Foundation History

A Brief History of Palm Drive Hospital and the Foundation originally written by Richard Powers, M.D.

On May 12, 1941, Martha Helwig, a local nurse, recognized the need for a hospital in West Sonoma County. She persuaded her husband, Al , to develop a hospital. They picked a site atop a palm-lined drive overlooking the Laguna (north of the present site).

Early adminstrators were Ralph Thole and Carl Lindgren. In the 1950s, Al Carrion, the Helwig’s son-in-law, became the administrator. He served in this position until retiring in 1976.

The little hospital provided medical, surgical, and obstetrical care until 1970, when Palm Drive Hospital was bought by Hospital Corporation of America (HCA), a large hospital chain from Tennessee. The corporation invested ten million dollars to build the present facility, which it was to manage and operate. In the 1980′s HCA created a new corporation (Health Trust) for smaller, less profitable hospitals.

In the 1990′s, along came Columbia, buying everything medical it could swallow. It partnered with HCA and bought back Health Trust and, thus Palm Drive Hospital. It then bought Healdsburg General Hospital and was maneuvering to take over Sonoma County Community Hospital in about 1997, but lost to Sutter. As a result of that defeat, Columbia decided to sell Palm Drive Hospital and Healdsburg Hospital, offering them to several prospective buyers. In May of 1998, Palm Drive Hospital began losing an average of $50,000 a month. However, because it was not losing nearly as much as its sister hospital, Palm Drive Hospital was repeatedly reassured that it would not be closed.

On November 12, 1998, Columbia called an emergency meeting of the Medical Staff and the Board of Directors and told them that Columbia would close the hospital to admissions in two weeks. They would close everything, including the emergency room, by January 1999.

Columbia’s business practices had gotten them into trouble with the government; they were restructuring, and had to have Palm Drive Hospital written off their books by January 1999.

The beginning of the Foundation: Fortunately, the Sebastopol area Chamber of Commerce had noted what Columbia had done in Healdsburg. The Chamber had already organized the Health Economic Development Committee, chaired by Frank Mayhew. That Committee immediately created the West County Health Care Foundation, which was incorporated November 14, 1998. The Foundation began raising awareness and funds through public meetings regarding the imminent closure of the Hospital.

The Foundation needed to raise one to 1.5 million dollars to prove to Columbia/HCA that the citizens of West County were serious about buying their hospital. By mid-December, the Foundation had raised $750,000, with another $750,000 to raise before the January 15, 1999, deadline. Time was running out.

Brian Cooper and Jeff Edelheit proposed a limited liability company (LLC), which could be quickly created and raise the capital to buy the Hospital. They called together a group of West County citizens (“35 for Palm Drive”), and the LLC raised over one million dollars and borrowed the remainder from National Bank of the Redwoods. That got Columbia to delay the closure until March 1, 1999.

The beginning of five years: Harry Polley and other negotiators persuaded Columbia to sell everything to the LLC at salvage prices. The LLC then contracted with the West County Health Care Foundation to operate the hospital.

In the meantime, the Foundation had hired consultants Bob Phillips and Max Jack to develop a plan so that Palm Drive Hospital could operate without a loss of $50,000 per month. The plan called for downsizing to a six- to eight-bed medical/surgical and a one- to two-bed ICU hospital and sharing administration with Warrack Hospital. Unfortunately, this plan proved not to cover the fixed cost of lab, x-ray, emergency room, and the infrastructure to satisfy regulatory agencies.

Subsequently, the Foundation hired Neil Martin, a seasoned hospital administrator from Arcata, to reverse the negative cash flow. Unfortunately, it was a time of great turmoil for the local hospital employees and the medical staff. Eventually the Foundation brought in Bob Schapper to provide vision and to guide the hospital through its tri-annual inspection by the Joint Commission on Hospital Accreditation (JCAHO) and the Department of Health Services.

The Foundation still could not generate enough revenue to cover the operational expenses. It had initially borrowed a million dollars from the Exchange Bank through a U.S. Department of Agriculture guaranteed loan. Bob Schapper and Judy Farrell were able to persuade two West County citizens each to loan an additional million dollars to subsidize the operations and keep the hospital open.

In September 1999, the leaders of “35 for Palm Drive” proposed the formation of a hospital district, which would be the first new hospital in California in 20 years. In April 2000, the West County citizens voted to form a district and gave a 93 percent majority endorsement of a 5.9 million-dollar general obligation (GO) bond for the hospital district. The bond was used to purchase the hospital from the LLC, leaving a residual of a couple million dollars for structural improvements and earthquake retrofitting of the hospital.

In April 2001 the district passed a parcel tax of $60 per parcel for the next five years, which would generate about 1.2 million dollars per year to pay for uncompensated care and subsidize other operations, such as the emergency room. In order to draw on the parcel tax funds, however, the hospital operations had to be managed directly by the Health Care District. Therefore, on November 1, 2001, the Palm Drive Hospital Health Care District took over the operation of the hospital from the West County Health Care Foundation, assuming all the assets (including accounts receivable, equipment, and goodwill) as well as the liabilities (the three loans and accounts payable).

Operating a small hospital in Sonoma County continues to be a challenge for all of us.

The Foundation continued with its mission to improve health care in western Sonoma County by raising funds to keep Palm Drive Hospital open. In hopes of improving the recognition of that mission to the hospital, the Foundation changed its name to the Palm Drive Health Care Foundation in 2003. In that year, they raised over $250,000. The Foundation is developing an endowment program to assure long-term support so that it can maintain local control and local access to health care in an ambience of excellence, honesty, integrity, caring and compassion, along with stewardship of the resources and mutual respect, as well as teamwork in West Sonoma County.

It is hoped that in the future, when the hospital operations is more self-sufficient, the Foundation may turn more attention to its other mission of outreach into the outlying communities in western Sonoma County.

The current Foundation Board of Directors consists of active citizens dedicated to improving the health status of all residents in Western Sonoma County with hospital care, medical care, health improvement and health education.