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Council delays SPMH legal action, offers resolution of support for VCMC merger

June 06, 2003
Santa Paula City Council

There was a full house when the City Council met Monday to discuss their next steps in dealing with the financially failing Santa Paula Memorial Hospital.

There was a full house when the City Council met Monday to discuss their next steps in dealing with the financially failing Santa Paula Memorial Hospital.Fueled by information that SPMH was lethargic in tackling affiliation talks with the county health system, reports that employees at the “Hospital on the Hill” are purchasing supplies, and that retirement fund contributions had not been deposited, the council reacted strongly. Last week they asked the city attorney to prepare a report on eminent domain, Attorney General intervention or a Grand Jury complaint.Councilwoman Mary Ann Krause detailed how “we got to this point” from the time SPMH announced in late December that it was in danger of closing its doors to the formation of the Santa Paula-Fillmore-Piru Ad Hoc Committee which she chaired.The committee believed there was improvement at the hospital, which had hired consultants to study affiliations or mergers, among other issues.Although told by the SPMH board and Mark Gregson, chief operating officer, that “things had significantly improved at the hospital, ongoing operations were taking care of themselves and old debt at that point was the only concern,” a flurry of phone calls to council members in recent weeks created alarm.Complaints ranged from Emergency Room cleanliness to the “lack of paper products. . .broken equipment,” due to lapsed maintenance contracts could not be fixed, “borrowing supplies, doctors moving surgeries to other hospitals,” and physician consideration of a vote of no confidence in the hospital, said Krause.Board consideration of “Taking on additional debt,” in addition to the present $1 million line of credit and reports that employees were being sent home early to shave the payroll were also reported.Krause noted that the council only seeks movement in negotiations with the county.Concerns about the fiscal condition of the hospital and management have risen, said Vice Mayor Gabino Aguirre. “The news from the community paints a dire picture indeed. . .there is no question of the value of the hospital to the community and as a council we are committed to maintaining it.”“We’re actually here to look at options on how we can help keep the hospital open,” said Councilman Ray Luna.Hospital employees are afraid to speak publicly about the situation, noted Councilman Rick Cook. “These concerns have come from your employees, not mine.”Cook said the issue of retirement payments is critical and asked for trust details, including whether or not representatives of Quorum Health Resources, which employs Gregson and the SPMH financial officer, can withdraw funds from the trust.The Ad Hoc Committee had been told that retirement deposits were current and that the hospital had retrofitting funds: “We were told yes and now are told no, you don’t,” said Cook.Hospital employees are “in fear” and fear “retribution from higher up,” if they offer public testimony, Cook noted.“This is not a witch hunt,” but rather exploration of a contingency plan if negotiations with the county are further stalled, said Mayor John Procter. “We have a common purpose here, we need to get to the bottom of some kind of solution to the problem.”Carol Burhoe and Rodney Fernandez, members of the SPMH board for less than two years, told the council that the hospital needs help and support.“The good news is we’ve managed to keep the hospital open and maintain the level of services the community needs,” said Burhoe, who has been meeting weekly with employees to update them on the situation.Although the patient census rose 27 percent through January-April over the previous nine months and expenses, including payroll, have been trimmed, current revenues are not enough to cover overdue bills.Burhoe added that the SPMH board has been meeting “constantly, 34 times since the first of the year,” reviewing and developing strategies as well as considering partners. With county approval a partnership can be forged within 60 days, she noted.
“Quorum has been on a lot of people’s minds,” and the board last month took action last month to “end the contract,” noted Fernandez.Quorum is paid over $500,000 annually for Gregson and financial officer Dan Jessup plus assorted added consultant fees. The company has also not been paid for approximately six months, said Fernandez.SPMH is hoping to avoid bankruptcy, he added, but “we need somewhere in the neighborhood of $3 million,” for debt; although retirement deposits were delayed, they are current and the next payment is due September. “We’re in difficult times, there’s no question,” noted Supervisor Kathy Long.The SPMH board voted to negotiation an affiliation with Ventura County Medical Center two weeks ago, she noted.Questions raised by Cook and others about hospital debt need to be addressed: “The board of supervisors has the due diligence” to examine SPMH’s full finances among other issues to broker a deal. “. . .we’re aware of the challenges but are also aware of the wonderful opportunity,” for an affiliation.Numerous public speakers took the opportunity to criticize the council for their “threats of litigation” said Walt Adair, the former police chief, or to question SPMH management practices and the hospital’s future.“I want to know if my family or friends get sick will we have a local hospital,” asked John Wisda. “We should go forward with a new resolve and tougher approach. . .”With the shortage of supplies and inoperable equipment physicians are hesitating to use SPMH, said Agie Kessler, the office manager of an area physicians’ practice. “If this hospital closes down it would be extremely difficult to replace,” area doctors, who are still awaiting SPMH service payments.“I think finally we’re on the right track,” with looming county negotiations, said Dr. Ernest Carlson, who served on the SPMH board for 14 years and is an Ad Hoc Committee member. Carlson cautioned against bankruptcy as “creditors would jump on the land and anything else they could lay their hands on. . .”“I see great nurses leaving us, great physicians and others drifting away,” said Dr. Michael Sparkul. “The future for SPMH is pretty grim; if it should close it would catastrophic. . .”“Santa Paula Hospital is Santa Paula,” said Latino Town Hall President Bob Borrego. “. . .there’s no guarantee a merger will go through and you are poised to take action,” if an affiliation with the county fails.“I’m glad to know that Quorum was given notice,” as recommended by the Ad Hoc Committee, said member Scott Rushing.Due to public testimony, “perhaps it would make sense to lay aside this item for a period of time,” to see how negotiations proceed and instead offer a resolution to the board of supervisors supporting an affiliation, said City Manager Wally Bobkiewicz.After Krause received assurances from Fernandez that a bankruptcy would require a vote of the full board, Aguirre asked if there were any guarantees that the hospital will remain viable.“There are no guarantees in life but we’re working very hard,” to ensure the hospital stays open, said Fernandez.“I can make a guarantee,” said Aguirre. “We’re going to count on you and the board,” to keep the doors open. If there is any indication the hospital might close, “if it means eminent domain, that’s what we should do, if it means going to the attorney general, that’s what we should do and if it means going to the grand jury that’s what we should do.”“. . .when they merge with the county the board will be known as the board that saved the hospital, not the board that sank the hospital,” whose “real owner” is the community, said Cook.