Judge Refuses to Delay Merger of 2 Hospitals : Courts: Camarillo Health Care District vows an appeal to block consolidation of Pleasant Valley facility with St. John’s.

A Ventura County Superior Court judge on Wednesday refused to delay the merger of Camarillo’s only hospital with an Oxnard medical center, a deal that is scheduled to close in two weeks.

But Camarillo Health Care District board members vowed to immediately appeal to a state court to postpone the planned consolidation of Pleasant Valley Hospital with St. John’s Regional Medical Center in Oxnard.

“It’s not over,” said James Prosser, a Camarillo attorney who sits on the health care district’s board.

Superior Court Judge Frederick Jones said he was not convinced that the hospital merger would cause irreparable harm to Camarillo residents, as the health care district had argued.

“St. John’s Hospital has committed to continue Pleasant Valley Hospital as a general, acute-care hospital through 1997,” Jones said in his ruling. “Closure of the hospital or cessation of its general, acute-care services are not imminently threatened.”

Pleasant Valley Hospital Director Norman Gruber, who engineered the plan to consolidate the community hospital with the larger Oxnard medical center, hailed Jones’ ruling.

“The facts are on our side,” Gruber said as he was leaving the courtroom. “Everyone’s going to win in this. The hospital’s not going to close. The merger’s going to be the best thing to keep the hospital available in years to come.”

Maintaining that Pleasant Valley Hospital is ailing financially, Gruber has argued that a merger with St. John’s would restore the smaller hospital to financial health and ensure its long-term existence.

But health care district officials said Wednesday they recently reviewed documents that prove what they have said all along: Pleasant Valley Hospital is financially stable.

As part of the legal proceedings, St. John’s released a copy of the consolidation agreement between the two hospitals that shows Pleasant Valley has $44 million worth of assets, including $12.5 million in cash, Prosser said.

St. John’s will pay all of Pleasant Valley Hospital’s $21 million in debt as part of the consolidation.

But St. John’s will still realize a net gain of about $23 million in Pleasant Valley’s assets, Prosser said.

“Pleasant Valley Hospital has used the term merger to soften the impact on the citizenry,” Prosser said. “This is not a merger. It’s an out-and-out sale.”

The consolidation offers Gruber and other hospital officials a chance to close the books on a history of poor management decisions, Prosser said.

“Selling the assets to St. John’s gives Pleasant Valley the opportunity to walk away from the debts and issues of management,” he said.

After the merger, the Pleasant Valley Hospital board would cease functioning, except possibly to deal with pending lawsuits, and four of the eight current board members would join St. John’s officials on a new, combined panel that would govern both hospitals.

Gruber, who has been the hospital’s director since it was founded in 1974, said he plans to find employment outside the Camarillo area after the merger.

Prosser said he is optimistic that the state Court of Appeal will delay the merger to allow time for a judge to review the case because no other California hospital that was established by a publicly funded health care district has proposed to merge with a private institution.

Whether or not the state Court of Appeal refuses to delay the merger, the health care district will pursue its lawsuit against Gruber and the board members of Pleasant Valley Hospital, Prosser said.

The suit charges that hospital officials mismanaged public funds after the district transferred the hospital to a newly formed nonprofit corporation in 1983.

A few years after the transfer, hospital officials made several attempts to diversify, including operating a medical clinic in Moorpark that subsequently was closed, and purchasing more than a dozen nursing homes in Georgia, Alabama, Oregon and the state of Washington.

All the nursing homes in the Southern states went into bankruptcy in December, 1991--one month before Pleasant Valley Hospital announced its plan to merge with St. John’s.

“If they had reinvested the money that ultimately went to the nursing homes, if they had taken that money and reinvested it in the hospital, Pleasant Valley would be in a stronger position today,” Prosser said.

Gruber, however, has said that hospital officials intended to bring in money from the nursing homes and other ventures to reinvest in the hospital.

Pleasant Valley Hospital remains profitable for now, Gruber said, but like other small hospitals, it faces financial pressures in the rapidly changing world of health care.

For example, the hospital’s occupancy rate has dropped from about 80% to 40% over the past 10 years, except in its extended-care unit. The drop has occurred in part because many treatments--such as cataract surgery--that used to require hospitalization are now conducted on an outpatient basis, Gruber said.

Pleasant Valley has 180 beds, and St. John’s has 223.

More and more hospitals across the country are merging to save money by combining certain departments and services, such as billing, Gruber said.

“One of my strengths, in my opinion, is the ability to have foresight in strategic planning,” Gruber said. “There really is no place as time evolves in metropolitan areas for a free-standing, community hospital.”

NEXT STEP

Camarillo Health Care District officials said they will ask next week that the state Court of Appeal delay the merger. If the appeal fails, Pleasant Valley Hospital and St. John’s Regional Medical Center will sign a merger agreement on Feb. 18.