After more than 50 years serving the community, Fallbrook Hospital is set to close its emergency room and stop admitting patients in November.

With emotion written clearly on their faces, five Fallbrook Healthcare District directors unanimously chose to pursue an alliance with two neighboring North County districts that will focus only on outpatient services rather than sign a deal with a private for-profit operator that was designed to keep the hospital’s core inpatient services operational.

Directors were clearly tempted by a proposal from Riverside-based Strategic Global Management Inc. but were ultimately turned off by provisions in an offer letter that called for the public district to assume significant liability, directly employ hospital personnel and pay an unspecified management fee to the firm.

Board member Gordon Tinker said the additional risk was just too much to bear.

“It is essentially transferring all of the financial risk, and I mean all of it, from SGM to the district,” Tinker said.

Fallbrook solicited proposals from 12 health systems in the region, though only two came through with offers. The second is a joint proposal from Palomar Health in Escondido and Tri-City Medical Center in Oceanside, both public health care districts with publicly elected boards like Fallbrook.

The proposal, which still needs final approval from Tri-City’s and Palomar’s boards, would have all three districts form a joint powers agreement that would allow them to offer a range of outpatient services in Fallbrook from urgent care and rehabilitation to skilled nursing and hospice. But the agreement does not include keeping inpatient services, such as emergency, obstetrics or intensive care open.

Fallbrook is currently managed under a 30-year lease agreement by Tennessee-based Community Health Systems. The company closed the hospital’s labor and delivery department Sept. 3 and announced it planned to shutter its emergency and intensive-care departments Nov. 17.

The company has said modern health care’s growing emphasis on managed care contracts, which funnel patients to specific providers, and ongoing competition from other hospitals in the region caused the hospital to continually operate at a loss. Blaise Jackson, the board’s attorney, said CHS lost nearly $6 million operating Fallbrook Hospital in 2013.

Director Barbara Mroz noted that financial survival in today’s health care landscape requires organizations that have access to a system that includes doctor groups and other services.

“You as a hospital cannot stand alone as a single hospital. You have to be part of a health care delivery system with all levels of care and all ancillary services,” she said.

But many in the audience Wednesday night said they were sad to see the community of about 35,000 residents lose the place where so many have been born and have seen their loved ones treated in hospital beds.

Fallbrook resident Leslie Salmon said she was most concerned about what will happen when she or her neighbors have emergencies.

“If someone is very sick, that’s a significant distance to get to another emergency room,” Salmon said.

Board chair Stephen Abbott, a battalion chief with the North County Fire Protection District, said he believes that most serious medical emergencies, like strokes and heart attacks, are already traveling by ambulance to larger facilities with more advanced operating capabilities.

“The rates of admissions to the ER have substantially declined over the last several years,” Abbott said.

The agreement between the three health care districts identifies urgent care, skilled nursing, home health care and hospice, physical therapy, wound care, laboratory services and imaging services as being provided in Fallbrook.

The group will also consider using part of the existing hospital to operate an ambulatory surgery center, dialysis services and pharmacy.

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