Reinventing Sonoma Valley Hospital

Jul 16, 2018 | From the SVH CEO

There’s been growing speculation about the special Sonoma Valley Health Care District board meeting scheduled for July 25 which the public is invited to attend, as always. I’d like to clarify what hospital administration is presenting at that meeting and why.

Administration is presenting a proposed budget for fiscal 2019, which includes the administration’s analysis on the viability of three service lines. We are recommending closing two services –  Obstetrics and Skilled Nursing – and transferring Home Health Care to another local nonprofit. There are compelling reasons for these recommendations.

The hospital industry is being transformed by healthcare trends that are having a profound impact on community hospitals like ours. Small hospitals are quickly realizing they must reinvent themselves to have a role in this rapidly changing system.

It’s become clear that a community hospital can no longer try to be all things to all people but must refocus on essential community needs. This means emergency services and the critical services required to support it such as surgery, ICU, pharmacy, diagnostic imaging, and laboratory.

The biggest challenge we face is the rapid shift from inpatient to outpatient services. The combined impacts of dramatic advances in medical treatment and technology, reduced government reimbursement for services, and rising costs are causing a decline in the amount of time that patients spend in hospitals.

To keep our commitment to our community, SVH is focusing on how we can maintain the most important and highest utilized service – our Emergency Department. There’s no doubt that this service is greatly valued and necessary to ensure that our community has access to the high-quality healthcare it expects.

We are streamlining services with emphasis on those that contribute to the Hospital’s financial sustainability.  We’re also investing in new outpatient services, such as the diagnostic services project recently approved by the board that will bring state-of-the-art technology to the hospital. A project, incidentally, funded entirely by our amazing donors.

The reality is that a small hospital today cannot continue to provide services that lose money, no matter how good those services are. For several years we’ve carefully examined each service to determine its financial viability. In the process, we’ve found that these three services are no longer sustainable despite our best efforts.

Skilled Nursing. Our Skilled Nursing Facility is excellent but is very small and is now losing money due to lower reimbursement and fewer patients. It had a loss in the past fiscal year and we project worsening performance in the coming year. The fact is, we are one of the few hospitals to still have a skilled nursing facility because it had traditionally contributed to the bottom line and is an excellent service for our community. Unfortunately, our size limits our ability to succeed in this service line. However, good alternatives are readily available as the community has several highly-rated SNFs to choose from.

Obstetrics. We know this has been a concern for some in our community. We heard you in 2014 when we raised the possibility of closing obstetrics. Since then, we’ve worked hard to make this service financially viable. But the continued decline in births locally, reflecting the national trend, has made the situation worse. We have an average of 2 births per week now, which is not sustainable. In FY 2018, the number of births at the hospital dropped for the second consecutive year, down 35% from 2015 and almost 50% from 2010. We estimate a loss of more than a half-million dollars for OB in the fiscal year ending June 2018.

Home Health Care. Our Home Health Care service is another gem and we are pleased to say we have an alternative to closing this department that will maintain the service in our community and retain staff.  We realize this is an important service for many in our community, especially the elderly, and we’re in discussion to transfer the service to a large, local and highly respected nonprofit.  We do not expect the community will experience any disruption in home care with this transfer.

No hospital wants to be in the position of closing services, especially high-quality services like these, but the financial realities of healthcare today are forcing hard decisions.

Some have asked why the increased parcel tax does not cover these shortfalls? The parcel tax is critical to hospital finances, but it’s not intended by itself to make the hospital financially sustainable. We need the parcel tax to supplement State and Federal insurance payments, mainly Medicare and Medi-Cal, which are below the cost of providing hospital services, and help ensure continued local access to hospital emergency room care and other critical services.

Fortunately, we have many services with positive, sustainable margins including surgery, outpatient rehabilitation, outpatient diagnostics, and special procedures such as wound care.  Our new plans to combine Inpatient Services on one floor with ICU, Med/Surg and A Woman’s Place will result in positive margins for Inpatient Services as well.

Our success depends on physicians. So, we’ve focused on increasing access to specialist physicians such as Cardiology, Ob/Gyn, Orthopedics, General Surgery, Pain Management, Breast Surgery, Ophthalmology, Urology, Gynecology and ENT here at home.  Working closely with UCSF, we will continue to bring even more specialty services to our community, including through telemedicine.

I believe we’re well along in the process of showing how SVH can reinvent itself to thrive in the years ahead while continuing to meet the critical healthcare needs of our community.

We thank our community for its continued support and assure you that we are committed to our vision of making Sonoma Valley Hospital the best community hospital in California.

In good health,


Kelly Mather
President and Chief Executive Officer
Sonoma Valley Hospital

Meeting Details:
Special Health Care District Board Meeting
Wednesday, July 25, 6:00 pm
Sonoma Valley Hospital
Basement Conference Room
347 Andrieux Street
Sonoma, CA 95476