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Santa Paula Hospital in Critical State

Chapter 11 looms as the medical center struggles to stay open until a deal with Ventura County is sealed.

May 30, 2003|Daryl Kelley | Times Staff Writer

Santa Paula Memorial Hospital's ability to stay in business has taken a deep hit in the last 10 days as the number of patients at the medical center has fallen from 22 to eight, raising the possibility of bankruptcy if a deal to join Ventura County's health system is not completed quickly.

Hospital officials confirmed Thursday that the hospital's debt has swollen to $3.7 million, that it is struggling to make its $200,000 biweekly payroll and that some vendors are withholding medical supplies because of late payments.

Unless things improve, it will be difficult to keep the Santa Clara Valley's only general hospital and emergency room open until the county deal is sealed in perhaps 60 days, they said.

"It's going to be close," hospital Chief Executive Mark Gregson said Thursday. "We're doing everything we can to stay intact while negotiations are finalized."

Phillip Romney, chairman of the board of trustees, said bankruptcy reorganization is the hospital's final option. "We have been doing everything we can to avoid going into Chapter 11 reorganization," Romney said. "It's simply a matter of if we find ourselves in a situation where we don't have adequate supplies to treat a patient, we'll divert the patient elsewhere."

Meanwhile, the Santa Paula City Council has called a special public hearing for Monday evening to consider legal intervention to guarantee that the hospital stays open even if the proposed partnership with Ventura County falls apart.

And Supervisor Kathy Long, the point person for the county, said she was surprised and frustrated to learn from hospital trustees this week that the facility's finances have become so dire it could close in two weeks.

"Since we started this process in February, I've heard from [Gregson] that the patient volume is up, that they're doing fine," Long said. "Now I hear for the first time that they have two weeks to keep their doors open; that they're in critical condition."

The county Board of Supervisors is expected to appoint a negotiating team on Tuesday and will move as quickly as possible to reach an agreement to keep the 39-bed medical center open, including the only trauma center between Ventura and Santa Clarita.

"Whether it can be done in five or six weeks or five or six months has to do with [the hospital's] cooperation," Long said. "I made it clear to the trustees that as soon as the board action Tuesday, they need to provide all the information they have .... We're committed to this, but it will require all the trustees to put everything on the table and have all the truth. This is not the time to be holding your cards."

Romney said trustees and hospital administrators will be available to the county at any time to complete the deal, which he estimated could take at least 60 days. He said he has made it clear since December that the hospital was in jeopardy.

The 42-year-old Santa Paula hospital, one of three in California built solely from community donations, has been losing $3 million a year and has not turned a profit on operations since 1988. Cash assets and investments of $15 million have been depleted, and Gregson said liabilities now include $2.7 million in debts to suppliers and a $1-million line of credit that has been nearly all spent.

Officials announced in December that the hospital needed to raise $600,000 in 90 days to avoid possible closure or downsizing. Conditions improved in the first 4 1/2 months of the year, peaking at about 30 patients a day.

But they took a sharp downturn the weekend before last, Gregson said, and have plummeted from 22 patients on May 18 to just eight on Thursday. The hospital needs about 21 patients a day to break even, he said.

Gregson could not explain the sudden decline, except to say that it is partly the result of a normal seasonal downturn. He said he has detected no reluctance by doctors who use the hospital to keep coming back.

He said the hospital's surgery calendar is heavy for June, and that he expects it to continue to operate fully.

Santa Paula city officials said Thursday they will do what it takes to make sure that happens.

Members of the City Council, meeting behind closed doors at 7 a.m., asked their lawyer to brief them next week on three legal options they could pursue if the hospital's negotiations with the county fail.

The council is set to consider seizing control of the hospital through condemnation, asking the state attorney general to take control or give the city authority to take control of the facility, or requesting a criminal investigation of the hospital administration by prosecutors.

Officials called the Monday hearing in response to complaints from some of the hospital's 240 employees and the public about what they see as the slow pace of hospital talks with the county, City Manager Wally Bobkiewicz said.

"I think the council wants to make sure that patients can go there and get proper health care in the long term," he said.

Councilwoman Mary Ann Krause said the council does not want to impede the hospital's negotiations. "We don't want in any way to harm them," she said. "We just want to do what we can to make sure the hospital stays open."

Hospital trustees voted two weeks ago to affiliate with Ventura County's public hospital system.

While the Santa Paula facility would gain financial stability through a partnership, Ventura County would gain a core objective of keeping open the hospital's trauma center for treating critical injuries.

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