Ojai Valley Community Hospital has entered talks with Community Memorial in Ventura on a possible merger, a deal that could see the loss of Ventura County’s last remaining independent rural hospital.
Talks began six weeks ago and will include the exchange of financial information to determine whether an affiliation would be economically viable for both sides, said Gary Wilde, chief executive officer of the larger and more profitable Community Memorial Hospital.
If a merger occurred, it would take place in the fall, Wilde said.
The possibility of the 100-bed Ojai hospital being managed by a larger and more financially secure nonprofit reflects a longtime trend in the medical-care business. Struggling with rising labor costs and shrinking payments from insurance and government providers, rural hospitals can no longer survive on their own, experts said.
“It’s becoming more and more difficult for the small, independent hospital to stay open because of many factors, all of them financial,” said Jan Emerson, a spokeswoman for the California Healthcare Assn., a trade organization based in Sacramento.
The Ojai hospital has been the only small, rural medical center in the county since December, when Santa Paula Memorial was forced to shut down after 42 years because it could no longer afford to pay its bills. Santa Paula Memorial filed for bankruptcy, and its trustees are talking with healthcare companies about possibly reopening the facility.
Although the Ojai hospital’s financial situation is not as severe as the Santa Paula hospital’s, Ojai officials are trying to be as proactive as possible, said Dr. Martin Pops, chairman of the nonprofit foundation that owns the 45-year-old hospital.
“We have been looking at the handwriting on the wall and at what the future of the hospital is for some time,” Pops said. “The stand-alone, rural, small hospital is rapidly becoming a thing of the past.”
The Ojai hospital has operated at a small profit for several years and has a debt of about $2 million, Pops said. Yet it would have much to gain from an affiliation with 240-bed Community Memorial, a nonprofit, community-owned regional hospital, including ready access to medical specialists and the ability to consolidate some services and overhead expenses, he said.
“We’re interested in the quality of care local residents receive in this hospital, and having a major medical center affiliated with us would provide the kind of [specialized] services we can’t provide here in Ojai,” said Pops, a retired doctor who practiced in Los Angeles.
It is also important to keep the hospital open because with 260 employees it is the third-largest employer in the area, he said.
“This is one of the most important institutions in the Ojai Valley,” Pops said.
The two hospitals are a good match because both are nonprofit community hospitals dedicated to serving local residents, Wilde said.
“If we can do something to strengthen another hospital and that helps us meet our mission to serve the community, while strengthening ourselves, then that’s a benefit for both of us,” he said.
Wilde previously served as chief operating officer at Cottage Health System in Santa Barbara County and played a key role in the 1995 merger of Cottage Hospital in Santa Barbara with tiny Santa Ynez Valley Hospital. The effort included the addition of midsized Goleta Valley Cottage Hospital to the company.
Ojai Valley Community Hospital was initially owned by a small group of investors. During the last four decades, ownership changed hands several times between various corporate entities. In October 2000, a group of local residents purchased the hospital and established it as a nonprofit organization owned by the community.