Two Cities Join in Bid to Save Small Ventura County Hospital

By Daryl Kelley

Jan. 24, 2003 12 AM PT

Times Staff Writer

City councils from Santa Paula and Fillmore have vowed to save the Santa Clara Valley’s beleaguered community hospital, while also pointedly demanding more financial information from the Tennessee company that runs the tiny medical center.

In a rare joint meeting, the neighboring councils said they would do whatever it takes to keep the 39-bed Santa Paula Memorial Hospital open. But they also said some employees don’t trust hospital administrators and wonder what has happened to money the Santa Paula community has raised in recent years to keep the hospital afloat.

Council members said, as well, that they may be interested in setting up a special health-care district in their 50,000-resident farming valley, merging the hospital with a larger one or even selling the 41-year-old facility if that is necessary to keep it open.

“No one here thinks this hospital is going to go away,” said John Procter, mayor of Santa Paula. “We are the type of community that simply won’t allow it.”

Firm resolve was mixed with tough questioning Wednesday evening in a 3 1/2-hour meeting at the Santa Paula Community Center attended by about 100 people, including many hospital employees.

Residents wanted to know how the hospital, facing a $3-million-plus operating loss this fiscal year, would finally break even and halt a cycle of desperate fund-raising. The hospital announced last month that it needed to raise $600,000 in 90 days or it might be forced to close or downsize.

The meeting Wednesday was punctuated by council and audience demands that the community-owned hospital, which has not turned a profit since 1988, open its books to show how much money the Quorum Health Group gets for overseeing it. Quorum has operated the center since 1994.

After arguing that Quorum’s management contract was confidential, hospital Chief Executive Mark Gregson finally acknowledged that Quorum was paid $498,000 out of a budget of about $15 million to manage the hospital in the fiscal year that ended in 2002, an amount he described as “minimal.”

The money paid Gregson’s salary and benefits, those of a chief financial officer and additional fees to Quorum, which, with more than 200 facilities, is the biggest U.S. manager of nonprofit hospitals.

Gregson said the value of services provided by Quorum far exceeds the cost of its contract. The hospital saves about $500,000 a year in purchasing alone, he said, because Quorum is so large it gets hefty discounts by buying in bulk.

Phillip Romney, chairman of the hospital’s volunteer board of directors and Santa Paula city attorney, said the hospital saves twice the value of the Quorum contract each year by having the company as its manager.

“Our hospital wouldn’t have survived this long” without Quorum, Romney said.

But several council members said they’d heard concerns and questions about hospital operations, especially from employees.

“They’re fearful of good money chasing bad,” said Santa Paula Councilman Richard Cook.

They are concerned, he said, about home and vehicle leases for Quorum administrators, and that the hospital has not made an employee retirement payment for months. They also want to ensure that $75,000 netted from a Christmas fund-raiser goes as promised toward improving the emergency room.

Romney and Gregson said administrators meet regularly with employees, but would do more to open lines of communication.

They said home and vehicle leases for Gregson and financial officer Dan Jessup -- and plane flights back to their home states -- ended when they were hired permanently, at different times in the last 18 months.

Money from the Christmas fund-raiser is still earmarked for the emergency room and employee retirement payments are current, even though the date of payment was changed. The next one is not due until September, Gregson said.

Gregson said the hospital needs only four more overnight patients a day, up to an average of 21, to break even. “If your doctor sends you somewhere else, ask why,” Gregson said. “If we’re running four patients [more] a day, we’re there.”

But some council members faulted the hospital’s past outreach to the community, saying many residents don’t even know it exists. The hospital needs a hotline so potential patients can call when their doctors tell them they have to go to another hospital. The community and staff also need to know the specifics of the hospital’s survival plan, they said.

“Any serious donors want to know what your plans are,” said Councilwoman Mary Ann Krause of Santa Paula.

Fillmore Mayor Evaristo Barajas said: “The hospital is needed, but we really need to get out there and lay everything on the table.”

Some residents and council members liked the idea of a health-care district, a possibility the hospital evaluated a few years ago but failed to embrace, partly because it would not raise enough money to eliminate the hospital’s deficit. Such a district would be funded by parcel taxes and would require two-thirds approval of voters within its boundaries.

County Supervisor Kathy Long said she’d back the district if the city councils decide that’s the way they want to go. She also said that she’d push to have the county’s health system work with the Santa Paula hospital.

Wally Bobkiewicz, city manager of Santa Paula, noted that voters in northern Sonoma County and the city of Alameda recently formed health-care districts when their faltering community hospitals needed support.

He recommended that the two city councils next week approve formation of a special committee that would report back by March 1 with recommendations on how to save the Santa Paula hospital.

Hospital’s fiscal troubles

Santa Paula Memorial Hospital, which hasn’t turned a profit on its own since 1988, relies heavily on fund-raising and assets from estates. All figures are in thousands of dollars.

*--* Year* Operati Operatin Net Nonoperating Net revenue ng g operating revenue** revenue expenses revenue 1990 $14,465 $14,558 -$93 $392 $299

1991 13,704 14,299 -595 489 -106

1992 15,437 16,540 -1,103 617 -486

1993 14,467 15,441 -974 650 -324

1994 13,821 14,415 -594 845 251

1995 13,976 14,529 -553 844 291

1996 12,947 13,930 -983 716 -267

1997 12,797 13,294 -497 863 366

1998 12,607 13,727 -1,120 1,382 262

1999 13,459 15,382 -1,923 481 -1,442

2000 11,928 14,699 -2,771 2,321 -450

2001 10,522 13,702 -3,180 10 -3,170