Kaiser turning to county's small hospitals for help
 

July 24, 2002

By BLEYS W. ROSE
THE PRESS DEMOCRAT

Kaiser Permanente is quietly shopping for more medical office space and is negotiating with Sonoma County's three smallest hospitals -- Healdsburg, Palm Drive and Sonoma Valley -- in anticipation of more new members than it can handle.

Talks come at a time when Kaiser, a self-contained medical system that does not use private-practice physicians, stands to benefit from defections from its bankrupt rival, Health Plan of the Redwoods.

Kaiser has agreed to add 600 new members to its Medicare program, following the announcement that HPR will cease offering Medicare coverage after Oct. 31.

"This has been in the works before HPR filed bankruptcy, but it has taken on more urgency since then because we think there will be other people who want to join," said Dr. Bob Schultz, medical director of the Kaiser Permanente Medical Center in Santa Rosa.

Kaiser expects to open medical office buildings on an Old Redwood Highway site in north Santa Rosa in late 2005, but rapid membership growth forced Kaiser to launch an immediate search for about 20,000 square feet of office space that could open next year. The space under consideration is about a quarter the size of one of its Bicentennial Way medical office buildings.

When Kaiser announced its Old Redwood Highway plans two years ago, it anticipated 130,000 members by 2003 -- a number already surpassed.

Kaiser now has 138,000 members, or about half the total number of people enrolled in health maintenance organizations in Sonoma County.

"We want something that could be done quickly because, if we get a big influx of members, we will need more space," Schultz said.

HPR, with 78,000 members, is in the midst of a bankruptcy reorganization that its officials believe is likely to result in a smaller HMO that will contract with fewer physicians. They maintain they can rebuild HPR despite the loss of 11,000 Medicare members and threats of service providers to stop contracting with HPR.

Three other large HMOs -- Health Net, PacifiCare and Blue Cross -- are negotiating with employers to offer plans in the event HPR fails to pull itself out of bankruptcy.

Meanwhile, officials at the three small hospitals confirmed that negotiations are aimed at funneling Kaiser members to the Healdsburg, Sebastopol and Sonoma facilities.

Within the past year, all three hospitals have secured parcel taxes from voters to keep the financially shaky facilities open.

Sonoma Valley Hospital officials want to handle Medicare patients who are served by Kaiser facilities headquartered in Marin County, which includes the Petaluma medical offices.

Palm Drive Hospital officials say they are close to an agreement with Kaiser to provide services to Kaiser members in the west county. However, they said they are not prepared to provide details until Kaiser officially agrees to the contract.

Meanwhile, since January, Healdsburg Hospital has treated about a dozen Kaiser patients in its acute care unit after they had procedures at Kaiser in Santa Rosa.

Healdsburg Hospital chief executive Ed Bland said it has had "a couple patients a month" receiving skilled nursing care there rather than at Kaiser, mostly because the north county hospital is closer to a patient's home or friends and relatives.

"Kaiser is busting at the seams down there," Bland said,

He said the hospital has discussed putting some Kaiser surgeons at the Healdsburg facility, but no agreement has been reached.

"Kaiser has been very open about their needs. They need extra beds and we have extra beds," Bland said.

Sonoma Valley, like Palm Drive and Healdsburg, needs the patients because more patients means more revenue.

All three hospitals were in danger of closing or sharply curtailing services until they were bailed out by voters supportive of community-based health facilities, including emergency rooms.

Dr. J. Nevin Smith, president of the 50-member Valley of the Moon Medical Group, said Sonoma doctors would like to handle Kaiser patients on a contract that would benefit valley residents who would not have to travel to Petaluma or Terra Linda for services.

Specifically, Sonoma Valley wants to handle seniors and disabled people in Kaiser's Senior Advantage Medicare program.

"It is very, very preliminary," Smith said. "We are just exploring ideas. We have had one talk and will will have some more talks."

At Sebastopol's Palm Drive Hospital, officials have been in talks with Kaiser for about two months about circumstances under which Kaiser members could use the hospital.

Spokeswoman Judy Farrell said the hospital hopes to be able to announce next week exactly what services will be available to Kaiser members.

Kaiser has set a precedent for contracting with private practice doctors. Last February, it put Kaiser oncology specialists in the new U.S. Cancer Center in Rohnert Park. The center treats cancer patients from Kaiser as well as those referred by physicians in the Valley of the Moon Medical Group and the Sonoma County Primary Care IPA, based in the west county.

Contracting with hospitals and doctors outside the Kaiser system are not unprecedented for Kaiser in California and often is used to fill in service gaps until the HMO builds facilities or hires doctors.