Sutter Threatened Litigation Against Hospital Suitor

The Citizen 

Sutter Health sent a letter within the past two weeks to both the Eden Township Healthcare District and Prime Healthcare, the Southern California health provider with interest in operating San Leandro Hospital, threatening litigation if the two sides engage in future negotiations.

In an email Friday requesting an interview with the owner of Prime, Dr. Prem Reddy, a spokesman for the hospital chain confirmed the existence of the letter and denied claims they are interfering with the conflict between Sutter and the District.

The interview was denied, according to Jason La Marca of Prime, because of “the pending litigation between Sutter and the District and recent threats by Sutter to sue Prime Healthcare Services based on claims (albeit baseless) that Prime Healthcare Services is taking affirmative efforts to induce the District to breach its contract with Sutter. Although these claims have no merit.”

Bill Gleeson, the vice president of communication for Sutter, also confirmed the letter was sent to the District and Prime, but said it “merely reiterates our legal rights as outlined in the agreements signed by the District board members in 2008. These are legally binding agreements between the District and Sutter Health to build the new Eden hospital.

“This agreement also gives Sutter Health the absolute legal right to purchase San Leandro Hospital and precludes the District from negotiating any agreement with another party once we exercise our right to purchase the hospital, which we have done,” Gleeson said.

Sources say the letter was in response to comments made by Boardmember Dr. Vin Sawhney to The Citizen Dec. 21 about the possibility of Prime or another health provider operating the hospital after June 30. “The property is in dispute. Without title to the property, [Sutter] really can’t close it,” Sawhney said after the firing of the District’s legal counsel. “The issue would be they can walk away as of July 1, but that does not mean the hospital is closed.” Sawhney then made reference to both Sutter and Prime saying, “It is a disputed lease. They can leave the same as someone else can come in.”

The faint presence of Prime has hovered over the issue of San Leandro Hospital since June of last year when its charismatic owner addressed residents at the San Leandro Library. Until that point, Sutter and the county had maintained there was no outside interest in operating what they allege is a money-losing operation.

Also in June, Eden Medical Center CEO George Bischalaney, when pressed by Alameda County Supervisor Nate Miley if Sutter would negotiate with Prime, he reluctantly said they would, but subsequently failed to enter into any serious talks during the months that followed.

The Citizen reported in September representatives from Prime approached Sutter about the possibility of leasing San Leandro Hospital. According to the source, the talks went nowhere. It was also reported two weeks later Sutter  flatly refused to enter into any talks with the county and District to operate the facility as a hybrid of numerous hospital services. Sutter’s abhorrence of Prime operating San Leandro Hospital as a new facility in Castro Valley is built has been steady and best described by Alameda County Health Services Director Alex Briscoe when he said, “Sutter would rather fall on their sword than have Prime in San Leandro.”

A member of the grassroots Coatlition to Save San Leandro says Sutter is using its financial clout to close the hospital against the wishes of the community. “This highly profitable not-for-profit health care system is spending a lot of money on lawyers and public relations to try to gain their preferred outcome,” said Doug Jones.

He also sees conflicts arising if Sutter continues to use litigation against possible health care partners in the district, “It is likely Sutter Health will be in partnership with the Eden Township Healthcare District for the next half century,” said Jones. “It is hard to imagine this partnership working at all if Sutter follows suing the District by suing a potential provider of care for the District.”
>>>Supes Approve Eden EIR; Miley Urges Hospital Owner to Deal, June 10, 2009.
>>>Potential Hospital Buyer Met with Sutter Last Month, Sept. 1, 2009.
>>>Sutter Nixes Hybrid Model with SoCal Health Provider, Sept. 17, 2009.
>>>Lawyer Out; Questions Begin, Dec. 22, 2009.