The Palomar Board of Health will consider major charter changes Monday

Palomar Health directors are expected to meet Monday night to consider revising their bylaws, the document that governs all aspects of the public health district’s operations. Adoption of the changes would cement Mesa Rock Healthcare Management’s strategic role in the financially troubled organization with hospitals in Escondido and Poway.

Most of Palomar’s elected board members, and two of the seven were in opposition, voted in March to approve a 15-year contract with a private non-profit mutual benefit corporation. Mesa Rock was specifically created on the advice of lawyers hired by Palomar to employ its top executives, including Diane Hansen, its chief executive officer.

The deal makes the elected board less involved in Palomar Health’s strategic direction, and directors said it would give executives more leeway to broker deals with private partners without being subject to public records law. The board will also no longer hire or fire its CEO directly. The board’s main leverage to express its displeasure with the private company would be to terminate the deal by removing all executive team

The deal, considered unique in California, leaves ownership of all the district’s properties in the hands of the board, which also retains budget approval and continues to employ the majority of Palomar’s workforce.

The agenda for Monday’s meeting, set for 6:30 p.m. in Palomar Escondido Medical Center’s first floor boardroom, is revising the bylaws section that defines the role of its CEO, assignment of these functions to any management services agreement approved by the board.

The change will allow Mazie Rock to assume authority to “oversee and manage the day-to-day operations of the district, district facilities and implement the district’s strategic mission and vision as directed by the board.” The proposed changes also allow subordinate officers to be elected by a management services agreement rather than by the president and CEO.

The subsection allowing the board to review its CEO annually is deleted and replaced with an agreement that “shall provide information reasonably requested by the board for the purpose of assisting the board in the performance of its duties.”

Like most government agencies run by elected officials, Palomar traditionally maintains a number of standing committees to oversee certain areas of its operations, referring matters to the full board for consideration at its monthly meetings.

Monday’s proposed charter changes would remove Palomar’s permanent finance and human resources, committees for strategic planning and facility planning. Those in audit and compliance, governance and public relations will continue to work.

Palomar has faced friction since approving a management services agreement with Mesa Rock, particularly in the form of an anonymous complaint filed with the California Fair Political Practices Commission. The complaint alleges that Hansen violated a rule that prohibits facilitating the creation of an agreement that benefits a person who participated in its creation. As of Saturday, the FPPC’s complaint tracking website said the complaint was “open.” Palomar called the complaint frivolous.

Palomar’s financial house is in serious disarray.

The organization recently reported investors who hold more than 700 million US dollars Palomar debt that its operations lost $165 million in fiscal 2024, undermines confidence that the district will be able to repay its debt in the future.

The board of directors voted Nov. 26 to allow Hansen to negotiate a forbearance agreement with Assured Guaranty Inc., the insurance company that guarantees its bonds, and it is unclear what requirements Palomar would require to keep bondholders from requesting an immediate repayment. . Financial results for the first quarter of fiscal year 2025, which covers July-September 2024, have not yet been released in the “continuous disclosure” reports to bondholders.

Originally published: January 11, 2025 at 4:37 PM PST