‘Bully’ charges hurting hospital’s reopening bid
The prevailing plan to reopen Palm Drive Hospital is being led by the same man who many credit with saving it from permanent closure or disaster at least twice before. But the man, Dan Smith, is also being blamed for being a “lightning rod” and a “bully” at the center of a community rift that is blocking broader community support and alternate proposals for the future of the now-closed hospital facility.
Two immediate past health care district directors, among other past benefactors and leaders, have charged Smith with repeated “bullying,” personal attacks and being “toxic” during recent highly-charged community meetings and board-level negotiations concerning the closed hospital.
Former directors Nancy Dobbs and Chris Dawson said Smith contacted their private employers to influence their actions on the hospital board.
“He tried to get me fired and he drove away support for our hospital,” Dobbs said at a public meeting at the hospital on Dec. 8. She called him “aggressive and nasty.” Ralph O’Rear, a board member for KRCB public media where Dobbs is president and CEO, confirmed that Smith left him a voicemail. Smith’s message said Dobbs was a “detrimental impact” and urged O’Rear to “influence her,” O’Rear said. “It was stunning. I was left with the impression that his support comes at a price.”
Another KRCB director, Patrick Campbell confirmed Smith sent him an email about Dobbs. “I don’t know him but I thought it was scurrilous. I was surprised to receive such a negative message about Nancy.” Neither Campbell or O’Rear said Smith asked to “fire” Dobbs.
Dawson said Smith contacted his superiors at Vanguard Realty and visited his Sebastopol preacher. “It looked like he was willing to stop at nothing,” Dawson said. “I don’t know why it got so negative. It really became toxic.”
Smith defended his actions, saying Dobbs and Dawson were “breaking the law” and had ordered the arrest of the hospital’s Dr. James Gude for demonstrating or practicing medicine in the hospital’s parking lot the day it was closed. Smith said Dobbs, Dawson or others at the hospital administration called the police to order the arrest.
“There’s no merit to that,” Jeff Weaver, chief of police said. Weaver said hospital CEO Tom Harlan had called him over concerns of hospital liability surrounding Dr. Gude’s protest. “Nothing happened,” said Weaver. “We never planned on arresting anyone.”
“I admit there’s been some bad blood here,” said Smith, “but I don’t feel I created all of it. I can understand some people being upset because I did something they didn’t like but I’m upset, too.” Smith has repeatedly charged that the hospital did not need to close last April. “People have died since it was closed,” he said this week.
Smith blamed the district board and the management team led by Harlan with “mismanagement.” He sent an email almost a year in advance of the bankruptcy, warning the directors were out of compliance and facing financial failure. Smith said his warning was ignored.
Smith said Harlan and the board failed to consult with the hospital’s physicians and violated the Brown Act by not telling the community about a pending financial crisis. “They betrayed the public trust,” he said. “Quite frankly, I don’t regret that I called for their resignations.”
Harlan and Dawson deny Smith’s charges that the hospital doctors were not informed of the financial problems and possible closing. Dawson said Dr. Gude even suggested closing the ICU at one point. “It was happening so fast,” said Dawson. “There were good people disagreeing over what should be done.” Dawson denied any Brown Act violations.
Smith, a wealthy software entrepreneur, well-known restaurant owner and the largest benefactor to the community’s Palm Drive Hospital, is again putting his wealth and passion behind a plan to rebirth the hospital as Sonoma West Medical Center (SWMC).
Now, some of the original donors that raised funds for the community to purchase the hospital from Columbia/HCA in 1999 are refusing to help, citing Smith’s “lightning rod” leadership.
“I’m afraid he (Smith) will go to any means to get what he wants or use his financial standing to force people to fall in line,” said one original benefactor and member of the “35 for Palm Drive” LLC, speaking anonymously because of concerns for retribution. “There’s a separation in this community because of him.”
The taxpayer-owned Palm Drive Hospital was closed last April when the elected board of directors filed for bankruptcy protection facing over $7 million in unpaid bills and payroll and $22.3 million in long-term bond debt.
“Even though we really want to see our Palm Drive Hospital open again, we will not provide any funds to the Palm Drive Foundation as long as Dan Smith is a part of the organization,” said former district director and donor Frank Mayhew. Mayhew blamed Smith as “part of the reason that Palm Drive had so many CEO’s” and abrupt changes of leadership. Besides Dawson, three other former district directors said they either resigned or felt “forced out” by Smith. (All three women spoke anonymously out of fear of retribution by Smith.)
“People say I’m out for personal gain or I have a conflict of interest,” said Smith. “I didn’t want to have to do this (save the hospital) a third time. I have no desire to run a hospital but the community should have one. It needs it and it needs an emergency room.”
Another original supporter of the hospital and leader of 35 for Palm Drive, local contractor Bob Cary, said he has “mixed feelings. I won’t get involved because of a certain individual.” He said the hospital has been very important to him and his family and he hopes all the past donations don’t end up feeling wasted.
After the hospital’s closing in April, Smith launched a public effort to repeal the district’s parcel tax which raises $3.7 million annually. He aborted the campaign because it proved “counterproductive,” he said.
Since then Smith has put at least $2 million of his own funds behind a plan fronted by the nonprofit Palm Drive Health Care Foundation. Smith has recruited and paid for a team of health care consultants, including Ray Hino as CEO to drive the Sonoma West Medical Center proposal.
Smith has attracted Dr. James Gude to serve as the leader of a medical program that will operate an emergency room, ICU and a series of new surgery, urology, neurosurgery and pain management specialities. Many of the services would be supported by Dr. Gude’s OffsiteCare telemedicine network of robots and foreign-based on-call specialists. Dr. Gude has practiced at Palm Drive for the last several years. Smith is an investor in Dr. Gude’s OffsiteCare company, a relationship that forced Smith to quit his district board seat in October 2011 for potential conflict of interest.
Hino, at his new job for just weeks, said he admits Smith can be a “lightning rod,” but supports his “genuine interests” in wanting to reopen the hospital and emergency room. “I came here to do something I believe in — which is reopen this hospital. I don’t care to be involved in any controversy surrounding Mr. Smith. I really want to be a bridge. I’m willing to put myself out there and talk with everyone I can. Honestly, we need the entire community. This can’t just be Dan Smith.”
At the same meeting that Dobbs made her public accusations against Smith, the newly constituted health care district board voted unanimously to enter exclusive negotiations over the Sonoma West Medical Center plan to reopen the hospital by early April 2015 and win full accreditation and federal Medicare licensing before July.
The district has new leadership, following the Nov. 4 election where two Smith-endorsed candidates, Dr. Richard Powers and Dennis Colthurst, replaced retiring Dobbs and appointed incumbent Jim Horn. Dawson resigned last summer, citing both personal and family health reasons. Jim Maresca, supported during his 2012 election by Smith, was selected as new board chair, replacing Marsha Sue Lustig who remains on the board. The fifth board member is Sandra Bodley, also elected in 2012.
Responding to the charges of “negativity” and “toxic” discourse, Maresca said “over the course of this last year, there has been a lot of harsh things said by many people. I don’t think it’s always been constructive and considerate of other views as it should have been.”
Maresca said some “healing” is needed and he hopes to “keep communications open” to harness everyone’s “good intentions.”
Bodley said Smith has tried to “usurp” the board’s authority “to consider other projects and enterprises” to serve health care needs in the sprawling, mostly rural district that expands far beyond Sebastopol to the Russian River communities and to the Bodega-Jenner coast.
Bodley is challenging the basic financial premises of Smith’s plan for a Sonoma West Medical Center. “How is a 10-bed, stand-alone facility sustainable? This is a serious financial responsibility. The community needs to be warned. We don’t know if a full hospital is a reality (with or without) the shadow of Mr. Smith’s hand.”
Former CEO Harlan, who resigned in July, said “bottom line, we could find no scenarios for saving our acute beds (and emergency room) without significant philanthropy or consider going in some other direction.” At the time, Harlan called on the community to “reimagine” its hospital and “explore other services for the community.”
Smith is serving as chair of a new Sonoma West Medical Center (SWMC) board of directors that includes Dr. Gude, Hino, retired surgeon Craig Campbell and winery owners John Balletto and Merry Edwards, among others. The SWMC was created by Smith and the Foundation to provide a new nonprofit governance structure to operate the hospital under a new management or lease contract with the district board.
The new plan seeks to succeed where 15 years of community-ownership has failed. The Sonoma West Medical Center plan requires up to $8 million in new donations, loans or grants, plus an immediate 15 percent growth in patient revenues to be successful.
Foundation President Gail Thomas, who is leading a community fundraising campaign, said early support and pledges have been encouraging. “If you ask me, I will tell you, ‘absolutely’ that we can be successful,” she said. She said any riffs between Smith and others “doesn’t get us a hospital.”
To date, almost all of the real money has come from Smith and his wife Joan Marler. Smith said he will pay for the complete cost of reopening the hospital by April and then call for collected pledges to help pay for the remainder of the first year’s operations.
Both Smith and Thomas declined to name any other donors or pledge makers at this time. The SWMC plan also anticipates use of some of the district’s parcel tax funds, although the majority must go to satisfy future bankruptcy court actions.
Smith and others have attempted similar fundraising appeals in the past with very limited success. The Foundation has contributed just under $2 million to Palm Drive Hospital operations in the past 15 years, according to tax records. A Smith-led $5 million capital campaign launched in 2009, following the hospital’s previous bankruptcy filing was only partially successful, raising about $2 million, according to Smith.
Before closing, Palm Drive Hospital was a $28 million business with more than 200 employees and associated physicians. The annual payroll, with doctor fees included was almost $18 million. Almost two-thirds of Palm Drive’s patient revenue was from Medicare.
The next public meeting of the Palm Drive Health Care District Board is scheduled for Monday, Jan. 5, 2015 at the hospital.