Palm Drive Hospital set to close April 28

A rural hospital in Sonoma County has filed for Chapter  9 bankruptcy.

The governing board of Palm Drive Hospital, located in rural Sebastopol, California, voted unanimously to close the hospital next Monday, April 28. The 37-bed hospital has filed for Chapter 9 bankruptcy twice in the seven years since its opening. The news is met with disappointment by residents and staff, who are concerned about patient access to healthcare in Sonoma County.

Former district board president Dan Smith and orthopedist Michael Bollinger, two members of the Palm Drive Healthcare Foundation, had assembled a 71-page  proposal to attempt to keep some services open. The plan involved shuttering the inpatient ward, and reducing services to a two-bed intensive care unit, three inpatient beds and an emergency department. The proposal also included new lines of revenue, such as physical therapy and telemedicine. 

However, due to cash restraints, the hospital did not find the proposal to be an option. 

"Although the foundation proposal includes a well-intended, interesting and well-thought-out plan, given the short turnaround time-frame provided, it is not financially feasible as presented," read a memo from district staff in the North Bay Business Journal. The proposal also failed to address the hospital's current budget problem, but instead relied on projections from future accounts receivable to finance the hospital.

The agreement to close the hospital included an amendment to extend talks with the foundation to determine whether a long-term, post-closure plan could be found. Several proposals have been considered to meet the health care needs of the region after Palm Drive closes, including a 24/7 urgent care clinic.

Through the use of alternative treatment settings, including account receivable services, the cost of maintaining a hospital could significantly decrease. Hospitals that are struggling with accounts receivable management should consider outsourcing receivables to Professional Medical Services.