Hospital progress report cautiously upbeat

Dr. Richard Kirk, Chair of the Sonoma Valley Hospital Board, began his presentation to the Sonoma City Council last Wednesday by introducing Chief Executive Carl Gerlach, whose contract, he reminded the council, the board had extended for two years. He then turned the mic over to Gerlach who would show how the business plan, on which the hospital has staked its future, is beginning to show results.
Talking over colorful carts and graphs, Gerlach outlined his goals, financial turnaround, facilities upgrade, and capital financing, and his reasons for optimism, a great clinical management team, excellence in operating room and diagnostic services, increased medical staff cooperation and demonstrated community support. He showed that the turnaround results so far were encouraging. November and January were hard, but in the last three pay periods, the charts showed, there’s been a substantial increase in cash.
Chief Financial Officer Jim McSweeney explained in a separate interview that thanks to having been able to attract 11 new doctors and more referrals by part time specialists, the patient volume has been up. “We’ve revamped the hospitalist program and that has allowed us to admit and treat locally, people at the margin who might have been treated elsewhere.” So cash flow is improving. He said the line of credit they managed to acquire will help with unexpected external events, such as the State budget cuts, which will impact Medical payments, which will especially hurt the small hospitals, who are like Mom and Pop businesses trying to compete with Costco.
“I don’t believe we can survive independently,” Gerlach told the council. McSweeney explained, “Health care is very labor-intensive. There’s an extremely high fixed cost. And it’s very hard, when you’ve got a labor-intensive industry, and your work is hands-on, it’s hard to improve productivity.” He said that all small hospitals have the problem. “We have very little ability to influence our raters. Blue Cross, and the others answer to their employees. We need to form a network and level the playing field.” Gerlach’s plan is to join with other district hospitals. “We look forward to benefits that will accrue in the long term from the joint powers agreement, contracting clout, and the ability to share some services and overhead,” he said. He concluded by reiterating that the $45 million bond financing is crucial to repair and refurbish the present facility and preserve local 24/7 emergency care. The bond money will also be used to purchase land for new buildings, and a subsequent bond would be required to pay for the actual hospital construction. Meanwhile, he said, it was urgent that they upgrade equipment, finance the necessary planning for future construction and achieve financial stability.
When it came time for questions, Mayor Joanne Sanders asked if this bond was to keep the ER going, what was the purpose of the previous parcel tax. Gerlach replied that the last parcel tax provided a subsidy. The intent of this one is to make sure the facility is renovated. Council member Steve Barbose asked to what extent the hospital is an economic driver in the Valley, “What’s the payroll?“ Gerlach replied that it is $22.5 million per year, and invited anyone interested to visit the hospital website. “It’s a great resource for information. We believe in transparency in governance.” Speaking of transparency, council member Stanley Cohen asked Kirk, “How are we to be sure that the $45 million is going to be spent as the board designates?” Kirk replied, “There’s a requirement that we provide a citizens advisory group to oversee the spending of these monies. There will be a citizens group looking over our shoulder all the time.”
So far, the presentation seemed to say, the plan is working. “We’re close to making money,” said McSweeney. “We made money in January. The need is going to increase. Gosh, if I were Bill Gates and I were rich enough to buy the whole valley, I’d build a hospital just to protect my property values!”