Jan. 17, 2012 | St. Rose Hospital’s financial woes are continuing. The crippled Hayward hospital is asking this week for more favorable terms on its recent $3 million loan from the Eden Township Healthcare District. Without it, it may not be able to continue making payments, according to a District report.

The loan was given last August to alleve cash flow problems it encountered last summer and exacerbated by a new computer system glitch. Its interest rate was initially set at 8.25 percent, according to the District, but St. Rose is asking to cut it in half.

In a staff report posted this week, St. Rose CEO Michael Mahoney wants to reduce the interest rate to 3.25 percent to better help the struggling facility get through the winter months. Under the current agreement, St. Rose pays a weekly payment of $200,000 through February and $167,000 through the end of March.

The request adds additional question about the sustainability of the facility and whether the District’s recent interest in acquiring it makes economic sense. The District lost $2.3 million last year, according to its financial statements.

In many ways, the proposed merger of the District and St. Rose appears to be the impetus for reducing the terms of the loan. District CEO Dev Mahadevan, in a letter to board members recommending the adjustment, said the change would allow St. Rose “to reduce its expenses and in light of the proposed acquisition that is currently being investigated and the potential future relationship.”

In early December, it was revealed that St. Rose was in default for $2.3 million in unpaid loan payments. The board approved a payment schedule proposed by Mahoney affording the hospital time to fix its persistent cash flow problems.

Despite the spate of financial problems at St. Rose, Alameda County Supervisor Nadia Lockyer and other county health officials have urged the District to move quickly to merge with the hospital.

Part of the long-range plan for both St. Rose and neighboring San Leandro Hospital is to utilize a larger economy of scale for procuring a larger portion of federal and state funds to offset continuing losses and services at each facility.