Three Directors Asked To Recuse Themselves Over Surgery Center

The Citizen 

The sale of the Eden Township Healthcare District’s share of the San Leandro Surgery Center sought by Sutter Health is still up in the air, but the nagging appearance of a conflict of interest among certain boardmembers was again raised in a legal question with wide-ranging implications for the fight to keep San Leandro Hospital open.

The District’s lawyer Colin Coffey recommended at Wednesday night’s meeting three current boardmembers recuse themselves from voting on the sale of the District’s partnership in the San Leandro Surgery Center to Sutter for over $1 million. Coffey of the law firm Archer Norris, replaced the fired Craig Cannizzo last December, said Directors Dr. Bill West, Dr.Vin Sawhney and Dr. Rajendra Ratnesar posed instances of conflicts of interest from income derived from business transactions with Sutter in the past 12 months.

West and Ratnesar were deemed to have a conflict of interest due to since terminated directorships at Eden Medical Center. Sawhney, according to Coffey, has received income from services provided to San Leandro Hospital for indigent care in the last year.

The legal question brought forth by Coffey could have game-changing ramifications for a board that has quickly become far more offensive in their tactics comfronting Sutter’s bid to turn the hospital over to the Alameda County Medical Center to become an acute care rehabilitation facility without emergency room services. It is not yet clear whether one or all of the recused boardmembers could also be excluded from participating in any dealings between the District and Sutter over the fate of San Leandro Hospital.

“The board and the District have been endeavoring in the past month or so to explore a variety of conflict of interests issue arising both from the past and past experiences that have made some controversy of conflict of interest that have been pursued through special counsel to bring some expertise in the area of public official conflict of interests laws and that review has also reflected current board potential conflicts of interest,” said Coffey.

Afterwards, Coffey again confirmed legal counsel was investigating additional conflcits of interest if and when they arise. When asked if the legal implications of three boardmembers recusing themselves for a possible transaction with Sutter and  the surgery center and whether that could be applied to conflicts of interest with the same boardmembers and San Leandro Hospital, he said, “It could part of everything or nothing.”

The trio of boardmembers were notified earlier in the day Wednesday, while Sawhney said he only learned of the potential conflict of interest as he walked in the door. For this reason, the board voted 4-1 to postponed a decision on the surgery center for second consecutive meeting.

In addition, postponing the vote sidestepped a potentially old-fashioned method of gaining a quorum since the dismissal of three members would have left only two voters. Under these circumstances, which could still return to discussion, Coffey said under the legal theory of the “rule of necessity” the three excluded members would draw straws to secure one member to regain voting rights and gain a quorum.

Despite, the odd turn of events, the Director of the San Leandro Surgery Center Shelia Cook said the District needs to close the deal soon. “We have already been put off,” said Cook. I feel this is just another ploy to put this off again.”

Cook also attempted to quell fears by many in the audience that Sutter’s potential partnership in the center would damage San Leandro Hospital economically and said the hospital conglomerate is still interested in making the deal. “We are not looking to take any business away from San Leandro Hospital,” said Cook. “Sutter Health is not going to change any decision they have made in the action to become a partner of San Leandro Surgery Center. By delaying this, you are punishing the surgeons, not Sutter Health.”

Yet, many still sport a strong antipathy towards anything Sutter. Labor representative Mike Brannan of the California Nurses Association thinks dealing with Sutter sends the wrong message. “A move to sell the surgery center–something that Sutter Health wants–would be a signal to the community that the board is not serious about the bigger picture and fighting to keep San Leandro Hospital open.”

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Categories: Colin Coffey, Rajendra Ratnesar, S.L. Hospital, San Leandro Surgery Center, Sutter, William West

7 replies

  1. The San Leandro Surgicenter took the lion's share of the outpatient surgery away from San Leandro Hospital years ago when it opened. The remaining outpatient surgery at the hospital is not desirable to the Surgicenter due to high risk and/or poor reimbursement.

    The doctor owners of the Surgicenter are desirous of concluding the sale of the District's share to Sutter Health in order to realize gain from the advantageous insurance contracts that Sutter has been able to negotiate due to their greater bargaining power. Without that it is questionable whether the Surgicenter will survive. Closure would mean loss of employment for a significant number of people.

    The District has a formal Conflict of Interest Code and Policy that has the force of law. There are procedures in that code for dealing with conflicts that should be employed to address the alleged conflicts raised at the Wednesday night meeting. A careful reading of those procedures supports the view that these conflicts are not disabling and can be used to allow at least one of the directors recused to participate in the discussion and vote, thus achieving a quorum and allowing action to be taken.


  2. Frank,

    It is inspiring to read that you are concerned about “loss of employment for a significant number of people.” San Leandro Hospital employs many more people than this SurgiCenter, and benefits from Sutter Health's “greater bargining power”. Yet Sutter claims to have lost over $6 million at SLH during 2008, the most recent yearly report avaliable, and tens of millions over the course of their operations there.

    Many of us find those numbers completely unbelievable, but taking Sutter at its word, they are now asserting an immediate financial need to close desperately needed services at SLH, thus creating “loss of employment for a significant number of people”. Numerous past statements of yours support Sutter's right to do so, despite the fact that the $21 million in 2008 profit from Sutter's Castro Valley operations show that overall large profits from their Healthcare District hospitals can easily subsidise operations at SLH.

    I hope your statement here, which displays concern over health care service and job losses, is held to consistently from this point forward. It would be a welcome change.


  3. I read that the San Leandro Surgery Center doctors want to sell to Sutter because of their “advantageous insurance contracts.” Sutter Health is not the only player in the world with advantageous contracts. Where is their competition in this solution? This is just another ploy from Sutter to gain their monopoly on health care locally!


  4. Why would local docs want to get into bed with Sutter anyway – knowing their modus operandi?


  5. San Leandro Surgery Center started on Estudillo Avenue across from the library in 1964… The Center is celebrating 46 years in the community and moved to it's present location in 1995… just to set the record straight.

    The Center is locally owned and operated with a dedicated staff of credentialed professionals.

    It is active in the community, provides care for indigent, host health care clinics, works with the Shriners and sponsors local events such as the Lake Chabot Trail Challenge that benefits our East Bay Regional Parks.

    It would be a shame for our community to loose local control of this outstanding facility with a proven record of service…


  6. San Leandro Surgery Center does not provide care for indigents which are not covered by State of California or Alameda County insurance. Set the record straight on that. No insurance, no service. It cannot afford to do indigent care without being paid from the state or county. As stated above by Dr. Frank Rico, the Surgery Center took away the paying patients from the hospital and now in economic hard times, the Surgery Center is having difficult times too and would like to be affiliated with someone that can support them or they may not be able to survive on their own. If that happens, maybe the hospital will be able to recoup some of it's losses over the years when the Surgery Center took patients away from the hospital and left the hospital with the real indigent patients. Now the owners of the Surgery Center know things are lean and now they have to make up for lost cases and would rather have the Sutter family absorb the losses instead of them.


  7. Again… to set the record straight.

    San Leandro Hospital was founded in 1954 and San Leandro Surgery Center in 1964… hardly a newcomer to the scene if one is to be intellectually honest.

    It's no more than a case of sour grapes to say a small medical facility which traces it's roots in the community 48 years is responsible for the Hospital's problems.

    As to indigent care… many without insurance or means have benefited through the Shriners Vision Program hosted by San Leandro Surgery Center at no cost…

    Patients do not belong to anyone… they are not property to be “Taken” and it is preposterous to claim the fate of San Leandro Hospital fate lies in the hands of the Surgery Center… might as well blame all the area physicians that have opened their own surgical suites.


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