District Begins Process to Seize Hospital and Halt Merger

The Camarillo Health Care District is taking steps toward seizing Pleasant Valley Hospital, as part of an effort to halt the planned merger of the Camarillo hospital with an Oxnard medical center.

The health district board voted unanimously last week to find an attorney to begin legal proceedings to condemn the nonprofit hospital and bring it back under the district’s control. Such a move would prevent Pleasant Valley from merging with St. John’s Regional Medical Center in Oxnard.

The action taken Friday night was the first move by the newly elected majority on the health district board’s battle to regain control of Camarillo’s only hospital.

The new majority indicated that their election gave them a mandate to do everything possible to stop the merger and ease Camarillo residents’ fears of losing their full-service hospital.

“The present hospital board is, in effect, ready to give our hospital away,” said James Jeffers, one of the newly elected board members. “We can’t sit back and see them give away a $25-million asset that belongs to our community.”

Board directors emphasized that they have to act fast because the hospitals plan to merge on Jan. 1. “Once the assets are commingled, it would be pretty hard to unscramble,” said board President Gary Norris.

Director John Rush, another new board member, said starting legal proceedings to seize the hospital through eminent domain may be enough to stop the merger because the two hospitals might call off the deal to avoid rising legal costs.

To hedge their bets, the board also decided to formally ask the state attorney general to investigate several aspects of the merger.

Sheryl Rudie, Pleasant Valley Hospital’s planning director who has helped coordinate the merger, said Friday night’s board action persuaded her that the district will mount a serious challenge to the merger. “They will spend every last cent because this is their life,” Rudie said.

But, she said, St. John’s board of directors has decided to pursue the deal even though it may be saddled with heavy legal costs.

As the merger is structured, St. John’s owners, the San Francisco-based Catholic Healthcare West, has agreed to assume all of Pleasant Valley Hospital’s $20 million in debts.

Pleasant Valley officials have said that merging with St. John’s is the only way to keep the Camarillo hospital from succumbing to fiscal problems.

In addition to absorbing Pleasant Valley’s debt, the merger would also allow the Camarillo facility to save money by streamlining certain administrative operations, such as billing and purchasing.

And, although the majority of Camarillo voters demonstrated their strong opposition to the merger in last month’s elections, the few residents who attended the special meeting Friday took a different position.

Several residents said they feared that in its zeal to prevent the merger, the board will sacrifice other services of the health care district.

The district built the hospital in 1974 and ran it until 1983, when officials decided that a private nonprofit corporation could do a better job of managing the facility and raising money.

Since then, the district has devoted itself to providing an array of programs, such as elder day care and adolescent counseling, for the 75,000 people in Camarillo and surrounding unincorporated areas.

Resident Lynn Dempsey asked board members Friday to explain how the district will purchase the hospital and finance its operations, if the condemnation proceedings are successful.

“Where do the bucks come from? How do we pay the bill?” she asked. Dempsey and other residents also said they were concerned that legal costs alone could financially drain the district.

Board directors tried to allay these fears.

“We will not be forgetful of the goals of this district,” Rush said.

The board runs the health care district with about $1 million a year in property tax revenues and has about $697,000 in reserves.

Board members Friday authorized spending up to $10,000 on attorney costs to begin condemnation proceedings. So far, the district has spent $77,000 in legal and accounting fees to fight the merger.

Infighting over the cost of battling the merger recently prompted district administrator Sherry Williams and board director Paul Rockenstein to resign. Both said they would not be able to agree with the newly elected board members on the issue.

Within the next two weeks, the California attorney general is expected to decide whether the merger violates the state’s charitable trust doctrine, which requires that nonprofit organizations, such as hospitals, use their assets only for charitable purposes.