Hospital Merger May Get a Nudge

Fearing that the area’s only hospital may close, the Santa Paula City Council is seeking the state attorney general’s help to force trustees of Santa Paula Memorial Hospital to conclude a long-delayed merger to save the facility.

The council voted unanimously Monday night to file a complaint with the attorney general’s office over possible violations of the California Corporations Code, a series of laws governing nonprofit corporations.

The council is basically alleging that the hospital’s board has failed to take appropriate action to preserve the 42-year-old hospital, one of only three in California built solely from community donations. The hospital has been negotiating with Ventura County officials since June over a possible merger with the public health system, but the two sides have failed to strike a deal.

If the attorney general declines to intercede, the council will request permission from the state to sue the hospital’s board of directors and pursue its own enforcement action to keep the hospital open. The hospital is more than $3 million in debt and is struggling to make its $200,000 biweekly payroll.

“The hospital is a charitable asset and it appears to be in jeopardy,” City Councilwoman Mary Ann Krause said. “If the attorney general has any power to protect charitable assets, then we’re asking him to step in.”

Krause expressed frustration with the hospital board’s failure to partner with the Ventura County health system after four months of talks. Negotiating documents, made public last week, indicated the hospital was balking at the county’s terms in the proposed deal regarding control of the facility and all of its properties.

“The board has not been able to consummate an agreement with a partner, but a partnership appears to be their only option at this time,” Krause said. “Rather than have them lose all opportunities to preserve this hospital, we’re asking the attorney general to look at it.”

But Philip Romney, chairman of the hospital’s governing board, said he did not understand what prompted the council’s action. The hospital’s board was scheduled to meet with county officials Tuesday night to discuss their differences.

“I’m somewhat baffled by what they’re doing,” said Romney, Santa Paula’s former city attorney. “As far as I know, they don’t have any facts to support their complaint.”

He said the board has repeatedly offered since January to meet with council members to discuss the hospital’s future but has been rejected.

But Krause disputed this version of events. “It’s not true at all,” she said. “We’ve had to ask them to come to council meetings. We asked two weeks ago for our council subcommittee to meet with their board, but they said that until they get permission from the county, they can’t do it.”

Krause said she was particularly concerned that the county has said that because of the stalled talks it would not be able to assume management of the hospital until the first quarter of 2004, which would leave the facility with several more months of financial instability.

The council’s action is the latest chapter in the saga of the small, rural hospital that is fighting for survival. The medical center provides care to hundreds of Santa Clara Valley residents, many of whom are on fixed incomes and receive state and federal subsidies for medical care.

Last December the hospital board went to the city and said it would have to close its doors in 90 days without an infusion of cash. Since then, the hospital has taken out a $2.5-million loan to cover its financial obligations, using its property as collateral.

“The ability of the hospital to hang on and remain open that long without some outside help, in my mind is questionable,” Krause said. “My feeling is the attorney general needs to move forward regardless of any movement in the talks.”

The council directed the city attorney to draft a formal complaint that the council will review before submitting it to the attorney general. Krause said it could be filed as early as next week.

But county Supervisor Kathy Long, whose district includes Santa Paula, said she still believed a deal could be worked out between the county and the hospital despite growing tensions. “We still feel there is a possibility to have a good relationship, and a good business relationship, with the hospital,” she said.