Still awash in red ink despite a holiday fund-raising campaign, Santa Paula Memorial Hospital notified employees Tuesday that the tiny community-owned medical center might eventually have to merge with a larger hospital to stay afloat.
In a letter to its 240 employees, directors of the hospital said they are cutting costs and increasing revenue to try to close a $2.8-million annual budget deficit, but that they must consider all options to keep hospital doors open.
"We have to evaluate affiliations, partnerships, merger, sale," hospital Chief Executive Mark Gregson said in an interview Tuesday. "But the bottom line is: There needs to be a hospital in this community."
If the hospital were to close, the 50,000 residents of the Santa Clara Valley farming region would lose not only a 39-bed medical center where 360 babies are born and hundreds of surgeries performed each year, but also a medical safety net that has saved many lives in emergencies over four decades.
The city councils of Santa Paula and Fillmore and the neighborhood council of Piru are set to meet at 6:30 p.m. today at the Santa Paula Community Center to discuss the hospital's finances and how the facility might be saved.
If necessary, the hospital's board of directors would consider proposals from large hospitals, such as Community Memorial in Ventura and St. John's Regional Medical Center in Oxnard and Camarillo, or initiate talks with those facilities, said Santa Paula board Chairman Phillip H. Romney.
Some Santa Paula board members have already talked informally with directors at Community Memorial, Romney said. But formal talks with larger hospitals won't begin for at least several weeks and then only if the Santa Paula board concludes that restructuring is needed.
There have been contacts between individual board members at Santa Paula and Community Memorial, Romney said.
"They've been along the lines of: 'Do you want to sit down and talk?' And our response is: 'We're evaluating things and we may want to sit down and talk.' "
Michael Bakst, executive director of Community Memorial, said he'd be interested in talking with Santa Paula administrators, although he said he doesn't know enough about that hospital's operations to know how a partnership might help everyone involved.
"But if they feel they need help, we'd be interested in listening to them," Bakst said. "If it's mutually beneficial, we'd be happy to work with them."
Rita O'Connor, a spokeswoman for St. John's in Oxnard, said hospital President Mike Murray has had no merger discussions with Santa Paula officials.
She said she had no knowledge of how interested St. John's might be in working with the smaller hospital.
Retaining the independence of the Santa Paula hospital, opened in 1961 after years of community fund-raising, was a key sticking point during talks with Community Memorial about a partnership several years ago. But now nearly all of the small hospital's $14-million reserve has been spent to make up for losses.
As things stand, the hospital -- one of three in California built solely from community gifts -- could lose $3 million on operations for the fiscal year ending March 31. The hospital has not made a profit since 1988.
Early last month, the hospital appealed to Ventura County residents in newspaper ads, saying that without $600,000 in donations, it would be forced to downsize or close. The ads warned that the center was "on the edge of a precipice" and could be "forced to permanently close its doors" unless it stemmed a cash-flow problem of "drastic proportions."
The campaign brought in about $100,000, and an annual Christmas fund-raising dinner sold out, netting about $75,000, Gregson said.
There has also been an uptick in patient load since then, he said. And the hospital has frozen 13 jobs since December.
In all, the hospital has cut about $120,000 a month from its expenses and is shrinking its $230,000-a-month deficit, he said.