Camarillo Backs Audit of Hospital’s Records : Health care: The City Council endorses a $25,000 study of Pleasant Valley’s finances after questions are raised about the facility’s profitability.

Camarillo City Council members have stepped into the controversy over the proposed merger of two hospitals, endorsing a move to audit Pleasant Valley Hospital’s financial records.

The council’s vote last week came only minutes after the Camarillo Health Care District decided to spend $25,000 to audit Pleasant Valley’s books, but months after residents and physicians began expressing opposition to the hospital’s proposed merger with St. John’s Regional Medical Center.

Many Camarillo residents still fear the merger will result in the closure of their only hospital.

“Serious investigation of the information that was brought to the citizens of Camarillo is in order,” council member David M. Smith said after Camarillo resident Moe Kadish presented his version of the hospital’s balance sheet. “We’ve been given some information that suggests we have no idea what the hospital’s profitability is.”

Council member Michael Morgan agreed. “These facts really make you wonder what’s going on over there,” he said. “There’s just too many question marks not to ask questions.”

Kadish, 77, a veteran member of national and Alaskan hospital boards who opposes the merger, disclosed figures Wednesday that he believes prove that Pleasant Valley Hospital has been misleading the public.

Kadish told the council that hospital officials have been falsely contending that the hospital is in worse financial shape than it is to sell the merger proposal to the public.

“You don’t have to have hospital experience to look at these figures and figure out what I did,” he said. “It’s just plain business.” Kadish’s comments to the council were based on documents filed with the state Health and Welfare Agency.

Pleasant Valley officials have said the hospital cannot survive without the merger. They said earlier this year that profits have plummeted in past years, reaching only $1 million last year, and are showing a deficit of $586,000 this year. Officials also projected a total deficit of $3.5 million to $4 million by 1996.

Last week, the day after Kadish told the council that the hospital made $2.2 million in profits last year, hospital officials cited different figures.

Robert Sayers, chief financial officer for Golden Health Services, the hospital’s parent company, said the hospital actually made $1.5 million last year and now has a deficit of only $250,000.

Residents and physicians say that such inconsistent answers from hospital officials have caused them to look to the health care district to block or at least stall the merger. Hospital officials have said services at Pleasant Valley would not be cut after the merger but have also said it is unclear which services will continue.

After unsuccessful attempts to persuade the Camarillo Health Care District to seize control of Pleasant Valley through eminent domain, opponents are turning to the City Council with the same proposal.

Camarillo attorney Jim Lingl asked the council last week to consider taking over the hospital “in an effort to preserve the acute-care facility in our city.”

Something drastic must be done, Lingl said, to stop the transaction before the Federal Trade Commission approves the merger.

Vice Mayor Charlotte Craven said last week that the health care district would be better suited than the city to take over Pleasant Valley Hospital, which the district operated until 1983, when it transferred it to a not-for-profit private organization.

“My gut feeling is that people who do health care for a living would do a better job of operating a good facility for the community,” Craven said. “Running a hospital is something we don’t know anything about. If we were to consider it, we’d have to make sure we could run it better.”

Craven said her interest was piqued by Kadish’s contention that Pleasant Valley Hospital would be financially healthy if it had not been transferring millions of dollars to its parent corporation, Golden Health Services. Kadish said the hospital has transferred $11.4 million to affiliated corporations in the past nine years.

Golden Health Services provides billing, purchasing, accounting and computer services to the hospital and Pleasant Valley Health Services Corp., a chain of nursing homes that has declared bankruptcy, hospital officials said.

Sayers said the $1.7 million that Pleasant Valley transferred to Golden Health was not to save a foundering corporation, as Kadish suggests, but as payment for services provided to the hospital.

“We don’t make any money off that,” said Robert Sayers, chief financial officer for Golden Health.

Saying they have nothing to hide, hospital officials have agreed to open their books to an auditor hired by the health care district.

Camarillo Health Care District board members, which voted Thursday to spend $25,000 on an audit, wants the study to look at the financial relationship between Pleasant Valley Hospital and its affiliated corporations, all of which are headed by hospital President Norman Gruber.

Dr. Richard S. Loft, a longtime Camarillo physician, supports Kadish’s belief that the hospital’s current problems stem both from its top-heavy management and Gruber’s management style.

“We are so top-heavy in administration,” Loft said. If these positions were cut back, “we would be more than viable. We would be healthy.”

But Sayers said such cutbacks have been made within the past year, and the hospital is still losing money.

In fact, hospital officials said, 18 positions at Golden Health have been eliminated through layoffs or attrition in the past year, leaving only 35 employees.

The hospital “has been less healthy for several years now, and this year it’s actually gone into the red. That tells me the unhealthy trend will continue,” Sayers said. “I think the question is, when do you look for a partner?”