Sutter Exercises its Right to Purchase San Leandro Hospital


By Steven Tavares
The Citizen

Sutter Health is exercising its right to purchase San Leandro Hospital, according to several sources. The move further complicates the possible survival of the hospital and caught many local politicians flat-footed and unaware of Sutter’s plans. The end of the hospital could come as early as Sept. 30.

A spokesperson for Sutter Health could not be reached early Tuesday evening. News of Sutter’s surprising move before the Alameda County Medical Center (ACMC) board at 5 p.m. reached San Leandro Mayor Tony Santos shortly after five, while an aid to Supervisor Alice Lai-Bitker learned of the plan from a cell phone call of one of the attendees. A spokesman for the California Nurses Association was also unaware up to 9 p.m. Tuesday night.

Sources told The Citizen an announcement regarding SLH would take place on July 28 at Highland Hospital. One source was under the assumption that Sutter would be making an announcement regarding its intention to transfer their right to purchase to ACMC, but late Monday, they had received no confirmation. The Citizen was told by two separate Sutter spokespeople no announcement would be made the next day. One spokesperson acknowledged that such anannouncement would likely occur before the Eden Township Board of Directors. There is no indication to why Sutter seemed to surreptitiously evade widespread public view of its intentions for the controversy hospital plan.

According to a memorandum dated May 9 from then-Director of Health Services David Kears to the Alameda County Board of Supervisors, he lays out a few possible scenarios of which could occur. (Click here to read the entire memo.)

Sutter under its lease agreement can close SLH. Eden Township Health Care District (District) owns the property and it can transfer the property to another entity only if Sutter agrees to transfer its right of ownership to that entity. Under consideration has been the option for Sutter Health, the District, and the County of Alameda (County)/ACMC to enter into an agreement whereby:

(a) Sutter Assigns the Option to Purchase SLH to the County/ACMC and the District waives certain provisions of their lease agreement with Sutter to allow the transfer of property to the County/ACMC; Should the District elect not to transfer SLH to the County/ACMC the other option by which the County/ACMC could acquire SLH is:

According to Shawn Wilson, the chief of staff for Alameda County Board of Supervisors President Alice Lai-Bitker, this is the option they believed would eventually become the “hybrid model” for SLH, which would retain surgical departments, the emergency room and add acute rehab to the top two floors. Instead, Sutter is choosing plan B, below.

(b) Sutter Exercises its Option to Purchase SLH with its intent for SLH to close no later than September 30,2009, and the District transfers SLH to Sutter (or its affiliate) effective on or before September 30,2009 as prescribed in their existing agreement. Sutter enters into a long-term lease agreement with the County/ACMC based on the conditions set forth by all parties. Lease agreement is as close to a transfer of title as is reasonably possible.

The Pros of option (a) are: that it is an agreement of all key parties (SutterlEden, District, and County/ACMC); it is doable within the resources of all parties; it allows ACMC the possibility to directly negotiate the purchase of SLH and finance its conversion to a Regional Acute Rehab hospital without the assistance of the County; and allows for the continuation and expansion of FACH Acute Rehab Program. The Cons are that it precludes consideration of any other option to retain SLH as an acute medical surgical hospital with a fully operated emergency department.

The Pros of option (b) are: allows for the County to secure SLH in order to relocate and expand ACMC operations of FACH acute rehab program, and thus continue to address a critical acute hospital need in the County; and, it is consistent with the timeline set by Sutter to close SLH and expedite the conversion of SLH into an ACMC operated Acute Rehab Hospital. The Cons are: leaves a residue of discord among the three parties not conducive to building back the confidence and support of the residents impacted by the closure of SLH and, it precludes any immediate possibility of ACMC acquiring SLH as an asset through its own ability to finance the conversion of SLH into a acute rehab hospital (by acquiring SLH outright, ACMC can then use SLH as security against the loan needed for the conversion).

The memo refers to “residue of discord” if plan B is allowed to revert the process back to SLH becoming an acute rehab center. This may have been the reason Sutter did not allow opponents of their plans time to mobilize. Wilson calls this the “worst-possible scenario” and wondered whether Sutter’s offering price might be paltry.

In a sense, this complicated, sometimes convoluted hospital saga may have come full circle by resetting the scenario where acute rehab services of which Kears says is essential to the health of the hospital system is back in play, while Sutter may have just left the building.