0920_September Comstock's Magazine September 2020 | Page 43

risk are what Jeffrey Johnson, Western U.S. market leader for consulting firm Wipfli, dubs “tweeners” — independent facilities that serve smaller towns and cities rather than major metro areas. Dameron is one of those tweeners. The hospital was losing money pre-COVID — more than $18 million in 2018, the last year for which state data are available. So Dameron came to an agreement last December to be managed by Roseville-based network Adventist Health as an interim step to full acquisition by Adventist. That would be good for Dameron’s long-term viability since hospital networks have more negotiating power. Now the deal is in jeopardy. Wolcott, who also oversees Dameron during the transition, says the Stockton hospital hasn’t issued any financial statements post-COVID and doesn’t publish its financials. But in April, Dameron’s revenues fell by 40 percent as the hospital stopped elective surgeries, Wolcott says. The hospital was seeing the number of those procedures start to come back in early June when COVID-19 cases started spiking again. That could mean another drop in volumes. If the case spike goes on another six weeks, “it could potentially inhibit Dameron’s ability to be successful in the long term,” says Wolcott. “If we’re not able to get Dameron turned around to the place where Adventist Health believes it can be successful over time, then Adventist Health can’t afford to just acquire a failing hospital. … Stockton could potentially lose a community asset that provides choice for half a million people.” (State listings show six other hospitals in San Joaquin County: Adventist Health Lodi Memorial, San Joaquin General Hospital, St. Joseph’s Medical Center, Sutter Tracy Community Hospital, Doctors Hospital of Manteca and Kaiser’s Manteca Medical Center.) At 125-bed independent Marshall Medical Center in Placerville, it’s also been a tough few months. Revenue dropped 30 percent in March, says CEO Siri Nelson. April was worse, but May was not as bad as April. On April 7, credit rating agency Fitch Ratings downgraded Marshall’s bond rating to BB+, technically the highest junk bond rating. Fitch cited a variety of factors: a higher debt-to-cash ratio because of planned building projects, a bigger pension contribution and the impact of the COVID-19 crisis. Nelson points out that ratings agencies also dinged big hospital systems because of the pandemic. Two of them downgraded Sutter Health’s bonds in April, though they’re still A-rated. Nelson is staying positive. “We’re used to adapting,” she says. Still, she acknowledges that it’s tougher not having a “deep pocket like a big system” nor being cost reimbursed like a smaller critical-access hospital. Several other small independent hospitals in the region contacted for Designed with care. HGA.com September 2020 | comstocksmag.com 43