The Plan For San Leandro Hospital You’ve Been Waiting For

By Steven Tavares

The dedicated folks who have successfully kept San Leandro Hospital open for over two years despite pressure from Sutter Health and others to close the facility have never been particularly interested in compromise.

Whether feasible or not the mission of this group of doctors, nurses and concerned residents has been to rebuff Sutter and maintain the hospital’s services just the way they stand today as a full-service facility with an emergency room. Despite their firm beliefs, the notion has really only been pie-in-the-sky until Wednesday.

Enter the well-groomed and charismatic president and CEO of St. Rose Hospital Michael Mahoney. His plan to consolidate his facility with San Leandro Hospital under the stewardship of the Eden Township Healthcare District is the proposal the community has been waiting. Not only would it make both hospitals self-sufficient, it would reorganize the manner in which the local healthcare district provides care to its residents. Make no mistake, the amount of political juggling needed by Mahoney and District Chair Carole Rogers is going to be enormous. Not only will they somehow need to convince Sutter Health this “two-hospital system” will not interfere with its bottom line with a gleaming new Castro Valley Medical Center sprouting up nearby, but it will need to convince the Alameda County Board of Supervisors of the plans merits.

Mahoney surely has a motive outside of the greater good of the community, but like any good deal, it spreads the wealth around. At the heart is the idea two hospitals can draw more federal funding than just one. To do that, Mahoney is banking on leveraging St. Rose’s status as a disproportionate hospital to help fund both facilities. It is not a coincidence that the amount of inter-governmental transfers Mahoney believes the plan could draw is $7 million annually, at the minimum. That is nearly the same figure county health experts believe is needed to subsidize San Leandro Hospital. Alameda County Healthcare Services Director Alex Briscoe has always been adamant that no matter where a subsidy comes from, it must be guaranteed for at least a decade or longer. Mahoney’s plan seems to put this problem to rest.

Any proposal to keep San Leandro Hospital operationally is all well and good, but the trail of lackluster ideas like the hybrid plan has always led to Sutter Health’s ambivalence towards dealing with the District. So, what makes this deal different?

Despite Sutter being the face of corporate greed run amok to its local critics, it could have some interest in making a deal. As one nurse said Wednesday evening, Sutter has no interest in supplying care to an influx of patients utilizing MediCal or possessing little or no health insurance. Sutter, of course, would never agree with the assertion it favors high-end customers, but the critique of it instituting medical red-lining is pervasive in Northern California and certainly fits the dynamic between payers in San Leandro and Oakland versus Castro Valley and the Tri-Valley areas.

Although, it was a bit disconcerting Wednesday when Mahoney was asked how his plan would entice Sutter’s approval, that he only could muster up a line saying he knew their CEO Pat Fry personally and thought they were good people. His interpersonal relationship, though, with Fry could be a boon for San Leandro Hospital. It could be said at this point after nearly two years of legal and personal tussling between Sutter and Rogers, there is need for a new face and approach to dealing with Sutter. Rogers may have been the right person for the right time in the struggle to save the facility, but because of the circumstances around the issue, namely a lawsuit and countersuit in the courts, Mahoney is better suited to become San Leandro’s version of the hard-throwing closer.

Sutter would also avoid having a vigilant competitor to its $300 million palace of a facility in Castro Valley. It became clear this was a considerable fear when Prime Healthcare, a Southern California hospital provider known for ruthless billing practices tried to add San Leandro Hospital to its growing portfolio. Mahoney’s plan ducks this dynamic and seeks to provide a segment of community underserved by Sutter.

Most importantly, there are few corporation more aware of keeping their public relations profile in excellent standing than Sutter. It is precisely the reason the incredible outpouring of protest by local residents two summers ago so greatly emboldened the District to take on Sutter in the courts. It also piggy-backed similar themes in San Francisco and Santa Rosa portraying Sutter as greedy corporate hacks bent on screwing over the poor.

With that, there should be some excitement with news of the Mahoney Plan, but of course, it should be tempered. There has rarely been a story in these part with more amazing and surprising turns of events than the this, but this is the deal you have been waiting so long to hear about.

15 thoughts on “The Plan For San Leandro Hospital You’ve Been Waiting For

  1. St Rose hospital loses as much money each month as San Leandro Hospital does. The last thing SLH needs is to be run by an organization that is already going broke.


  2. More bonuses for administrators and managers at Eden. While the rank and file do all the work.


  3. The reason Sutter wants to kill people in San Leandro by forcing a deal which would close the Emergancy Room is this: To Sutter Health, making a billion dollars of profit from our region in the next generations is not enough. They want a billion and a half.

    By the way, the claim that Sutter provides $2 million a week of charity care in this region is wildly incorrect. In fact, one of the things that is creating opposition to Sutter's attempt to force through a rebuild of their San Francisco hospitals is that they don't provide nearly as much charity care as the other hospitals in town.


  4. It certainly sounds like we agree. Now that there is a viable alternative to operating San Leandro Hospital, Sutter doesn't have to suffer any potential future financial losses. That's exactly the point. Sutter can merely relinquish operating control of SLH, allow St. Rose to partner with the District to continue full Hospital services and get on with making a billion dollars in profit from their Castro Valley hospital which will be completed soon.


  5. I'd be surprised to see Sutter enter into any deal with the District Board. They don't keep their agreements why should sutter trust them to abide by a new deal. Sutter already provides about 2 million dollars a week in charity care. Its just not their responsibility to give free care to San Leandro. This is nothing more tha an SEIU controled board using tax payer money to go after Sutter.


  6. If the post-Rico District Board hadn't fought with everything at their disposal, including the use of District funds to file suit, many people would have died and suffered needlessly.

    If Dr. Rico's Board had been allowed to continue their strategy there would be no possibility of a St. Rose/SLH deal today.


  7. More Sutter/Eden corruption — read on:

    According to allegations in a recently filed lawsuit, Sutter Health routinely charged insurers for anesthesia services that were never performed, and double-billed for services that were performed.

    Even more recently, the California State Insurance Commissioner filed a motion to intervene in this lawsuit.

    Hospitals typically charge about $150 to $250 for anesthesia services, which generally covers the cost for a technician to prepare the operating room. Anesthesiologists typically are not employed by hospitals and charge insurers separately for their services. However, the filed lawsuit alleges that Sutter Hospitals routinely billed insurers $3,000 to $5,000 for anesthesia services. According to the plaintiffs in the filed lawsuit, Sutter Health Network allegedly charged insurers even if the anesthesiologist had charged a separate fee and in some cases when no anesthesia had been used. [From press reports].

    As a result of the above lawsuit and allegations about billing problems with Sutter Health hospitals, the law firm of Audet & Partners is interested in speaking with consumers who have had billing problems with Sutter Health Network, its affiliated providers, and other hospitals and hospital chains.

    You may call us at 800.965.1461 to confidentially speak with an attorney about our lawsuit investigation, or you may contact our law firm via the simple and confidential form on the right side of this page.

    For reference purposes only, affected institutions may include the following:

    Alta Bates Summit Medical Center
    California Pacific Medical Center
    Eden Medical Center


  8. Yes, I would be happy to see the St. Rose/SLH deal work out. I am skeptical that Sutter will go for it unless Mahoney can show them that it would be in their interest to support it. As is often the case in these deals, the devil will be in the details that would need to be established through negotiation. Good luck, Mr. Mahoney.


  9. mahoney is a smart guy. he knows sitter is all about the bottom line so that's his weapon. he's going to try to make them realize that at the end of the day they will end up with more money in their pockets if san SLH exists. the proof is, you guessed it, ST. ROSE!! st. rose beds stay full with all the uninsured while right across the street kaiser Hayward rakes in the money hand over fist. it's a no brainer for sutter and the perfect salesman to make the pitch is Mahoney


  10. Sutter doesn't want competition from anyone, they want to close SLH. A St. Rose operated SLH is competition for Eden and their mediocre care.


  11. Hello Dr. Rico, glad to see you think that there is still a glimmer of hope for SLH, and I hope to see you Wednesday the 20th at the ETHD meeting, I would like to talk to you eye to eye and hope you are truly of the mind that there is hope for the hospital. PAPA JOHN


  12. Dr. Rico, if the terms of a settlement allowed St. Rose and the District to operate SLH as a full-functioning acute care Hospital with a 24-hour ER, and the financial terms did not hopelessly undermine the business of operating SLH short or long-term, I can't imagine a soul in this District, including the District Board, who would want to continue the legal fight with Sutter.

    Are those the terms of the settlement you would like to see Sutter accept?


  13. Finally someone has come forth with a constructive and realistic plan. I have been saying for years that SLH can remain open if funding can be obtained to cover its losses. Sutter has been doing that but evidently does not wish to continue in that role. Mr. Mahoney, a knowledgeable and experienced hospital administrator, inspires some hope that his plan to obtain federal funding may be the answer. Nevertheless, in this era of reducing government expenditures his plan remains in question.

    The other major obstacle is the task of getting Sutter's agreement. The District's breach of the 2008 agreement and the resultant litigation has cost Sutter millions in damages and litigation expenses. Sutter has won every step in the litigation so it is likely that they will expect to recoup those expenses and the longer the litigation goes on the more those expenses will be.

    Now we see that the District has filed a notice of appeal. This in spite of having already spent in excess of $2,000,000 in legal fees alone. The District has been in a negative cash flow situation for years and persisting in this matter makes their position weaker as time goes by without a resolution. If they are ever to have a chance of getting Sutter's agreement, the sooner they move on it the better.

    Two reasons for this are that a settlement now would stop Sutter's losses and the District would still have some resources left to sweeten the deal by reimbursing Sutter for some of their damages and costs in the litigation. At the same time the District needs to save its resources for SLH operating costs until the federal funding comes through.

    As for SLH posing competition for the EMC can someone please explain how ridding itself of SLH's losses exceeding $1,000,000 a month in recent months would be detrimental to EMC?


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