A last-ditch effort by business and community leaders in Sebastopol, Calif., has saved 49-bed Palm Drive Hospital from closure by its owner, Columbia/HCA Healthcare Corp.
Columbia has agreed to sell the facility to the West (Sonoma) County Healthcare Foundation and its allies for $2.5 million in a complex transaction scheduled to close Feb. 28, foundation officials said. A limited liability company formed by local business leaders will buy the hospital from Nashville-based Columbia and lease it to the foundation for $1 per year.
"We've been under incredible time pressure," said Dan Smith, a Sebastopol business owner who is chairman of "35 for Palm Drive," the corporation. The corporation has raised $1.5 million in cash and plans to borrow another $1.5 million to fund the purchase and make capital improvements.
Investors don't expect to make a profit, Smith said, but they hope to recoup their money within a few years, in part by selling hospital real estate holdings.
The foundation, which will operate the hospital, has raised $700,000 to cover operating expenses, said spokeswoman Judy Farrell. It expects to raise a total of about $1.2 million.
Under Columbia, the Palm Drive facility had about 300 employees, but it typically filled fewer than one-third of its beds. Foundation officials said they hope to operate the facility at a profit by staffing only about 10 beds.
Plans call for Palm Drive to offer emergency and acute care, an intensive-care unit, surgery, radiology, outpatient care and expanded skilled-nursing and women's health services.
Two healthcare consultants, Max Jack of Moraga, Calif., and Bob Phillips of Sacramento, Calif., will serve as interim administrators for the hospital once the transaction is completed.
A community group's acquisition of nearby Healdsburg (Calif.) General Hospital from Columbia last November prompted the Palm Drive action.