Eden District Puts Sutter on the Defensive


The Citizen

THE DISTRICT v. SUTTERThe relationship between Sutter Health and the Eden Township Healthcare District is best viewed in phases. The Pax Eden ended in 2004 when the District purchased the hospital and leased it to Sutter. Within two years, seeds of corporate bullying began to emerge. It’s the great girlfriend who became the monster wife. The ill-advised purchase of a Hummer followed by $5-a-gallon gasoline and the tattoo on your lower back that seemed like a good idea way before those two kids popped out. The Buyer Beware analogies could go on forever and everywhere along the line. Since 2004, Sutter has held all the cards by shrewdly gaining leverage over the District by dangling the rebuild of Eden Medical Center as both the carrot and the stick, that is, until this week.

The District’s lawsuit alleging a conflict of interest against three members of the group who negotiated the 2008 memorandum of understanding is a gamechanger. It’s the moment when the District can possibly begin to erase the deal that in its shocking simplicity, effectively gave Sutter total control over the future of the District’s two main assets–Eden and San Leandro Hospital.

Assuredly, there have long been voices shouting the lawsuit’s same transgressions against Dr. Rajendra Ratnesar and Eden Medical Center CEO George Bishalaney and, to a lesser extent, former boardmember and vociferous defender of the MOU, Dr. Francisco Rico. Proving all three had blatant conflicts of interest does not seem hard to see. How anyone in 2008 thought having Bischalaney, who was the CEO of both Eden and the District, directly involved in its execution is preposterous and only conjures up a flood of conspiracy theories centering on the deep-seated perception Sutter, indeed, controlled previous incarnations of the District board and its recently deposed legal counsel.

In addition, Ratnesar was and is currently cozy with Sutter, although he denies impropriety by telling the local paper when it comes to any conflict of interest the righteousness of his heart apparently negates the rule of law.  Rico, although amazingly eloquent and thought-provoking, was also uniquely tied to Sutter through a parntership in a medical group with ties to Sutter. It seems to beg the question, why wasn’t anyone paying attention to this obscene flouting of the public’s trust?

The presence of the District’s lawsuit could likely keep the hospital running for months after the deadline and only heightens Sutter’s greatest fear of all: an outside operator, namely an entity like Prime Healthcare flirting with the District.

What this lawsuit illustrates is Sutter engaged in a surreptitious and massive takeover of a local government entity in the interest of increased profits and reduced competition in the area with profound implications to the residents of the community. Sutter’s moves were made with such deftness that many did not see the signs until it became apparent the plan was to trade San Leandro Hospital for a shiny new hospital in Castro Valley. A call to action gained steam in the early part of last year, but it was nearly too late and gave Sutter a huge upper hand that it still enjoys. At every battle since, Sutter has merely plowed forward with reckless abandoned. Most infamously, they invoked their right under the 2008 MOU to purchase San Leandro Hospital and quickly leased it to the Alameda County Medical Center, bluntly saying ‘I’ll take that and do whatever I want with it’ and attempted to do without paying a single dime. That certain amount  of arrogance, though, may have been muted by the District’s lawsuit this week.

Explicitly what it does is potentially reset the clock both backwards and forwards. It seeks to void the disputed 2008 MOU, which would allow the more favorable 2004 MOU (to San Leandro Hospital) to gain precedence once again, but it also may mute persistent worry over what happens after the hospital’s license expires after June 30. County officials and San Leandro Mayor Tony Santos have been asking recently what the newly-energized District board plans to do about the possible lapse of the license. Allowing it to lapse could take up to $30 million to renew, the county has said. The presence of the District’s lawsuit could likely keep the hospital running under the current license for months after the deadline and only heightens Sutter’s greatest fear of all: an outside operator, namely an entity like Prime Healthcare flirting with the District. Both Boardmembers Carole Rogers and Dr. Vin Sawhney has strategically mentioned recently someone other than Sutter entering the fray. To Sutter’s ears, such talk is akin to burning your ‘tween daughter’s poster of Taylor Lautner (for Gen-X women, insert Corey Haim. RIP.)

The roadmap to the future of this conflict is right there in the District’s complaint. It is likely the District’s lawyers are preparing for Sutter’s next move, which would be to hang their hat on the arbitrator’s decision last week which granted them the title of San Lendro Hospital and move forward with closing the emergency room and bringing in ACMC. Within the , though, is the threat of an injunction by the District is Sutter chooses this route. With the entire conflict tied up in a legal dispute, it is difficult seeing a judge siding against the District. If Sutter were to do the very act an overwhelming number of residents oppose and provoke an injunction by the District, it will only embolden a recently quiet group of supporters to grow into the determined and fairly large group we saw last summer. That group’s actions are widely credited with giving the District breathing time to reorganize its plans and the content of its board. It also told Rogers, Sawhney and, to a lesser extent Dr. Harry Dvorsky, the community had their backs.

What we have now is the very first time, supporters for San Leandro Hospital have pushed Sutter on to their collective heels. The lawsuit against Sutter is compelling and will likely force them to actually negotiate with the District, instead of the slash-and-burn technique we have seen the past six years. If the lawsuit succeeds, the third phase of coexistence between Sutter and District might look more like the first six years, rather than the tumultuous last half dozen.

JOIN THE REVOLUTION! for more news, go to twitter.com/eastbaycitizen

Categories: Eden Township, Francisco Rico, George Bishelany, Rajendra Ratnesar, S.L. Hospital, Sutter

16 replies

  1. Your account of the relationship of Sutter Health to the District is a gross mischaracterization. The fact is that Eden Medical Center has NOT been an asset of Sutter's since Jan 1998 when the District transferred ownership of Eden to EMC/Sutter pursuant to Prop A that was approved by the voters of the District in 1997. The District came away from that transaction with about $92 million. Until Sutter's public announcement in the fall of 2006 that they had changed their plan to build a new hospital in the District, Eden and the District benefitted significantly from the affiliation with Sutter.
    Sutter did not “control previous incarnations of the Board” as you allege. All of the members of the District Board were elected by the voters of the District.
    You totally omit the fact that Sutter publicly announced in the fall of 2006 the intent to NOT build a new hospital in the District. Prior to that announcement, the District had already purchased SLH on the condition that EMC, backed by Sutter, would build a new hospital in the District.
    The earthquake resistance mandated by SB1953 mandated closure of Eden. Numerous engineering studies had been done and they indicated that Eden did not comply with the requirements of SB1953. Furthermore, the studies determined that retrofit was not an option because it was too expensive, would disrupt the functioning of the hospital and would still fail to comply with SB1953 when the specs became more stringent in 2030.
    SLH is not fiscally sustainable without outside subsidization. The report from independent outside consultants that was presented to the Board in open session that was well attended at SLH in November of 2008 and which was commissioned by the Board at the insistence of Carole Rogers confirmed that.
    Nevertheless, the Board was able to get Sutter to cover the losses at SLH of about $25 million in addition to considerable capital improvements including a new CT scanner, lab equipment, air conditioning equipment and other support.
    If Sutter does not build a new hospital here then the action of SB1953 will close Eden and SLH and the only remaining hospitals will be St. Rose and Kaiser. Our negotiations got the commitment from Sutter to finance and build a new hospital with all private money totaling $320 million and they have proceeded as promised.
    The current Board is wasting hundreds of thousands of dollars in legal fees in an ill advised effort to undo what we accomplished and appease certain special interests. It is an assumption on your part that an overwhelming number of residents oppose Sutter's plans. Realize that the District encompasses all of Hayward, Castro Valley, Union City as well as San Lorenzo and San Leandro. Most of those citizens do not use SLH. The opposition has been from a vociferous minority that is localized mostly in San Leandro.


  2. The CT scanner was a gift from a separate foundation and not paid for by Sutter. Sutter only provide for the installation of the scanner, not the purchase!


  3. In all fairness, this article should be labeled as either an op-Ed or analysis. The hospital story is quite difficult to cover because of it's one-sided qualities. I have gone out of my way in past stories to paint Dr. Rico's time on the board as exactly as he portrays it a above. They were pushed into an unfortunate corner by Sutter and made up for it with a deal many find hard to comprehend today. His assertion that many side with his current viewpoint is tough for me to corraborate. I've been on this story since May of last year and have never come across someone who believes the hosptial is a money pit that should be allowed to close. Honestly, only Rico, Dr Ratnesar, another former member Suzanne Barba and those affiliated with Sutter possess this viewpoint and that is what makes this story difficult to cover. How can you cover it down the middle when nobody sees it that way? I've found you can't because Rico's view does not have enough compelling information to meet the opposite perspective halfway. Believe me, if there was more substance, I would report it. The best I think I have done is to report the circumstances surrounding the time the MOU was negotiated and I find that board was faced with a no other solution than what they came up with.


  4. You got it almost right. Sutter listed the CT scanner as a gift from Eden to San Leandro Hospital and charged an inflated installation fee to San Leandro. This is the kind of bookkeeping tricks Sutter uses to make San Leandro Hospital look like it's losing money!!


  5. The Ct scanner was provided as a gift from the Wayne and Gladys Valley Foundation.


  6. Dr. Rico,

    Your false characterizations must be challenged. You are now facing Healthcare District citizens with good memories and a full range of facts at our command.

    Opposition to closure of San Leandro Hospital's acute care services is nearly universal in all parts of the District. Over 500 citizens overflowed a District Board meeting last June; all who spoke demanded that the Directors reject Sutter's plan to execute the closure of SLH's ER, ICU and all other acute programs. There has been consistent participation at District Board meetings since then, and at County Board of Supervisors meetings which took place around the same time. The people are the “special interests” which the Board is appeasing with this lawsuit against Sutter.

    The 2006 and 2008 elections provide more evidence that maintenance of hospital services has been demanded by the people. In those elections, three of five incumbent Board members lost reelection bids by wide margins. Each of those defeated incumbents held the position that Sutter should be allowed to close SLH if the District gained a reduced-size replacement hospital in Castro Valley in exchange. Each of the three challengers ran on preserving services at both hospitals.

    Dr. Rico, you were one of those incumbents who was beaten badly by your challenger. Despite all of this, you continue to insist that “an overwhelming number of citizens” do not “oppose Sutter's plans.” You are also completely unwilling to deal with the consequences which would come from Sutter's plans. Chief among the consequences is that people in our District would be needlessly harmed and killed.

    It appears to me that your views, and the mendaciousness which you use to defend them, express sociopathic tendencies.


  7. Dr. Rico,

    In November 2008, “the report from independent outside consultants that was presented to the Board in open session” provided many different funding options for San Leandro Hospital to continue as a general acute care hospital. Quoting from the report, these included:

    “Continued affiliation with Sutter Health, New affiliation with other healthcare operator, Public support….Private support….”.

    As we have noted here frequently, Sutter is easily capable of providing the full subsidy for continued operations at SLH just from their Eden District profits (Sutter consistently makes much more at Eden Hospital than they lose at SLH). Sutter Health is also a massively profitable chain throughout Northern California, a not-for-profit with over $3 billion in profits in the last six years, easily able to manage a $6 million yearly subsidy for life-preserving services. There is no financial need for Sutter to close SLH.

    On to the next option provided by the consultants. “New affiliation with another healthcare provider” is an option which the District Board has successfully pursued. An offer remains on the table from a viable statewide Hospital operator; this offer would preserve the ER, ICU, Medical/Surgical rooms and other acute services at SLH. All it requires is for Sutter to relinquish operating control of SLH, something they appear anxious to do.

    Incredibly, Sutter has pulled out all stops to prevent this from happening, even in a potential partnership with Alameda County Medical Center. The head of the County Healthcare Services Agency was in these attempted negotiations; he has been quoted as saying Sutter was the party who prevented those negotiations from moving forward.

    Dr. Rico, with these facts in your way, why do you defend Sutter's actions in these areas?


  8. Dr. Rico,

    You state that “The current Board is wasting hundreds of thousands of dollars in legal fees in an ill-advised effort to undo” the most recent MOU which placed current Hospital services in jeopardy. While we understand that you hold your own legal education in high regard, this statement reflects an incredible level of arrogance.

    Prominent law firms do not seek to associate themselves with losing cases. Our Eden District Board has engaged Pillsbury Winthrop Shaw Pittman, one of the very top litigation firms in California. This firm appears to be quite confident that the District has a strong case, and Pillsbury is fully capable of prosecuting this case skillfully.

    Dr. Rico, do you claim to know more about the law in this area than the Pillsbury firm?


  9. Doug, Doug, Doug,
    You're argument has finally descended to personal insults! We'll see how it all comes out in the end.


  10. Dr. Rico, the attacks you have leveled against numerous people in public and in print, including on this site, make it quite laughable to see you run away from defending your record in the face of one harsh adjective.

    Your refusal to accept the will of the public is odd. Your refusal to deal with the consequences of your actions during your last term in office is disturbing, and causes me to wonder if tender portions of your humanity will ever be forthcoming to us.

    Absent that, defend your record against the facts presented here. Alternatively, how will we prevent needless death and suffering in our Healthcare District over the next generation?


  11. Doug:
    In the 4th paragraph of your first comment there appears two quotes ascribed to me that do not appear in my comments. Law firms are in the business of representing clients and they will do so for any client who pays their fees. As for legal opinions, be advised that the practice of law is one of the learned professions and so it is quite common for there to be legitimate differences of opinion. Pointing out such differences does not constitute a personal attack, but calling people names and questioning their motives as nefarious does. The attitude you display in your polemics illustrates the depths to which civil discourse has sunk in our country. You apparently have a problem granting that anyone who disagrees with you might have a legitimate and honest position. The attacks I “have leveled against numerous people in public and in print” have not been personal attacks on their motives or character (that's what a personal attack means). They have been differences of opinion that I support with facts and law.


  12. Dr. Rico,

    Efforts have been made to identify that these are my critiques of your actions and words. Your statements such as “The current Board is wasting hundreds of thousands of dollars” to “appease certain special interests” are among numerous claims of yours which explicitly question the validity and motivations of others.

    I've found that your defenses often put smokescreens around the facts. Because of the life-and-death issues involved, these smokescreens are the definition of incivility.

    For example, just in the course of this comments post: You state “SLH is not fiscally sustainable without outside subsidation”.

    Factual responses: Sutter Health is easily able to provide that subsidy with profits it gains from the Eden District. Sutter continuing the subsidy is a option in the “report from independent outside consultants”. So is an independent operator providing the subsidy, a currently avaliable option which County officials tell us Sutter has blocked.

    Your unwillingness to deal with these facts is, in my view, very insulting to the public. This is particularly true since many, many District residents will die and suffer needlessly if SLH's ER and other Acute services are forced to close. Do those consequences touch your soul and heart at all?


  13. All i need to know about Dr Rico was gleaned below in his defense of Glenn Beck.

    Anyone who thinks Beck is a real journalist has zero credibility.


  14. Oh Poor Dr Rico still crying over the loss of your position on the board of ETHD, you stil have not answered my question to you, what benefit would the closing of San Leandro Hospital be to the community it serves, you say that its only a small group that wants to keep the hospital open, you need to open your eyes and maybe someday come to the hospital and ask the people coming there where they are from, I happen to know that we have people from all of the areas that you mention in one of your diatribes, what a loser you are, why do you think they voted you off of the board if you were doing such a good job, just what do you expect to gain by closing the hospital, how come I never see you at the meetings anymore, after your second thrashing by Dr West to try and gain another seat on the board so you can help Sutter dominate hospitals in the Bay Area. Why dont you just go away and give up, your a loser.


  15. Though I have disagreements with Papa John and Doug Jones I respect them for standing up and being counted for what they believe. That's more than I can say for the gratuitous pot shots from anonymous bloggers who don't have the guts to stand up and be counted. So to anonymous I say learn how to read. My comment on Glenn Beck said absolutely nothing about being a journalist. That was your word. In fact I have never regarded Beck as a journalist. I regard him as a commentator, advocate and entertainer.


  16. I also condemn the posters who attack while hidden behind anonymous post.

    That said, this is not an anonymous post. Putting aside whatever personal attacks are held within Doug Jones comments, I ask you, Dr. Rico, in respect to all others who ask the same questions to please respond to the issues raised by Mr. Jones.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: