CHA merges with larger Petaluma Health Center

07/01/2020

Yesterday, the Petaluma Health Center took over the Coastal Health Alliance, a merger that a decade ago executives at the small rural clinic said was necessary to keep the doors open. Staffing at the alliance will stay the same and patients will see few changes, though West Marin services may also expand down the line. 

The plan was announced more than a year ago, but Pedro Toledo, the chief administrative officer at the Petaluma Health Center, said both organizations wanted to take the process slowly. The deal was official on July 1.  

“It’s almost like a marriage,” he said. “The [Coastal Health Alliance] has been around for so long, and we want to make sure that we are taking their history and their culture and the needs of the community into account. We’ve been doing it slow and doing it right, going through all the appropriate steps.”

Three Coastal Health Alliance board members have joined the existing 12-member board of the Petaluma Health Center, which altogether has 400 employees, two main facilities and five satellites in Sonoma County. In addition, the alliance is putting together two patient advisory committees—one made up of English speakers, the other of Spanish speakers—that will serve as liaisons with the board. 

Steve Siegel, who has served as the C.E.O. for the alliance for the past seven years, will stay on at least through September to transition his responsibilities to the Petaluma senior management team. Otherwise, no changes are planned for the more than 50-member alliance staff. 

Some of that staff is now furloughed as the result of the pandemic, including the acupuncturist and the podiatrist. Additionally, the Bolinas clinic, which was closed at the start of the pandemic to consolidate operations and protect staff, won’t re-open for at least the next several months, Mr. Toledo said. 

The alliance is slowly increasing in-person visits, with 25 percent of appointments now face-to-face. Last month, it launched weekly walk-up testing for essential workers. “We’re taking a day at a time,” Mr. Siegel said. “We’d love to re-open Bolinas and go back to our schedule, and we’re focused on keeping staff safe and reducing exposure. Our next step is to figure out how to bring in more people who need to come in for primary care.”

Looking forward, there are several positive changes for alliance patients thanks to the merger. The first is that the Petaluma Health Center has put aside $2 million for facility upgrades, which could be used to build out the clinic in Point Reyes and add optometry and chiropractic care, among other services. 

Last week, the center also made an offer to take over the West Marin Pharmacy. The center would keep the West Marin location but change the licensing number, a relatively easy transition considering it already operates a pharmacy in Petaluma. Mr. Toledo said he is waiting for a response from the owner, Zsuzsanna Biran, who ran into trouble last year with the state for alleged malpractice and has long voiced difficulty in keeping the business profitable. 

Several reasons compelled Mr. Siegel to want to merge. A comprehensive needs assessment in 2010 foresaw a slow decline in patient numbers due to the increase in second homes and recommended merging with a larger entity to maintain financial viability. In 2016, the alliance closed a third clinic in Stinson Beach amid staff departures and dwindling patient numbers. 

The alliance attempted to merge once before, in 2017. Plans to fold into West County Health Services fell through for unspecified reasons, leaving Mr. Siegel searching for a better fit. 

He says there are many benefits to combining forces with the Petaluma Health Center, which shares the same founder, Dr. Mike Witte. Among them are the fact that the larger Petaluma organization, which has a department dedicated to administrative duties such as reporting and fundraising, is better equipped to handle the strict reporting requirements that come with being a federally qualified health center in an underserved area.

Economy of scale is essential, explained Daniel Winokur, a director at a Los Angeles-based health care consulting firm who helped facilitate the merge. The Coastal Health Alliance has a $5.9 million operating budget for 4,000 patients, compared with $52 million for 45,000 patients at the Petaluma center. It costs Petaluma about $300 less per patient to provide care each year.

Another added benefit is that staff will have the opportunity to rotate between Petaluma and West Marin sites. Mr. Siegel describes that as a perk that could help recruit and retain employees who find it difficult to find affordable housing and make a life on the coast.