Hospital has a history of community support

Voters in the North Sonoma County Hospital District
(which stretches from Cloverdale to Windsor) are being asked to
approve a $150 per year parcel tax for Healdsburg District Hospital
in a special election on April 13.
If approved, the tax will replace an $85 parcel tax that
the voters approved in Nov. 2001, when the hospital district was
formed. According to hospital leaders, the publicly-owned hospital
will not survive the year without the extra money.
Between now and the election, we will explore the
history of the hospital, what has led to this crossroads, the
current structure of the hospital district, and what may happen if
the measure passes, or if it fails.
by RAY HOLLEY, Staff Writer
Hospital history
The following history is based on information provided by
hospital leaders, newspaper archives and a 1999 article written by
Marie Djordjevich Shobe, who was curator of the Healdsburg Museum
at the time.
Healdsburg has had a hospital since 1908, when Dr. J.W. Seawell
opened a five-room sanitarium in his home office on North Street.
The original building is the current home of the Camellia Inn, a
bed-and-breakfast establishment.
Seawell moved his sanitarium to the T. S. Merchant building at
the corner of Lincoln and Johnson Streets in 1920, combining it
with another facility run by Dr. E. E. Sohler. Seawell and Sohler
were helped by Nercilla Ames Harlan Jones, a former Army nurse, and
her husband Charles Jones, a former Army medic. The Jones’s
operated Healds-burg General Hospital until 1929 when it was
severely damaged by a fire. All seven of the patients were
evacuated to a nearby home.
The community reacted quickly. Ira H. Rosenberg offered the old
Rosenberg residence at East and North streets, site of the current
Jordan Oil and Gas Company building, as a temporary hospital.
A community fund- raising drive netted $50,000 from 45 citizens
in just 10 days for a new facility at the same location, Lincoln
and Johnson streets.
The building was completed in October 1929. The one-story,
concrete, fireproof building was considered state-of-the-art. It
had 10 private rooms, two-bed wards, a room signalling system, a
surgery, a delivery room, nursery, offices, solarium, kitchen and
dining room, and an emergency ambulance entrance.
It was one of the first hospitals of its size to be inspected
and recognized by the American College of Surgeons. Nercilla Jones
was its director for many years.
The hospital capacity expanded from 14 to 25 patients, and
served the ill from as far away as Annapolis and Boonville.
The original 45 donors and their heirs sold the hospital to
Chanco Medical and Electronic Enterprises in 1968. Chanco started
to look for a new location for the overcrowded and outdated
facility, then considered scrapping the expansion. Administrator
Duane Kenward and nurse Ramona DeBenedetti (like Nercilla Jones
before her) helped rally support for the new project. The work
began in 1969 on four acres of land on University Street, and the
hospital held a grand opening at its present location in January,
1972.
The old facility was sold and converted to offices for Duff
Chiropractic.
At the time the hospital was once again considered to be the
best of its type. With 52 beds and plans for up to 150 more, the
hospital had two surgeries, high-tech therapeutic and diagnostic
equipment, laboratories, a pharmacy, intensive care and maternity
units, kitchen and dining room, an emergency department, and much
more.
Nineteen patients were shuttled from Johnson Street and the new
era began.
Modern times
The new hospital went through a series of owners over the next
two decades. Chanco merged with American Medical Enterprises to
become American Medical International. AMI built new doctors
offices nearby, and expanded the hospital’s technological
capabilities.
In 1988, AMI helped 15 of its hospitals form an employee-owned
firm, EPIC, which was eventually acquired by Health Trust in
1993.
In 1995, healthcare giant Columbia/HCA acquired the hospital.
Columbia/HCA was on a rapid growth pattern, and overextended
itself. In March 1998, Columbia/HCA officials announced that unless
a buyer was found for the hospital it would close in 90 days.
At that time, although the hospital served patients from
throughout the north county, it was still primarily considered to
be a Healdsburg institution.
Dan Rose, a Healdsburg physician nearing retirement, decided not
to let the hospital close.
A number of groups were formed to investigate buying the
hospital from Columbia/HCA, but Rose’s group got the blessing to
negotiate exclusively with Columbia/HCA.
The community raised $500,000 by the end of October 1998, and
the purchase was completed the following month, using the city of
Healdsburg’s tax-exempt bond capability. A new Chief Executive
Officer, Ed Bland, was hired.
Nuestro Hospital, as the new entity was called, struggled to
find its focus in a rapidly-shifting healthcare environment.
In July 2000 Bland announced that the hospital was in good
shape. At that time Bland said, “at the end of the first six months
of this year we have a positive net operating margin and a positive
bottom line. Our board is pleased with our financial position
through the first half of 2000 and we expect to finish the year
with positive numbers on the financial report.”
He was wrong. An accounting error surfaced a few weeks later,
and Bland reported that the hospital would instead finish the year
$2 million in debt.
Healdsburg’s 2000 Mayor, Eric Ziedrich, expressed concerns about
the oversight at the hospital. “I understand that HMOs and the
health industry are very complex,” said Ziedrich, “but it’s
certainly very disconcerting that there could be a $1.6 million
accounting error. I hope the alarms are going off over there.”
The alarms kept going off. Bland and Rose (chairman of the
Nuestro board) looked at every option. They discussed mergers or
buyouts with with Memorial and Sutter hospitals, and they
considered closing various departments.
Nuestro did take drastic steps in March 2001, closing the
maternity ward, the intensive care unit, and two-thirds of the
beds. That move helped cut costs, but had an unanticipated
consequence. As doctors sent their intensive care patients
elsewhere, they took other procedures as well, and the hospital
continued to lose money.
That spring, the hospital announced a “make or break” strategy,
a plan to form a public hospital district and ask voters to tax
themselves to help keep the hospital open.
The new district was drawn widely, including the communities of
Cloverdale, Geyserville, Healdsburg, and Windsor.
In November 2001, voters approved the new plan by more than 80
percent. Rose said that a lot of hard work was still ahead. “This
buys us time while structural changes in health care are put in
place,” he said.
The Sonoma County Board of Supervisors appointed the five-member
North Sonoma County Hospital District board in Jan. 2002, and the
district proceeded to borrow $2.5 million from the county to buy
the hospital from Nuestro through eminent domain.
Nuestro had millions more in debt than assets, and filed for
bankruptcy – its debts are still unsettled – but it had bridged the
gap between hospital owners.
The hospital district – and its elected board – went through
growing pains in its first year. Ziedrich had taken two years off
from public life after leaving the City Council, then joined Kurt
Hahn, Herb Polesky, Marjorie Smith and Jack Air on the board. By
the summer of 2002, however, Ziedrich had resigned from the board,
primarily over conflicts with Hahn about the rules for public
meetings. Smith served out the rest of the year, but declined to
file for re-election, also accusing Hahn and the rest of the board
of not following the law.
Bland resigned in July 2002. A couple of months later, the
district hired Dale Iversen, former CEO of Warrack Hospital, as the
new hospital boss in Healdsburg. Iversen had a personal interest in
the hospital’s survival – he was born there.
In early 2003, the hospital teetered on the brink once again.
“If we maintain business as usual, we’ll be going out of business
in mid-March,” said Chief Financial Officer Dan Hull in February.
Hospital leaders developed a “12-Step Turnaround Plan.”
The plan called for a series of 12 initiatives, which included
increasing surgical services, cutting costs, asking the taxpayers
for help, and securing $3 million in emergency financing through
fundraising and a loan from the county.
“This started out as a business plan … now we’re calling it a
turnaround plan,” said Iversen.
In March, the hospital got the county loan, another $2.5
million, bringing the total owed to the county to almost $8 million
– all guaranteed by the taxpayers of the district.
Hospital leaders focused on the Turnaround Plan, but many
aspects of it fell behind schedule. The income-producing
initiatives are just now beginning to indicate whether they will
fulfill their potential.
Yet the hospital stayed open, in part, said Hull and Iversen,
due to strong support from local doctors who keep sending patients
to the hospital. A flu epidemic in December helped as well, giving
the hospital a strong finish to the year 2003.
A plan to ask voters to increase the parcel tax from $85 to $125
in November 2003 was postponed, and the district eventually settled
on $150 as the new parcel tax figure. A date was set for April 13,
2004, one of the last possible dates that could allow the hospital
to collect on next year’s property tax bills. Hospital leaders
wanted to wait as long as possible before the vote, in part to
avoid conflicts with March primary elections, and to give the
Turnaround Plan more time to prove itself.
In early 2004, the hospital district adopted an ambitious new
budget for the year, that calls for revenue increases from $10.7 to
$14.5 million. Hull defended the projections, saying that
incremental improvements in many areas justify the projected
increase of 26 percent.
The plan is an all-or-nothing scenario. District board member
Air puts the current situation in perspective with the succinct
comment, “There is no Plan B, either this tax passes or we close
the doors.”
Next week, part II of the series on Healdsburg District
Hospital.