Sebastopol’s only urgent care center has been closed for over a year. What’s up with that?
By Camille Escovedo, Staff Writer, SoCoNews, July 10, 2021
More than a year after Sonoma Specialty Hospital (SSH) of Sebastopol temporarily closed its Progressive Urgent Care to reduce COVID-19 exposure in March 2020, west county’s only urgent care is still shuttered.
Opening day is coming, said Dr. Gurpreet Singh, president of the American Advanced Management Group (AAMG) that bought the hospital with SSH from the Palm Drive Health Care District (PDHCD). But in a June 15 interview, he wouldn’t venture to guess exactly when.
Progressive Urgent Care has been closed long enough that William L. Adams of Merrill, Arnone & Jones, LLP, notified Singh and then-SSH chief executive officer Matt Salas on behalf of PDHCD that Sonoma Specialty Hospital, LLC is in breach of its obligation termed in a promissory note included in the hospital’s sale.
The health care district sold the hospital to AAMG and SSH in 2019 for $2 million in cash, with a promissory note that set conditions for the property’s use that SSH pledged to uphold or pay the district $1.2 million.
The note, signed and dated for December 2019, stipulates the $1.2 million and accrued interest not yet paid shall come “immediately due and payable” if the property is transferred, sold, refinanced or used for anything other than a long or short-term acute care with an emergency department or urgent care in the next 10 years.
If the property is still used in such compliance upon Dec. 4, 2029, the maturity date, then the indebtedness will be “forgiven in its entirety,” the note said.
Former PDHCD director Jim Horn provided SoCoNews with Adams’ letter dated June 30, 2020. The letter stated SSH “is in breach of its obligation to maintain an urgent care or emergency department at the Sonoma Specialty Hospital,” and had 60 days to remedy the breach or immediately owe $1.2 million for violating that obligation.
Within those 60 days, the health care district dissolved in August of 2020 and the County of Sonoma assumed the district’s debts, liabilities, tax authority, monies and records.
According to county communications manager Paul Gullixson, AAMG has shown a good faith effort to reopen the urgent care. The promissory note hasn’t been called because doing so could compromise the possibility of the urgent care opening at all, he said.
Facing a lack of transparency surrounding district issues, Horn filed numerous California Public Records Act (CPRA) requests with the county seeking information on various district matters in the past year, including the urgent care’s closure and possible reopening.
Among them are documents showing then-deputy county counsel Lauren Walker notified Salas and Singh twice in August 2020 after the dissolution regarding the breach of the promissory note.
First, a notice dated Aug. 7, 2020 informed Salas and Singh that the county is the district’s successor for winding up its affairs and that they had until Aug. 31, 2020 to cure the breach or the $1.2 million would immediately come due, “together with the interest, fees and costs provided for in the note.”
A second notice, dated Aug. 27, 2020, set down that the county had not received a response to Walker’s Aug. 7 notice and needed to hear back about their work to reopen an urgent care or emergency department, or else the county would have to fetch the $1.2 million principal balance of the note after Aug. 31, 2020.
Salas responded on Aug. 28, 2020, saying that they had just signed a lease for a property adjacent to Sonoma Specialty Hospital and that Progressive Urgent Care would reopen after “a brief period of renovation to bring the offices up to current ADA standards.”
On Oct. 6, 2020, Walker emailed Erick Roeser, county auditor-controller-treasurer-tax collector and Peter Bruland, a deputy county administrator in the county administrator’s office, that SSH called her the previous week with an update.
Walker reported that they were close to signing a lease for a new urgent care building, adding that it appeared that they were working to get closer to reopening.
According to the Office of the County Counsel, Walker no longer works at the office, and she could not be reached by press time. Bruland could not be reached by press time for questions about the urgent care and leasing process.
When asked during a June 15 about the discrepancy between what Salas told the county in August 2020 and when the lease was signed, Singh said they were planning to finalize a lease in August 2020, but then their broker showed them a different building that was more feasible for the urgent care.
Though Singh confirmed he signed the lease for the new building, he said he did not know when it was signed other than he believed it was signed two months prior the June 15 interview, which would have been April 2021.
However, documentation indicates he sent Walker and Bruland a lease document on March 22, 2021 that recorded his signature on Jan. 22, 2021.
“I think the lease was provided to them that we are negotiating what we were negotiating with them — but the finalized lease signed, I have to find out the exact month, because they wanted to know we are doing everything in good faith,” Singh said.
A good faith effort
In a June 7 interview, Gullixson directed SoCoNews to seek out the hospital for information about the current status of the urgent care, saying the county’s role was fairly limited regarding the hospital’s operations.
He said that while the county does not know when the facility is expected to reopen, the county occasionally receives updates from the hospital and believes there’s been a good faith effort and commitment to getting an urgent care up and running.
The Sonoma County Board of Supervisors has the authority to decide what to do with the promissory note in the end, he said.
Gullixson said the county’s primary objective was to call forth the commitment to get the urgent care in operation. Calling in the $1.2 million promissory note runs the risk that the urgent care would never be opened, which would not benefit the community, he said.
Gullixson said that he’d been informed that the county last had contact with the hospital on May 28, 2021.
“The county, it knows we are going in the right direction, meaning it was the right decision, so we are not out of compliance or anything,” Singh said, when asked about the county notifying him of the breach of the promissory note and why the county has held off its enforcement.
“This was not in our control. A lot of outpatient departments were shut down during COVID, so no one has control over it,” he said.
Why isn’t it open yet?
Singh said the reopening date of Progressive Urgent Care depends on when ADA compliance renovations and tenant improvements finish because after the urgent care closed, it was relocated outside of the hospital to protect long-term acute care patients from outside infections.
The doors of Progressive Urgent Care will open from a space leased next door to SSH, he said. On June 15, Singh initially told SoCoNews that the permits still needed to be pulled from the city of Sebastopol, upon which the construction would take two to three months to complete.
About an hour and 20 minutes later, he said that he sought an update from the contractor and found that the construction started that morning and would take between six to eight weeks to finish the job.
Singh said he can give a better reopening projection once renovations, including new flooring and paint, are done, and once the city grants the urgent care an occupancy permit. It’s a matter of taking all of the urgent care’s equipment, supplies and furniture out of storage at that point, he said.
When asked why the urgent care, closed on March 11, 2020, hasn’t reopened yet, Singh said COVID-19 complicated things. Once the debate was settled that the urgent care would reopen in a different building, it took time to find that building and negotiate the lease, followed by arranging ADA compliance improvements.
“It’s time which is not in our hands, especially last year and this year, what was going on with COVID. And now things are going to go faster, since there’s no kind of restrictions,” he said June 15, the day California reopened.
A long road out of debt for taxpayers
Before the hospital’s sale, the district contracted AAMG to take over management of the district’s hospital after its last operator, Sonoma West Medical Center (SWMC), became ensnarled in a pending lawsuit alleging a fraudulent scheme surrounding its toxicology program.
After its contract with the district was discontinued, SWMC filed for bankruptcy. AAMG renamed the facility Sonoma Specialty Hospital and converted the short-term acute care hospital with an emergency department into a long-term acute care with an urgent care facility.
PDHCD’s outstanding debt totaled approximately $20 million at the time of dissolution, according to Erick Roeser, county auditor-controller-treasurer-tax collector. He said in a June 25 email that the district’s debt across general obligation (GO) bonds, parcel tax bonds and bankruptcy-related costs is $17,164,553 as of May 31, 2021.
SoCoNewsreported in August 2020 when the PDHCD dissolved that most west county residents pay between $100 and $155 annually for the Measure W parcel tax, a 2004 levy funding the district to maintain a hospital, local emergency and acute care access and other medical services and various expenses.
These levies are to be collected by the county from here on out “and will continue for 15 to 20 more years, until the district’s debts are paid off,” per the report.
“For 15 months, SSH has failed to comply with the terms of the $1.2 million promissory note, and the Palm Drive Health Care District and the County have been reluctant to enforce the note,” Horn said by email June 23.
He continued, “SSH bought the hospital from the district for a deeply (and I believe, improperly) discounted price, and their failure to fully pay even that reduced price is an insult to west county taxpayers.”
According to Horn and his math, calling in the promissory note and applying the $1.2 million with accumulated interest to the existing general obligation bond debt could save taxpayers roughly $1.8 million in principal and interest, years off their dues.
The district refinanced its debt by the time it dissolved in 2020, according to Horn in a June 25 interview. He said he projected these numbers based on the principal and interest payment schedule attached to a refinancing document.
“The accrued interest to-date on the promissory note is not currently available,” Roeser said in an email.
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