Chan Threatens Healthcare District; Seeks More Money For San Leandro Hospital

Supervisor Wilma Chan in less cozy
times with ACMC

SAVE SAN LEANDRO HOSPITAL | The Eden Township Healthcare District is steaming mad following a letter from Alameda County Supervisor Wilma Chan and San Leandro Mayor Stephen Cassidy hinting at the possible dissolution of the elected body if they do not raise their contributions for the framework of a proposal to save San Leandro Hospital for, at least, three years.

The District previously approved a two-year contribution of over $700,000, representing 50 percent of projected positive revenues, last October. The City of San Leandro, the Alameda County Medical Center and the Alameda County Board of Supervisors each approved $3 million in subsidies over the next three years this month to cover shortfalls in keeping San Leandro Hospital in each operation as a general care facility with around-the-clock emergency room services.

But, now the Alameda County Board of Supervisors is pushing for a larger commitment from the District and some of their Board of Directors took umbrage at the tone of the Nov. 9 letter sent by Chan. In the correspondence, the issue of dissolving the over 50-year-old health care district is clearly dangled as an inducement to add funding for a third year, potentially in the neighborhood of $1.2 million and representing an increase of future revenues from 50 to 70 percent.

“Without this increase,” the letter to the District states, “the revenues for the upcoming three years may fall short and undermine the deal. We believe as the entity that been responsible for the hospital for many years, your board should make a contribution at least equal to the other three partners.”

The correspondence goes on to assert Alameda County’s Local Agency Formation Commission (LAFCO), an agency charged with regulating the boundaries of government bodies and combating urban sprawl, may consider dissolving the District. “The State of California is shutting down districts that do not run hospitals,” said the letter referencing the District’s loss of title to San Leandro Hospital to Sutter Health. “We believe the strongest argument to retain the District is your on-going financial participation as an equal partner in keeping this hospital open. In the alternative, you could dissolve and transfer your assets to ACMC earmarked for financial support of San Leandro Hospital.” Incidentally, LAFCO is partly comprised of Alameda County Supervisors Wilma Chan, Scott Haggerty and Nate Miley, who acts as the agency’s chair.

The Eden Township Board of Directors, however, took the tone of the letter as an inappropriate threat at their Nov. 14 meeting. “This is a perfect letter on how not to win friends and influence people,” said Board Director Lester Friedman. “It is a letter that is on the verge of offensive when you have a board here that has done everything it could do for San Leandro Hospital while every other participant has done nothing.”

Dev Mahadevan, the District’s chief executive officer, said he was also “outraged” at the tone of Chan’s letter. “I think they are ignorant of the facts,” he said, since raising the District’s contribution to 70 percent of projected revenue would violate terms of their loan with their financial institution. He also questioned the assertion health care districts without hospitals to run were under threat of dissolution by the state and their value is far greater than the actual facilities within their boundaries. “There are 20 other districts that will take up arms,” Mahadevan said, while adding such a move requires a vote of the people.

In a tersely written response to Chan’s letter, dated Nov. 15, the District suggested officials from the county and San Leandro were now turning their back on them after their ultimately unsuccessful legal challenge versus Sutter. “All the elected officials from the city of San Leandro and the county have been urging us to pursue the legal remedies we sought. Now, when we have been battered by this dispute and exhausted so much of our resources and still try to provide any unencumbered funds we have, you suggest we may be dissolved as a public agency because the wounds we incurred in the battle limit what we can do now.”

Earlier this year, the District lost its three-year-old legal battle to retain title to San Leandro Hospital. For Sutter, the spoils of that victory include owning San Leandro Hospital at no-cost while potentially possessing the power to bankrupt the District in damages. During the Nov. 14 District meeting, Board Director Rajendra Ratnesar referenced potential damages ranging from nothing to $40 million. Sources have told The Citizen, Sutter may be angling for the District’s stake in the Dublin Gateway Center and San Leandro Surgery Center on East 14th Street. If so, it would render impossible the District’s ability to live up to the proposed 50 percent of expected revenues, they approved last month.

In the meantime, the proposal to keep San Leandro Hospital is plagued with uncertainty, most of which, include Sutter being the final arbiter of any deal. Over the past five years, Sutter has never shown a willingness to allow San Leandro Hospital to survive in its present form. According to sources, somewhat corroborated by statements made by Chan at the Board of Supervisors meeting on Nov. 6, there is no indicated Sutter is willing to approve such a deal. However, they have hinted at willingness for ACMC to hurriedly submit a proposal pending Sutter’s approval.

Any proposal, if approved by Sutter, does not currently hold any stipulations against ultimately turning the hospital into an acute rehabilitation facility once strongly advocated by the Board of Supervisors and ACMC in 2009. Wright Lassiter, ACMC’s chief executive officer, who called the District “the less definitive of the partners at this time” at the Nov. 6 Board of Supervisors meeting, in fact, told the board Lassiter says there could still be a need for subsidy after three years, but would re-evaluate the potential deal at the mid-point over the hospital’s future.

At the District, Mahadevan raised significant doubt over the numbers being offered by Lassiter, calling them “just estimates.” “Math is my game,” Mahadevan told the District Board of Directors Nov. 14, alluding to his 40 years in accounting. “It will not add up.”