sonoma West Medical Center and chairman of the center’s board, informed the Palm Drive Health Care District that neither Americore Health, the Florida-based hospital management company poised to take over the struggling Sebastopol hospital, nor Pipeline Healthcare, the Los Angeles-based hospital management company that took over operations last July, are any longer involved with the local hospital.
The admission was a surprise to many, including district board members, as the board was slated to approve a management services and staffing agreement between the hospital and Americore Health last Thursday evening.
Only three weeks ago, Americore presented its plan to provide an immediate and much needed $500,000 cash infusion to the hospital and its goal to turn around the ailing hospital. The district readily approved the idea and hospital staff voiced overwhelming support for the partnership.
However, during the three-week period between Americore’s initial presentation and Thursday’s meeting, plans and promises apparently fell short.
“We got into a very unfortunate position with Americore,” Smith said. “Americore has not performed and is not capable of doing so.”
Two sources indicated that Americore did not put up the promised $500,000. Instead, Smith provided the money to save the hospital, yet again.
Smith told the Palm Drive Health Care District board that the medical center was in conversations with other hospital management companies prior to Americore’s arrival. He said he contacted a hospital operator over the weekend to discuss possible takeover.
“They own six hospitals in California, have $200 million cash in the bank and run many other medical facilities,” Smith said, without specifying which one. “We are in immediate discussions for the immediate takeover after Pipeline is gone.”
While the board did not publicly discuss future management options, sources said the KPC Group, a hospital management company founded by Kali P. Chaudhuri, may be poised to take over management at the medical center. The company owns seven California hospitals in Santa Ana, Anaheim, Orange, Costa Mesa, Hemet, Menifee and Victorville. It recently lost a bid to Paladin Healthcare to take over management of Petaluma Valley Hospital.
An immediate takeover is needed, as Pipeline’s management crew will vacate the facility by March 17. Interim CEO Luke Thararsi’s said his last day was March 10.
“It’s been a tough job,” Tharasri said. “Hopefully 20 years from now people will recognize the hard work that’s been done here.”
In the interim, medical center Director of Ancillary Service John Peleuses will fill in over the weekend before an interim CEO is selected Monday, according to Smith.
The district will hold a special meeting on March 13 at 10 a.m. to approve a new interim CEO. According to the management agreement between the hospital and the district, appointment of a CEO must be approved by the health care district board.
According to district attorney Bill Arnone, Tharasri resigned and it was Pipeline’s decision to depart the hospital.
According to Tharasri, the medical center owes Pipeline roughly $800,000 in unpaid management service fees and travel reimbursement.
“It was a labor of love and sacrifice of personal and professional lives,” Tharasri said. “We hope everyone can get paid.”
Under the management agreement between Sonoma West Medical Center and Pipeline, the hospital was to pay Pipeline a monthly management service fee of $125,000 per month for the first six months and $150,000 per month beyond that. Pipeline CFO Robert Heinemeier reported at the Feb. 27 medical center governing board meeting that Pipeline had not yet been reimbursed for traveling expenses of almost $82,000.
Arnone said the district would not be liable for any of the funds owed to Pipeline.
“There is a firewall between the district and the hospital for operational costs,” Arnone said.
He added that Pipeline has been “incredibly accommodating and really tried to make things work out.”
“The two parties are talking and I believe talks are amicable,” he said.
Although the hospital and Americore are no longer in talks, the district must abide by a Letter of Intent (LOI) between the district, Americore and the medical center to lease or sell the district’s assets to Americore. While the letter prevents the district and medical center from entering into new discussions regarding leasing or selling the district assets, the hospital and district boards can still enter into new conversations about new hospital operators.
“The LOI has nothing to do with management,” Arnone said. “It only deals with a potential acquisition or lease.”