Sponsored by VMG Health | gregk@vmghealth.com | 214.369.4888

California hospital up for sale following toxicology lab shutdown

Ongoing financial struggles and debt have led the Palm Drive Health Care District to issue a request for proposals for the sale of Sebastopol, Calif.-based Sonoma West Medical Center, according to The Press Democrat.

District officials released a request for proposals for the hospital's purchase May 15. Officials are seeking a buyer who will continue operating the 37-bed hospital as an acute care hospital or "other healthcare facility," the report states.

Hospital and district officials have reportedly taken a number of steps to improve operations and increase the facility's revenue, but old debt continues to cripple the hospital, according to the report. Hospital financial data released to the publication May 15 showed the hospital accrued $1.5 million in revenue during the month of April, but noted $2.3 million in operating expenses and an operating loss of $800,000.

Officials said the need to sell the hospital became clear after the facility suspended its lucrative toxicology program. The hospital was forced to shutter the program earlier this year after insurer Anthem sent officials a letter to officials in March claiming the hospital was involved in a lab testing scheme that resulted in more than $13.5 million in improper payments to the medical center, according to The Press Democrat. Hospital and district officials have reportedly denied the allegations made by Anthem.

"At the end of the day, the West County needs a hospital with an emergency room with full services for the community. To me, having the emergency room is vital," said Dennis Colthurst, president of the Palm Drive Health Care District board of directors. "We're just testing the waters to see what's out there, and to see if a strong buyer comes along and has the capital to help lift it up a little bit and bring in patient business, such as surgeries — that would be great."

A district board member told The Press Democrat hospital and district officials have held informal talks with several healthcare providers in the area, but have not been successful. He said if no buyers come forward, the district may be forced to issue another request for proposals allowing potential buyers to operate the facility as something other than a medical facility.

More articles on transactions and valuations:
Opinion: Why employees' paychecks shrink as companies merge
2-hospital Pennsylvania system to affiliate with Ohio Valley Hospital
How the Catholic church can influence hospital M&A: 5 things to know

© Copyright ASC COMMUNICATIONS 2018. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.

 

Top 40 Articles from the Past 6 Months