Thursday, December 24, 2009

Health District goes on the Offensive

District Rolls the Dice on San Leandro Hospital | Mayor Santos Take the Heat | City Council's Bloodlust for San Leandro Times Reporter | Gregory's Baseless Attack | Joyce, Our Choice!
Make no mistake, Monday's firing of the Eden Township Healthcare District's long-time attorney may be the biggest story in San Leandro Hospital's run of notable developments this year. With the bold, yet risky move, Directors Carole Rogers and Dr. Vin Sawhney have reached the stratosphere of reverence among hospital workers and the community, while Dr. Bill West, according to numerous supporters of the hospital, has delivered on the promise of turning the District towards a more offensive direction against Sutter Health. Aside from overheated rhetoric this week from San Leandro Mayor Tony Santos and Ratnesar, the move by the District is a risky gamble, but one some have been long saying needed to be done. It is generally agreed Sutter, with the 2007 MOU, is operating from a hugely advantageous position that made the District's more defensive position a bit toothless. The next three to four months may prove whether the move was valiant and victorious or a historic blunder for health care in the East Bay. The stake are now as high as they have ever been and seemingly rest on a set of lawyers very familiar with Sutter who may have more of an uphill battle in San Leandro than in their previous battleground in Marin County.


'WHOSE SIDE ARE YOU ON?' Tony Santos has been telling anyone who listens that he's had a finger on the San Leandro Hospital issue for two years--longer than anyone, he says--although Monday he says it's now three years. In the meantime, he has confounded supporters of the saving the hospital which is also a vast majority of the city, by positioning himself in the center of both sides, but more times than not oddly sounding like a Sutter apologist. He has criticized doctors at San Leandro Hospital for making it unprofitable by using facilities for some procedures and diagnostics. On numerous occasions, he has played the role of pragmatist by saying a private hospital chain is not entitled to provide a subsidy to keep a money-losing hospital operating and now has led the charge to discredit the Eden board's firing of their legal counsel. There is very little consensus as what Santos is aiming to accomplish, especially in the context of an election year in 2010. Supporters of the hospital have lit up message boards generally asking is he weakly trying to appear relevant or being used as a stooge by Sutter? One board member in a Facebook response to a comment from the mayor (now removed) actually wrote "Whose side are you on?" Despite noise over a possible deal with Sutter pushed by Santos and Ratnesar, sources still say the main issue with any hybrid option is a yearly subsidy of between $6-9 million. It was the crux of the problem before and still remains, sources tell The Citizen. An interesting side show to the this whole story, is a suggestion made by Alameda County Health Services Director Alex Briscoe where the District and the city of San Leandro pitch-in funding for some of the costs. Santos alluded to some groups asking the city to get involved and he seemed amendable to it. Any action would have to go through the city council where it would be interesting to see the issue debated between mayoral rivals Santos and Vice mayor Joyce Starosciak. In the past month, the two have used a few key city issues as proxy battles for next year's election. At a body where they have debated the use of a few measly dollars in a tight city budget situation, allocating a few millions dollars at San Leandro Hospital could be a heated showdown.


THE COUNCIL OPTS FOR MOB VIOLENCE Politicians and reporters do not get along and nor should they, but there is usually a mutual appreciation of the services each other provides to their community. Reporters are sometimes critical of politicians and the reverse, but what numerous members of the San Leandro City Council did Monday night was over the line in criticizing a front page story in last week's San Leandro Times. The stoning of Amy Sylvestri's article on Measure WW funding was unmerciful. No less than five councilmembers commented on the piece. The Citizen is not here to vouch for the veracity of the article, but to remind the council to retain a bit of decorum. A journalists ability to present the facts of a story in a comprehensive and trustworthy manner is a reporters most cherished trait and it hampers their ability to put food on the table and pay the mortgage. Besides, the article was not factually incorrect, but a bit ambiguous. What the city sorely needs is to hire a public relations officer to make the city's case clear in such stories. Such piling on by the city council could have been glossed over if not for their residual bloodlust aimed at The Citizen. During a recess Monday night, Councilman Michael Gregory, referring to an article detailing his meeting with Eden boardmember Dr. Bill West, said he has not spoken with West for two months and said "You should get your facts straight." The statement, made as the face of the collective council was still dripping with the blood of the Times reporter, is preposterous. Here's the facts, the story quotes West saying he met with Gregory on the subject of the hospital while the mayor confirmed the meeting and another source detailed the conversation. Gregory was said to be uncomfortable with approaching West on the subject at the mayor's insistence. Other than the hospital being located in Gregory's district, he also lives in close proximity to West. Telling a reporter to get their facts straight when, indeed, they are rock solid is insulting and cavalier.


GIVE ME A J-O-Y-C-E! You haven't seen campaign signs for Vice Mayor Joyce Starosciak's run for Tony Santos' job yet, but a preview of one is on her web site and on glossy literature around the city. One irascible former city official thought they were "horrible" and another less cranky current official wondered if the absence of her last name meant she was admitting its was unpronounceable. Listen, it's not hard to say. Try it. Stuh-ROSE-see-ak. Aside from that, leaving out her surname from campaign signs is a bit peculiar when her name recognition is a bit low among most of the city. That being said, some have mocked the rhyming, sing-song tagline of "Joyce. Your Choice". I don't see anything wrong with it. In fact, after covering San Leandro for the last six months, I can tell you the city leaders are not only saddled with a financial deficit, but an extreme deficit of humor. Robin Williams would bomb at the city council chambers and if someone placed a banana peel on the ground for comedy effect, a councilmember would pick it up and put it in their compost bin. So, a little humor and personality is very welcomed and besides what would you expect from a former cheerleader? Gooooo team!--S.T.


  1. Your statement that a vast majority of the citizens of San Leandro support saving San Leandro Hospital needs substantiation. Talk is cheap. When Alameda was facing the loss of their hospital the citizens of that city voted to tax themselves by a two thirds majority in order to save their hospital. So far all I have heard from SL is that someone else should cover the losses of "their" hospital in order to keep it open. Considering the large proportion of Kaiser patients in San Leandro I wonder if a similar tax measure could pass there since San Leandro Hospital would be of little benefit to Kaiser patients especially since Kaiser is planning a new facility in San Leandro.

  2. Dr. Rico did the citizens of the Healthcare District a service recently. He honestly reported in public session that Sutter Health refused to honor their 2004 Memorandum Of Understanding (contractual agreement) with the District to rebuild Eden Hospital. Dr. Rico also described a subsequent meeting between the District Board and Sutter CEO Pat Fry. In that meeting Fry ordered the Board to help Sutter build a hospital in Dublin, a City well outside the borders of the Healthcare District. This Dublin investment would have replaced the plan to rebuild in Castro Valley.

    Thankfully, Fry's demand that the Eden Healthcare District Board act in that corrupt manner was resisted, and I congratulate that Board for its resistance. Unfortunately, in the eyes of many of us Sutter's willingness to break the law forced the District Board to consider and approve another form of corrupt action.

    These events led to the subsequent, highly inferior newer MOU. Sutter claims that this agreement allows them to take San Leandro Hospital for free, a District asset which Rico and the rest of the District Board agreed to purchase for $35 million just five years ago. There are many other portions of the new MOU which are clearly giveaways to Sutter, but even this one literal giveaway is easily seen by any objective person as an astonishing abuse by Sutter.

    As a former Board member whom I voted for in the past, I am disappointed that Dr. Rico misinforms the public in the framing of his statement above.

    1) The Alameda Healthcare District consists of just the city of Alameda, while the Eden Township Healthcare District includes San Leandro, Castro Valley, San Lorenzo and most of Hayward. Therefore, it would be completely inappropriate for a vote of the citizens regarding the future of District assets to include only San Leandro citizens.

    2) Dr. Rico ignores the fact that numerous residents of Castro Valley and Hayward have come to Board meetings to state their opposition to reduction of services at SLH. San Leandro residents have only been a part of the broad coalition fighting for health programs in the District; few of us have claimed SLH as "our" hospital. In fact, opposition to this closure is taken on by citizens throughout the community because we are aware that closure of SLH would cause the Castro Valley hospital to be overrun and insufficient for the health care needs of District residents.

    3) The citizens of Alameda chose to create their Healthcare District under much different circumstances. In 2002, Alameda Hospital had no hospital operators offering to continue the ER and other Acute Care services, so the only option to preserve a hospital in Alameda was to approve the revenues neccesary to form their District. That is not the circumstance here.

    An operator has already made public an offer to continue current services at SLH; this offer would bring over $10 million of revenue to the District, and would require no taxpayer contribution whatsoever. A second offer is one that Sutter wishes to accept, but only on the condition that ACMC closes the ER and Acute Care beds at SLH. There has been discussion of a hybrid option which would preserve the ER and some Acute Care beds; to this point, Sutter has refused to negotiate in a way which could successfully conclude this option. The sole cause of the potential closure of SLH services is Sutter Health's unreasonable and indefensible demands of the Eden Township Healthcare District and Alameda County; this is purely a Sutter-created "emergency".

    We'd be interested in hearing back from Dr. Rico regarding these facts.

  3. Several corrections are in order to address Mr. Jones' comments. First, there was never a refusal by Sutter to honor the 2004 MOU. A more accurate characterization is that they changed their plans in a way that was inconsistent with that prior agreement. It was for that reason that the District Board at that time took them to task.

    Second, Pat Fry did not meet with the District Board separately. He met with the Eden Medical Center Board at that Board's invitation.

    Third, he did not order the District Board or anyone else to assist in building a hospital in Dublin. In fact he has no authority to order the District Board to do anything. Again, a more accurate characterization is that he encouraged those present to consider the opportunities that might exist in the Dublin area.

    Incidentally there is no law that bars a healthcare district from investing in facilities outside of its borders. In fact it was because of Fry's expressed interest in the Dublin Area that the District moved to acquire property there without Sutter's knowledge with the express intent of using it as a bargaining chip in later negotiations. The Dublin property stands on its own merits as a real estate investment that promises to generate revenue to the District to use locally.

    Other mischaracterizations that deserve comment are Jones' glib assertions of "Sutter's willingness to break the law" and other "corrupt actions." These are defamatory statements. There is not now nor has there been any illegal or corrupt action by Sutter. Breach of contract is a civil matter and is not generally regarded as illegal nor corrupt.

    The most recent MOU does not give away San Leandro Hospital to Sutter for free. More accurately Sutter has operated San Leandro under a lease with an option to purchase. It was agreed at the outset that if they chose to purchase they would get credit against the purchase price for the capital expenditures they made there.

    In defense of my first message:

    1. There is nothing that prevents the voters of San Leandro from voting to tax themselves to support San Leandro Hospital and thus keep it open. If successful it would not run contrary to the interests of the entire district and on the contrary would save and enhance one of the District's assets.

    2. Many of the speakers at District and Supervisorial meetings were actually employees of San Leandro Hospital and representatives of labor organizations in support of them. I know of no systematic plebicite or poll of the citizens of San Leandro regarding the fate of the hospital there. And if such a poll were taken it would be critical to qualify the question as to whether the citizens would have to contribute to support the hospital or if they expect someone else to pay for it as has been done since 2005.

    3. While there is an offer to operate SLH please note that it is not an offer to purchase. If Prime Health is so confident that they can operate SLH successfully why don't they come up with the money to buy it outright? As matters stand right now any such offer would have to be directed to Sutter Health and not the District.

  4. Dr. Rico, thank you for participating in this exchange. It is valuable for District citizens to have the opportunity to engage in discussion and debate of these exquisitely important issues.

    I was upset when the Healthcare District purchased the Dublin medical property, but now am thankful that you and the Board had this wisdom. It is now possible to see it as a revenue creator and valuable bargaining chip, as you note.

    While not knowing all details of its scope, I recall that the Healthcare District was involved in litigation against Sutter Health during the time Sutter had "changed their plans in a way that was inconsistent with that prior agreement." While I accept and appreciate your corrections in this and other details, I'd claim that many of these corrections are narrow and change the character of Sutter's actions in insignificant ways.

    I'm not a lawyer; perhaps readers of this exchange who are might wish to comment. However, when I sign a contract, I consider it a legal document which certainly implies that someone who violates its terms is breaking the law. It must also be noted that it is the view of many Doctors on the Eden Medical Staff and others that Sutter Health is conducting its business and bookkeeping operations of San Leandro Hospital in fraudulent ways. I feel certain that fraud of this kind can rise to the level of criminal activity.

    I'm looking at the definitions of "corrupt" in my dictionary: Immoral and perverse; Dishonest and venal; Containing mistakes or alterations. Sutter's breach of the 2004 contract, which you essentially admit to here, meets all these definitions, particularly in the falsehoods circulated, healthcare money wasted and the potential lives lost if Sutter were to succeed in closing Emergency and other Acute services.

    The discussion you bring about the ability of San Leandro citizens to tax themselves is poorly thought out. San Leandro Hospital is a Healthcare District asset. This is true legally, financially and by the health care services it provides to all citizens of the District and other parts of Alameda County. I'll also repeat the critique of my earlier comment: there are multiple options for current services at San Leandro Hospital to continue, none of which require additional taxing of San Leandrans or any other District resident. Only Sutter's extreme intransigence prevents those options from moving forward.

    Finally, the discussion of whether Prime or another operator would lease or purchase SLH is not on direct point, but after our traumatic experiences with Sutter I would prefer that the District lease SLH to its next operator. Only the District's ownership of SLH has prevented the ER from closing by now, as Sutter planned to do.

    I am curious about your last view. The Healthcare District owns SLH and leases its operations to Sutter. I'm aware that Sutter claims they have the right to purchase and that they have executed their option, but the Board's rejection of the title transfer makes it appear to me that the title is currently the District's. Do you dispute this?

  5. I hope Eden District brings out the fireworks and shows Sutter Health that the community - all of us who depend on hospital services from both Eden and San Leandro Hospitals- will not sit still for their oppresive actions. We will overcome!

  6. Doug,
    In your third paqragraph you are mistaken that the District was in litigation with Sutter. That was not the case. When it became apparent that Sutter was not moving toward building a new hospital to replace Eden, the District entered negotiations with Sutter with the goal of getting the new hospital and avoiding litigation. Reasons to avoid litigation:
    1. Uncertain outcome.
    2. Long and slow progress.
    3. Very costly.
    4. S.B.1953 earthquake compliance deadline to close Eden.

    In the law there is a distinction between civil disputes and criminal violations. Civil disputes are private disputes that can be resolved privately through negotiation, or through alternative dispute resolution processes such as arbitration or mediation. These disputes can also be submitted to the courts by a plaintiff filing a claim against a defendant. The court functions to resolve the dispute, but the law enforcement agencies are NOT parties to such disputes.

    By contrast, in every criminal prosecution the state is the party that brings the charges before the court and charges the criminal defendant with a crime. The crime is a violation against society and the prosecuting attorney brings the action on behalf of society.

    As for "fraudulent" accounting I would emphasize that accounting is one of the learned professions and one of the oldest. When physicians opine on accounting practices that are entirely outside their education and qualifications they risk at best looking foolish and at worst committing the actionable tort of defamation. Accusing a person, (and a corporation is legally a person in the eyes of the law), of criminal fraud cannot be defended without proof.

    Independent audits done by separate and independent auditing firms are required of every healthcare district and every not for profit corporation. These auditing firms take their responsibility very seriously as it impacts their reputation. They go into great detail during an audit.

    The use of the term "corrupt" and its application to the parties involved is a prejudicial and glib assertion without evidence to support it.

    The fact that SLH may be a District asset does not in any way prevent the citizens of San Leandro from taxing themselves in order to support the operation of SLH. SLH has required financial support to maintain services and that has been forthcoming from Sutter. There is nothing that says that such support could not come from some other sources like, the citizens of SL, Alameda County, the State of California, the federal government, or philanthropy.

    What you characterize as Sutter's "extreme intransigence" is simply the fact that after more than two years in the red during which Sutter expended tens of millions of dollars to support SLH they have decided the investment is not prudent nor fiscally sustainable. Is that hard to appreciate?

    The "multiple options" for SLH to continue services remain nebulous and unidentified and none address the simple fact that SLH runs in the red so whatever option chosen must address that unpleasant fact, whether by taxation or by some other form of subsidy.

    The District's refusal to transfer title has placed the title in dispute. Until that dispute is resolved the rightful holder of title is in question. Therefore neither Sutter nor the District, can enter any other transaction that might encumber title since neither of them can guarantee clear title at this time.

    Responding to anonymous: Yes, Sutter's commitment of $340,000,000 to build a new earthquake proof hospital in our community is so terribly oppressive. I wish someone would oppress me like that.

  7. Dr. Rico, thank you for your clarifications.

    The last three reasons you cite for your Board wishing to avoid litigation are persuasive, particularly as they relate to the deadline for seismic compliance. Two questions:

    - Sutter changed their plans in a way that was inconsistent with the 2004 MOU, which in all meaningful ways is a breach of contract. Why is it that you viewed the outcome of civil litigation as uncertain?

    - Sutter has filed a lawsuit against the Healthcare District for what it views as a breach of the later MOU by the District. Why do you believe Sutter does not wish to attempt to solve this dispute through a more peaceful form of negotiation?

    To your view that auditing firms take their task seriously, I believe that is most often true. However, the accounting firm currently charged with the audit of San Leandro Hospital's financing informed the Healthcare District in this month's meeting that their assigned task does not allow them to question the methods that Sutter Health used in providing financial reports. Only additional, specific requests to expand the scope of this firm's audit would allow them to discover if Sutter Health is providing fraudulent reports to the auditor. And that's exactly the point, isn't it?

    Again, why should any citizens of the District be forced at this time to consider levying themselves a tax? There is at least one option which is not "nebulous". A private operator has made a explicit offer which would preserve all current services and bring millions of dollars to the District with no tax required. You weaken your position by avoiding this inconvenient fact.

    Your explanation that it is reasonable for Sutter to decide the SLH investment is not prudent or fiscally sustainable no longer holds water. At least one private operator has offered to relieve Sutter of this financial burden, and Sutter goes to extreme lengths to prevent that operator from doing so. This cannot be brought into fidelity with your argument.

    From 2004 to 2008, the Eden District Board had plenty of opportunities to recognize that a Sutter Health business model is to aggressively move to close hospitals where it helps their bottom line. Sutter reported large losses at their Santa Rosa hospital, and attemped to close it. The same things happened at St. Luke's Hospital.

    The pattern at SLH matched the pattern at each of these facilities; at the hospitals Sutter wished to close, their reports of financial losses escalated. At our hospitals, though, the financial reports simply defy belief. For example, in 2008 Sutter reported that Eden made over $21 million, while SLH lost over $6 million. It is difficult to believe that these hospitals' payor mixes and other factors naturally lead to those outcomes, particularly since those financial reports are far out of range of Eden and SLH's historical norms.

    This is problematic given our understanding that the later MOU required Sutter to attempt to turn around the financial performance of SLH. There has been a reported failure to meet this requirement; many citizens wonder why the District Board did not provide more aggressive oversight. Where was the turnaround team at SLH? As reports came in of continuing large losses, why did the Board not require Sutter to change its operations to meet the goal? Allowing Eden to reportedly rake in cash while SLH languished met Sutter's goals, but not their obligations under the MOU.

    Finally, your statement about Sutter's "committment" to the community: Dr. Rico, your Board's work to gain the Castro Valley rebuild is appreciated, but Sutter's behavior provides evidence they view this as an investment, not a committment. They are building a hospital small enough to capture the more profitable patients and exclude more of the money-losers. This will likely allow them to make their $340 million investment at least a couple of time over during the operational life of the hospital.