‘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.

(6) comments

Gail Raborn

I am shocked and disgusted at this paper’s attempt to publicly flog, discredit and humiliate an important and highly valued member of the Sebastopol community, Dan Smith. The article in the Dec. 25 ’14 issue is not only mean spirited, but full of nasty innuendo, half-truths, lies, and probably reflects your own extreme dislike of this man - or you’d have never allowed such an article to be published in your paper.

This ugly article was also written obviously with the attempt to set back the formation of the new hospital proposed by the Foundation, Sonoma West Medical Center. As a hypnotherapist, I recognize your use of negative suggestion that it’s not wise to donate funds to SWMC (with the implicit idea that it won’t then have the financial backing needed to open it’s doors.).

Your comments about various previous financial donors withdrawing donations to SWMC are nearly all from “anonymous” voices - is Dan Smith so dangerous, really, that many folks don’t dare state their names? Get real!

Don’t you realize that by trashing one of the main people that is helping bring about the rebirth of our Sebastopol hospital - and emergency room - you are harming our whole community?
Isn’t it time to let go of your anger at this man and start supporting SWMC? God knows we need this hospital, as many locals, medical people, police and firemen have repeatedly testified.

It’s time to let go of the “sour grapes” attitude reflected in your paper in article after article.

It’s time for the Sonoma West Times and News to become a force of good in the community, rather than poisoning the well of public opinion against a powerful but very kind man and the hospital he’s helping create.


I support everything CW just posted. Anyone who writes that Dan has never "stooped to name calling" has never attended a Palm Drive Hospital Board meeting.


Congratulations to the editors of Sonoma West for publishing a serious balanced article about issues surrounding Palm Drive Hospital. How many times do you have to keep banging your head against a wall before you decide that this action is counterproductive? How many times is Dan Smith going to keep throwing large sums of money at Palm Drive Hospital when evidence and experience show that a small regional hospital is not financially feasible, given the proximity of Kaiser and Sutter in Santa Rosa? Not only is this a losing cause but Smith and his allies are attacking anyone who dares to question or oppose them. I hope that Sonoma West continues to cover this story and provide plentiful information to readers.


I have to sgree with the previous post. I have followed the saga of the hospital since it began years ago and have been in awe at the generosity of Dan Smith and Joan Marler and others who have selflessly given their time and vast resources to keep the hospital running for the community. Countless people have benefitted, lives have been saved and jobs created. Then I saw the past board move in a different direction with no real expertise in how to oversee such a complex operation and some who appeared to have personal vested interest in their service. Their failure to inform the public of the dire situation of the hospital, their repeated secret meetings in violation of the Brown Act, their inability to see that there were other options beyond bankruptcy, their mean-spirited attack on those who wanted to keep the hospital open, their failure to really listen to the public at their supposed "listening meetings" and their pushing of an agenda that allowed no options other that to close the hospital and franchise it out or worse, indicated they were not the best people for the job of managing this public trust. By contrast, I have been continually impressed by the composure and focus of Dan Smith and people from the foundation that continue to assume the best of their adversaries and who refuse to stoop to the low level of name calling and missinformation that has characterized the actions of people on the old board. I agree with others who say if there is a "Bully" it is those on the previous board who resort ot defamation of character of their opponents and ignoring the wishes of the majority of the community. In contrast to the Hospital Board meetings, the Foundation meetings have been informative with detailed reports with supporting information, and a shared sense of "we can do this" with a clear pathway to how it can be done. have lived in this community for over 40 years and the Foundation meetings and the Open Our Hospital movement have brought more cohesion and focus to our town than any issue we have faced in the past. An atmosphere of respect and inclusion characterized the Foundation meetings, even when Hospital Board members brought a distinctly negative tone and tenor to the discussions. It is a tribute to Dan Smith and the Foundation members that they have provided a working example of democracy and community action at its best. I am proud to live in a community where people of courage and principles are not dissuaded by those who are bitter and committed to failure. I owe my life to Palm Drive and know of many others who have received life-saving care by having an excellent hospital in our neighborhood. It is a credit to those working so hard to reopen the hospital that they have done their homework and found ways to make it succeed, in what is a remarkably short time. We should be honoring them. I wonder why Sonomawest and the journalist who wrote this piece lowered their standards and chose the eve of Christmas at a time of supposed good cheer to publish such a misguided hit piece. I, for one, will no longer read this news outlet since it is clear that its information and reporting are not to be trusted and are not in the best interests of the community it supposedly serves. I would expect such bad journalism of Rupert Murdock, but am saddened to see it in a county that is supposedly more enlightened.


Wow! This article just serves as more proof that real journalism is dead. First of all, Horn, Dobb's and their group of jokers, ran the hospital into the ground. If that wasn't bad enough, they campaigned to keep it there. I was there the night Powers and Colthurst replaced Horn and Dobbs. It was wonderful to see Dobbs leave with her name plate, but the childish tirade of a speech she gave, upon her leaving, was nothing short of a pathetic individual who refuses to take responsibility for the damage she caused. Horn remained throughout the meeting and spewed his bitterness along with inaccurate data and attacks on those who are reopening the Hospital. Unfortunately, the Board is left with two of these jokers who ran it into the ground, and its apparent that they are still in the camp of keeping the Hospital closed. If they were decent people, they would recuse themselves, so someone who believes in the Hospital could take their place. Dan Smith, is nothing short of a hero to West County. I know of no one else, who would place there personal fortune into a project with no financial return. Bottom line, Dan is a man with tremendous character, heart, and generosity. As far as someone being a "Bully" it's the accusers who are. They were not competent enough to run a hospital and when they were called on it they resort to calling people names. I have a news flash for these people, just because someone doesnt agree with you does not mean they are being offensive. Free speech is free speech if you agree with them or not. I in my humble opinion, these accusers are simply cowards and have no charcter. I would like to see Horn ,Dobbs and the other jokers, explain to the parents of a child who will be saved, because of Palm Drive, why the hospital that they ran into the ground, should have remained closed. I'm amazed at the million dollar opinions from these people. Dan Smith, has put his money where is mouth is, unconditionally, for this Community, while these people have caused nothing but distruction and heart ache for the Community.

Dan Smith

Dear Rollie,

It is clear from your hit piece that there are a few people who will do almost anything to defeat the effort to reopen our hospital, including yourself. Since they failed to convince the voters to elect Jim Horn, they now want to demonize Dan Smith in order to stop the effort to open our hospital.

But let’s look at some facts:

Nancy Dobbs’ claims that I tried to get her fired are blatant lies. Even your article quotes her board members as denying that I said anything of the sort. You had access to my communications so you knew this was a lie, yet you printed it anyway.

Frank Mayhew is quoted as saying that I was responsible for CEO turnover at the hospital yet only one CEO was let go while I was on the board and I did not make the motion to terminate him. I believe that the record will show that there were multiple CEOs while Frank and Nancy were on the board. You clearly made no attempt to verify Frank’s statement.

You claimed that I said that Jeff Weaver was ‘ordered’ to arrest Jim Gude, yet I never said anything of the sort. What I did say to you that you did not print is that Ms. Dobbs put a letter under Dr. Gude’s door saying that he would be arrested and lose his license if he tried to provide medical care after the hospital was closed. Since I read this letter myself, I know this to be a fact.

You refute my statement that the board violated the Brown Act with Chris Dawson’s denial, but in my conversation with you, you stated that you agreed with me that the board violated the Brown Act repeatedly both before and after the hospital closure. You went on to state that you had written this in the paper (something I never saw) and said it to board members yourself. Yet in this article, you leave the impression that this was only my opinion against Chris’s.

You claim that people resigned from the board because of pressure from me but the truth is that I resigned under pressure from Nancy Dobbs and Frank Mayhew in 2011, not the other way around. Also, the people who resigned in 2007 when the hospital went into bankruptcy did so after being pressured by the physicians, not by me. (The physicians asked three board members to resign in a letter.)

I make no claim to be a perfect being and I have made mistakes in the often difficult task of keeping our hospital viable over the past 15 years, a task that many thought impossible. But, for the record, I:

• Helped build the strategy that was successful to purchase the hospital in 1999 and was the elected president of the 35 for Palm Drive board in 1999.
• Rebuilt the hospital’s computer system in 1999 at my own expense for Y2K.
• Raised $100,000 and donated $200,000 in stock in 3 days to make payroll for the hospital in 1999 at a time when I had very little money.
• Wrote the bylaws, budgets and maps for the formation of the district in 3 days in order to get on the April ballot in 2000.
• Managed the election to create the district in 2000 and donated my office to do phone banking and won by 92%, the first time in 25 years that a hospital district had been created.
• Was the first president of the district in 2000 and managed the purchase of the hospital from the 35 for Palm Drive.
• Left the district board in 2001 and was not involved until 2007 when the hospital went into bankruptcy. (Please note that I made no attempt to influence the board during this time.)
• Was asked by the board president, Naomi Fuchs in March of 2007 to help keep the hospital open. (The hospital had no cash, was losing $500,000 a month from operations, and the CEO was on vacation.)
• Raised $600,000 from Exchange Bank and guaranteed $1.3 million in three days so that the hospital could stay open and make payroll.
• Raised the money to reopen the ICU and recruited Dr. James Gude to manage it with the result that the hospital business grew rapidly.
• Loaned and later forgave $1 million from my personal funds to keep payroll going through 2007 and 2008.
• Donated $200,000 to the foundation to buy a bankruptcy claim in 2010 in order to save the hospital $150,000.
• Purchased an operating table and other equipment to keep the hospital viable.
• Negotiated a $3 million dollar loan from the County of Sonoma in 2008, which was repaid in 2010.
• Guided the hospital to grow from $22 million in 2008 to $28 million in 2010, when it had a $5 million net profit.
• Organized the sale of bonds in 2010 to get the hospital out of bankruptcy and provide capital.
• Tried over and over to warn the board in 2010 and 2011 that the hospital would fail if they did not take corrective action.
• Left the district board in 2011 to help Dr. James Gude continue to provide telemedicine services to Palm Drive and other hospitals in the region.

I make no apology for pressing to keep our hospital open and to reopen it because I know it to be a matter of life and death for many people in our community. I make no apology for being critical of the district board, which mismanaged our hospital and closed it without giving the community the chance to respond.

The people you have quoted take no responsibility for the failure of the hospital in 2007 and 2014 when they were in charge, not me. In doing so, they put 200 people out of work with less than 30 days notice, deprived physicians of their livelihood, left creditors holding the bag for $7 million, denied employees $1.2 million in pay and put our community in danger. But they think I am a bad guy for talking to Chris’s minister and expressing my concerns? I may be dense, but I just don’t get it. I think your article makes clear who the bullies are.

Dan Smith

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