Leaders say hospital cannot stay open without tax 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. It is a $65 increase. This is
part five in a series on the local hospital and the upcoming parcel
tax election.
By Ray Holley, Staff Writer
North county voters are making a larger decision on April 13
than whether or not to increase their parcel taxes by $65 a year.
According to Healdsburg District Hospital leaders, the decision is
about whether a small community hospital can stay open.
“If this doesn’t pass, will this still be an acute care
hospital?” asked Chief Financial Officer Dan Hull. “I don’t think
so.”
This part of our series on the hospital parcel tax question will
look at why the district chose the $150 figure, how the money will
be used, and what happens if the measure fails.
The magic number
Over the course of the last year, the hospital management staff
and members of the North Sonoma County Hospital District board of
directors have been developing, adjusting, and refining a financial
forecasting tool based on the “12-Step Turnaround Plan” that the
hospital adopted in January 2003.
“The model,” as it is referred to by hospital leaders, is a
multi-page, multi-layer spreadsheet, and it featured prominently in
the district’s decision to ask for an increase from $85 to $150 per
parcel.
The district board held a study session on Oct. 6, 2003 and
tested a variety of figures, from $125 to $165, to see how each
scenario affected the hospital’s future budget.
“We looked at various numbers,” said Chief Executive Officer
Dale Iversen. “This one gives us what we need, but it’s not a
cushion with a lot of fat in it.”
The various scenarios all pointed to a need for a minimum $50
increase, to $135. So why did the district end up with $150?
It was a combination of experience and conjecture. The district
had already been hit with a series of unpleasant surprises that
affected the hospital’s profitability, among them the bankruptcy of
Health Plan of the Redwoods, a state-mandated increase in the ratio
of nurses to patients, and a decrease in reimbursement from the
state for MediCal patients.
Although $135 a year per parcel tax might cover all of those
problems, what might be coming next caused the board to be more
assertive with the number.
“We don’t see all the things on the road ahead that will affect
us,” said Herb Polesky, chairman of the district board, “we need to
be prepared for contingencies.”
Iversen agrees. “An air-conditioning unit can go out and
suddenly you’ve got an unanticipated $10,000 expense. We have to
keep a contingency, it’s sound business practice.”
By choosing a slightly higher figure, the district board also
hopes to give itself a little wiggle room. The board will hold a
public hearing each year to set the amount for the year ahead, and
it could choose a lower figure if the hospital’s budget looks rosy.
“Our goal is to eventually reduce this tax,” said Polesky.
Iversen said that the original $85 figure never was enough. “It
should have been higher from the beginning,” he said.
How will the money be used?
Hospital leaders say there are no plans to use the extra $1.3
million a year from the tax increase for extravagances. “We need it
for operations,” said Iversen, “it’s part of what makes the
Turnaround Plan work.”
Hull said the tax will be used for “general operating
shortfalls. It does not have any designations that limit its
use.”
For example, the money would not be set aside for the new
Emergency Department, which already has a $1.2 million pledge from
the Healthcare Foundation Northern Sonoma County. “It doesn’t come
with the restrictions that can come with donations,” Hull
noted.
Iversen wants to continue with the hospital’s recent practice of
raising salaries to be more in line with those in Santa Rosa. Why
raise salaries when the hospital loses money? “We have to keep
working to reduce the registry,” said Iversen, referring to medical
staff – primarily nurses – who are brought in from temporary
agencies, and cost much more than regular employees. Hull said that
by raising nurses wages last year, the hospital was able to hire
more nurses, expand its services, and still save $500,000 in
registry costs.
Iversen also hopes the tax increase will fund new
revenue-producing initiatives for the hospital. He is involved in
talks with Santa Rosa Memorial Hospital about “partnering to
provide more services,” such as a women’s health center or advanced
diagnostic imaging, that would require support from both
parties.
What happens on April 14?
Hospital leaders have stuck to a “there is no Plan B” philosophy
throughout the past year, as the Turnaround Plan has unfolded, with
some initiatives performing well and others behind schedule. If the
parcel tax passes, “we say thanks to everybody and go back to work
on new strategic initiatives,” said Polesky.
But, what if the tax does not get two-thirds approval from the
voters in the district made up of Windsor, Healdsburg, Geyserville,
and Cloverdale? Then, what happens?
“We haven’t spent any time on that,” said Polesky. “We’re
focusing on getting it passed.”
Hull said that without the extra funds from district property
owners, the hospital cannot sustain itself past the end of 2004.
“We see no way to maintain an acute care hospital,” he said “… I
don’t think this district was formed in order to become an
ambulance district. … Could we become a community-based health
clinic? We already have one (Alliance Medical Center) next
door.”
Iversen said that if Measure G fails, it will be important to
provide for an orderly closure. “Any of our employees could get a
job in Santa Rosa tomorrow for higher wages than they’re getting
here,” he said. “If they start taking those jobs we would have to
replace them with registry … the costs would go up and it (the
closure schedule) would accelerate.”
Iversen agreed with Hull that, even without more money from the
voters, the hospital can last until the end of the year, if there
are no surprises. “It’s critical that our staff knows this, so they
don’t start jumping ship … we have to stay together,” Iverson
said.
The city of Healdsburg is paying close attention. “If they don’t
have a Plan B, then we have to have one,” said City Manager Chet
Wystepek, who said that if the hospital closes, the city will try
to “exert its redevelopment powers to get control of that
facility.” Wystepek said the city would then look for another user
that would help “support that medical campus.”
Impacts of closure
There has been much public discussion of the risks to a
community that has to travel further for medical care. Doctors and
hospital leaders say that “people will die” without access to
emergency medical care, but there is also a social and economic
impact to the loss of the second-largest employer in town.
Healdsburg District Hospital has 260 full- and part-time
employees. Counting payroll, taxes, and benefits, it pays out more
than $9 million a year for its employees, and community leaders say
much of that money is then spent locally. “The economic impact will
be in jobs and spending,” said Wystepek. “Healdsburg has
approximately 3,500 jobs, and the hospital is about 7.5 percent of
those jobs. If you count the greater medical campus, it could be 14
percent of our work force at risk.”
A closure would affect Healdsburg most directly, but other
cities could also face impacts. Iversen said that the large Del
Webb adult housing development in Cloverdale might not have been
built if a hospital had not been nearby.
Matt Mullan, the Assistant Town Manager for Windsor, expressed
concerns about the loss of a major employer in the north county,
and noted that, “the hospital is convenient to Windsor, as opposed
to getting on Highway 101 and driving south.”
Mullan said that he isn’t aware of any contingency plans made by
the town if Healdsburg Hospital closes. “We’re watching the
situation,” he said.
Jim McAdler, the Administrative Services Director for Windsor,
said his department does not track the economic impacts of the
hospital on Windsor. “We’re certainly interested,” he said, “but we
don’t track specific employers that way.”
Healdsburg Police Chief Susan Jones said that her officers use
the hospital often, when someone is arrested who is under the
influence, for example. If an officer is tied up transporting that
person to Santa Rosa, “we might end up with just one officer on
duty and result in reduced coverage … and officer safety issues.”
Jones said that, when a call of a potentially violent nature comes
in, such as a domestic dispute, a single officer would have to call
for help from the Sheriff’s Department, which could delay response
times by 20 to 30 minutes.
Healdsburg Fire Chief Randy Collins said that, in 2003, his
department had “141 incidents of simultaneous calls,” where a fire
engine was already out on a call when another came in. If local
ambulance drivers are transporting someone to Santa Rosa, or
driving back afterward, Collins said that his department would have
to provide more medical care, which would require more money for
training.
Mike DuVall, who heads up the Coastal Valleys Emergency Medical
System, said that local disaster plans all assume that each
community has to be self-sufficient for at least 72 hours after a
disaster such as a major earthquake. He said that the north county
could be cut off from Santa Rosa in an emergency. Even in normal
times, DuVall said that Highway 101 traffic will have a large
impact on north county residents who have to travel south for
medical care. “The impacts will be far worse than you can imagine,”
he said.
Next week, the series concludes with a look into the campaign to
pass Measure G. The question will be asked: What do community
leaders in the north county say about who is supporting the tax
measure, and who is not?