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Current Issue Links
Drummond relocates, settles with lender
Drummond Medical Group, its associated physicians and more than a dozen healthcare providers who saw
patients in the building that housed Drummond for decades have relocated to another local medical office.
The move ends months of speculation about the future of the group, which was a landmark in the community’s
healthcare system. But questions about the group’s finances and business ethics are still being raised by one of
Drummond’s major creditors.
A bitter past
Previous reports have detailed how Drummond slowly atrophied from a near-monopoly on local outpatient
healthcare services to a small group of doctors facing reimbursement cuts and massive overhead, primarily from a
building and support staff designed to support more providers.
In 2007, the owners of Drummond’s building — a group partially connected with but distinct from Drummond
Medical Group, Inc. — took out a loan of $4.1 million from a Santa Barbara-based investment group using the
building as collateral. Relations between the two sides soon became increasingly adversarial. Drummond
defaulted on the loan after making four payments and filed for Chapter 11 bankruptcy protection. The two sides
were due in court on June 26 for a pretrial conference.
Tensions peaked last week when a representative of the building’s owner, Ridgecrest Medical First Mortgage
Investors, LP, alleged that Drummond personnel were stealing furniture, fixtures and equipment from the building
and loading them into a moving truck.
Police responded and determined that the taking of articles from the building was not theft but a civil dispute.
Drummond’s personnel proceeded with moving the supplies to their new location.
Each side accuses the other of having engaged in double dealing.
Ernest Quier, Drummond’s former administrator, said the investors simply made a bad loan. Quier who now
provides managerial services to Drummond and several other local physicians through his company Phoenix
Medical Management.
The investors agreed verbally to give Drummond a master lease on the building after wresting ownership of it
from the Drummond-associated borrowers in a December 2008 court ruling. The investors subsequently
submitted a written lease to Drummond with altered terms and an unreasonably short time for review.
But according to Andrew Fuller, the asset manager for Ridgecrest Medical First, some of Drum-mond’s officers
behaved from the start like they had no intention of meeting their obligations.
After defaulting on the multimillion-dollar loan after just four months, Drummond kept possession of the
building for a year through bankruptcy action.
Then when it lost the building and agreed to lease it back, Drummond and Phoenix Manage-ment used the
space and collected rent from other tenant providers but paid Ridgecrest Medical First nothing.
The removal of Drummond’s contents days before the pretrial conference was a last-minute grab by the
medical group’s management to take possession of property that should rightly have been collateral securing
Drummond’s debt to the investors, alleged Fuller.
He said he was disappointed that his investors — whom he called “mom-and-pop investors who put their
retirement savings into this deal” — had lost so much value in what Fuller described as some of the worst behavior
he has seen in 20 years in the real-estate business.
He made a point of directing his criticism at Quier and Drummond’s principal stakeholder, Dr. Douglas
Roberts, while saying some of Drummond’s other professionals —particularly Dr. Lawrence Cosner and Dr. Paul
Stemmer — had been forthright and fair in their dealings. (He credited one of them with making the first call to
police about property being taken from the Drummond building — an assertion that could not be confirmed before
press time.)
Quier denied that any of Drummond’s officers had done anything wrong. No signed lease agreement existed
between the investors and Drummond or its doctors. The removed property was not stolen but a matter of disputed
ownership, and much of the property was necessary for the doctors to continue practice at their new location, he
said.
The two sides settled Friday under terms that require Drum-mond to return some of the property and pay the
legal fees of the investors.
A look to the future
Despite the volleying accusations, Quier and Fuller both said they are accepting the settlement reached last
week, will abide by its terms and look forward to getting on with their respective businesses.
Quier emphasized that despite the rough road Drummond has taken, its model of focusing on its core primary-
care practice while teaming up with independent specialists has produced very satisfying results.
The primary-care practice is transitioning to a business model encompassing not one but four legal entities,
each technically its own medical clinic, though they will largely have similar providers and are owned by Roberts,
said Quier.
Along with a traditional primary-care clinic, Drummond will offer urgent-care services under a separate legal
entity, a third medical entity streamlined to provide services to cash-pay patients and a fourth which is in the
process of becoming an accredited rural-health clinic — a status that will significantly increase reimbursement
from government insurers, particularly Medi-Cal.
Roberts, Cosner and Dr. David Lusk will form the core of the primary-care group. Russ Lozovoy, NP-C, and
Apama Childers, PA, will also see primary- and urgent-care patients.
The practice is located at 900 N. Heritage Drive, Building A.
Seven independent specialty providers — Dr. Mehul Taylor, Dr. Anand Shah, Dr. Mohammad Sirajullah, Dr.
John Brazill, Dr. Ralph Highshaw, Dr. Kelly Gallego and Dr. John Seifert — have also made the move to the new
location, added Quier.
The new facility will be open for office visits and urgent care from 8 a.m. to 5 p.m. Monday through Friday, with
urgent care also open Saturday from 8 a.m. to noon.
Not making the move is Dr. Richard Karoll, who will continue to see patients at his existing location in the
former Drummond building. And for now Dr. Marcia Michalik will see patients at the clinic of National Health
Services in the Ridgecrest Business Park.
Fuller pointed out that several additional physicians, along with Center Professional Pharmacy and the
outpatient surgery center, continue to serve patients at the former Drummond building.
“I want to move on and they need to move on. In a small community we don’t want to start any battles.”
patients in the building that housed Drummond for decades have relocated to another local medical office.
The move ends months of speculation about the future of the group, which was a landmark in the community’s
healthcare system. But questions about the group’s finances and business ethics are still being raised by one of
Drummond’s major creditors.
A bitter past
Previous reports have detailed how Drummond slowly atrophied from a near-monopoly on local outpatient
healthcare services to a small group of doctors facing reimbursement cuts and massive overhead, primarily from a
building and support staff designed to support more providers.
In 2007, the owners of Drummond’s building — a group partially connected with but distinct from Drummond
Medical Group, Inc. — took out a loan of $4.1 million from a Santa Barbara-based investment group using the
building as collateral. Relations between the two sides soon became increasingly adversarial. Drummond
defaulted on the loan after making four payments and filed for Chapter 11 bankruptcy protection. The two sides
were due in court on June 26 for a pretrial conference.
Tensions peaked last week when a representative of the building’s owner, Ridgecrest Medical First Mortgage
Investors, LP, alleged that Drummond personnel were stealing furniture, fixtures and equipment from the building
and loading them into a moving truck.
Police responded and determined that the taking of articles from the building was not theft but a civil dispute.
Drummond’s personnel proceeded with moving the supplies to their new location.
Each side accuses the other of having engaged in double dealing.
Ernest Quier, Drummond’s former administrator, said the investors simply made a bad loan. Quier who now
provides managerial services to Drummond and several other local physicians through his company Phoenix
Medical Management.
The investors agreed verbally to give Drummond a master lease on the building after wresting ownership of it
from the Drummond-associated borrowers in a December 2008 court ruling. The investors subsequently
submitted a written lease to Drummond with altered terms and an unreasonably short time for review.
But according to Andrew Fuller, the asset manager for Ridgecrest Medical First, some of Drum-mond’s officers
behaved from the start like they had no intention of meeting their obligations.
After defaulting on the multimillion-dollar loan after just four months, Drummond kept possession of the
building for a year through bankruptcy action.
Then when it lost the building and agreed to lease it back, Drummond and Phoenix Manage-ment used the
space and collected rent from other tenant providers but paid Ridgecrest Medical First nothing.
The removal of Drummond’s contents days before the pretrial conference was a last-minute grab by the
medical group’s management to take possession of property that should rightly have been collateral securing
Drummond’s debt to the investors, alleged Fuller.
He said he was disappointed that his investors — whom he called “mom-and-pop investors who put their
retirement savings into this deal” — had lost so much value in what Fuller described as some of the worst behavior
he has seen in 20 years in the real-estate business.
He made a point of directing his criticism at Quier and Drummond’s principal stakeholder, Dr. Douglas
Roberts, while saying some of Drummond’s other professionals —particularly Dr. Lawrence Cosner and Dr. Paul
Stemmer — had been forthright and fair in their dealings. (He credited one of them with making the first call to
police about property being taken from the Drummond building — an assertion that could not be confirmed before
press time.)
Quier denied that any of Drummond’s officers had done anything wrong. No signed lease agreement existed
between the investors and Drummond or its doctors. The removed property was not stolen but a matter of disputed
ownership, and much of the property was necessary for the doctors to continue practice at their new location, he
said.
The two sides settled Friday under terms that require Drum-mond to return some of the property and pay the
legal fees of the investors.
A look to the future
Despite the volleying accusations, Quier and Fuller both said they are accepting the settlement reached last
week, will abide by its terms and look forward to getting on with their respective businesses.
Quier emphasized that despite the rough road Drummond has taken, its model of focusing on its core primary-
care practice while teaming up with independent specialists has produced very satisfying results.
The primary-care practice is transitioning to a business model encompassing not one but four legal entities,
each technically its own medical clinic, though they will largely have similar providers and are owned by Roberts,
said Quier.
Along with a traditional primary-care clinic, Drummond will offer urgent-care services under a separate legal
entity, a third medical entity streamlined to provide services to cash-pay patients and a fourth which is in the
process of becoming an accredited rural-health clinic — a status that will significantly increase reimbursement
from government insurers, particularly Medi-Cal.
Roberts, Cosner and Dr. David Lusk will form the core of the primary-care group. Russ Lozovoy, NP-C, and
Apama Childers, PA, will also see primary- and urgent-care patients.
The practice is located at 900 N. Heritage Drive, Building A.
Seven independent specialty providers — Dr. Mehul Taylor, Dr. Anand Shah, Dr. Mohammad Sirajullah, Dr.
John Brazill, Dr. Ralph Highshaw, Dr. Kelly Gallego and Dr. John Seifert — have also made the move to the new
location, added Quier.
The new facility will be open for office visits and urgent care from 8 a.m. to 5 p.m. Monday through Friday, with
urgent care also open Saturday from 8 a.m. to noon.
Not making the move is Dr. Richard Karoll, who will continue to see patients at his existing location in the
former Drummond building. And for now Dr. Marcia Michalik will see patients at the clinic of National Health
Services in the Ridgecrest Business Park.
Fuller pointed out that several additional physicians, along with Center Professional Pharmacy and the
outpatient surgery center, continue to serve patients at the former Drummond building.
“I want to move on and they need to move on. In a small community we don’t want to start any battles.”
By ADAM L. R. SUMMERS
News Review Staff Writer
News Review Staff Writer
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