Ventura County Takeover of Ailing Hospital in Doubt

Ventura County’s bid to absorb struggling Santa Paula Memorial Hospital into its public health-care system appears to have foundered as the two sides continue to argue over terms of the proposed deal, according to documents released Thursday.

The main sticking points in the four-month negotiations center on provisions of the proposed 10-year lease as well as the hospital’s failure to provide full disclosure of its debts and operating costs, according to documents obtained by The Times under the California Records Act.

But county Supervisor Kathy Long, whose district includes Santa Paula, said that talks between the county and the hospital had not formally broken off. She said that while hospital officials have canceled several meetings with the county recently, she fully expected them to participate in a negotiating session scheduled Tuesday.

The supervisor stressed that a chief concern in formulating a rescue plan was that the county minimize the financial risk involved in a merger with the ailing hospital. She said county officials feel they have put forth a solid proposal.

“Our board’s bottom line is that this agreement will not end up being a financial burden to taxpayers,” Long said.

Hospital officials could not be reached for comment. But Michael L. McQueen, Santa Paula Memorial’s attorney, warned the county in a letter dated Aug. 28 that if the two sides failed to reach agreement on basic lease terms, “the hospital may have no option but to exercise our duty to re-establish contacts with other entities.”

One other potential partner is Ventura-based Community Memorial Hospital, which was in talks with Santa Paula Memorial officials earlier this year.

But Community Memorial later dropped out of negotiations in part because of its own internal struggles that resulted in the resignation last month of its executive director, Michael Bakst.

Santa Paula Memorial, one of only three hospitals in California built solely with community donations, has struggled in recent years as its patient load plummeted and its debts piled up. The facility has not made a profit since 1988 and is losing $3 million a year.

The hospital has had trouble meeting its payroll and paying its vendors. It also has missed monthly payments to its employee retirement plan and laid off the equivalent of 20 full-time employees out of a workforce of 240 part- and full-time workers.

But the hospital is not without assets.

It owns free and clear the 25 hilltop acres, donated by descendants of Santa Clara Valley pioneers, on which the medical center was built. It also has approval to build a 62-unit nursing home on its property.

And, despite the hospital’s current financial troubles, the Santa Clara Valley health-care market has the potential to generate millions of dollars for a strong partner that has the ability to lure more private and Medi-Cal patients in the region, experts say.

Increasing the number of its low-income patients is especially attractive to the county, which would be eligible for millions of additional Medi-Cal insurance dollars from the state if Santa Paula Memorial became part of the public health-care system. Medi-Cal pays higher reimbursements to hospitals with large numbers of poor patients.

Santa Paula City Councilwoman Mary Ann Krause, a member of a committee seeking to help the hospital find a financial savior, said Thursday that she was disappointed by the latest developments.

“I don’t feel Santa Paula Hospital has negotiated in good faith,” she said. “By their actions, they’re burning their bridges with the county.”

She also expressed concerns about a possible deal with Community Memorial Hospital because it may be primarily interested in private patients.

“It’s particularly important that health care be provided to meet the needs of the Santa Clara Valley, which is largely low-income,” Krause said. “The hospital should serve the entire community.”