California hospital looks to boost finances after losing lucrative toxicology revenue

Leaders at Sonoma West Medical Center in Sebastopol, Calif., are exploring ways to increase revenue after the hospital shut down its lucrative toxicology program in late February, according to The Press Democrat.

SWMC suspended the program after Anthem sent hospital leadership a letter claiming the hospital was involved in a lab testing scheme. In its letter to the hospital, Anthem claimed the scheme resulted in the insurer making $13.5 million in payments to the hospital. "Sonoma West appears to have conspired with several third parties to fabricate or misrepresent claims for toxicology testing services that were improperly billed to Anthem," the letter stated.

Anthem threatened to take legal action against SWMC and its owner, Sebastopol-based Palm Drive Health Care District, if the funds were not returned immediately. The insurer also said it would deny all claims for urine testing the hospital submitted as of Jan. 22.

The alleged lab testing scheme gained national attention in late March when CBS aired a special investigative report. In June 2017, the governing board of SWMC and the Palm Drive Health Care District approved a lab management agreement with Durall Capital Holdings, a Florida-based company owned by Aaron Durall. The agreement reportedly generated more than $31 million over an eight-month period, according to CBS.

Now that the agreement with Durrall Capital has been terminated, SWMC is exploring ways to generate new revenue. Dennis Colthurst, president of the board of directors of the Palm Drive Health Care District, told The Press Democrat he remains optimistic about the hospital's future.

"We're treating patients, our emergency room, our surgery department are open," he said. "We're looking at the next steps to increase revenue through extra lines of work."

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