Santa Paula Hospital May Be Revived

Bankrupt and shuttered Santa Paula Memorial Hospital could be reopened by next spring if Ventura County supervisors approve a $2.75-million deal today to revive the rural medical center.

The proposed agreement calls for the county to acquire the hospital’s assets and pay off its $14.7-million debt, which would allow the institution to once again serve the 50,000 residents of the Santa Clara Valley.

“It’s a significant piece of the package that will be presented to the bankruptcy court,” Supervisor Kathy Long said Monday. “It provides a settlement of debt and, more importantly, opens the hospital doors.”

The 44-year-old hospital was shuttered last December after falling behind in payments to creditors. Three days later its board of trustees filed for bankruptcy.

Under the proposed agreement, the county would acquire the hospital, a medical office building, an administration building, parking lots, furniture, equipment and financial records.

Sixteen acres of undeveloped land at the site would be sold to a developer, who would develop the hilltop property overlooking the bucolic valley.

A formal agreement with a developer has not yet been reached, Long said.

The sale of the 16 acres is expected to generate up to $12 million, which would be used to pay off creditors. Ventura County would absorb the remaining $2.75-million debt in return for gaining title to the hospital and 13 acres of land.

The agreement would be the cornerstone of a reorganization plan that creditors could present to U.S. Bankruptcy Judge Robin Riblet.

“We believe it provides the people of the Santa Clara Valley with the best hope of having a high-quality hospital to serve all residents of the region, while minimizing the risk to county taxpayers,” county Health Care Agency administrators Kirk Watson and Pierre Durand said in a letter to supervisors.

The agency operates the Ventura County Medical Center in Ventura as well as a network of healthcare clinics across the county.

The clinics had 325,000 patient visits last year.

As part of the county system, Santa Paula Memorial Hospital would receive reimbursements from state and federal insurance plans.

The hospital could also profit from treating about 450 Santa Clara Valley residents who are county employees and enrolled in a county-run insurance plan, officials said.

County Chief Executive Officer Johnny Johnston is recommending supervisors approve the agreement.

Even if the deal is approved, the city of Santa Paula would have to agree to subdivide the hospital property and approve a zoning change on the 16 acres to allow residential development.

Long said city leaders have already begun the process to make those changes.

Meanwhile, hospital trustees are considering a rival business proposal from a Pasadena company, Kare Healthcare Inc. Trustees said Kare has plans for paying off creditors, but no details have been released.

Hospital trustees and county officials negotiated for several months earlier this year in an attempt to reopen the hospital, but talks fell through over financing and control of the property.

Santa Paula residents have told the Board of Supervisors they are eager for the hospital to reopen so they would no longer have to drive 14 miles to Ventura for hospital care.