Inside The Collapse Of The Latest Proposal To Save San Leandro Hospital

HEALTH CARE | Even as the public was led to believe a three-pronged plan to keep San Leandro Hospital open as a acute care general facility with a 24-hour emergency room had great potential, letters between Sutter Health, the Alameda County Medical Center, Alameda County Supervisor Wilma Chan and San Leandro’s mayor show the deal has been off the table since late November, at the earliest. The correspondence obtained this week by The Citizen also show local leaders in the dark and bereft of time and ideas over the nearly four-year long fight to keep Sutter from closing the facility and reconfiguring it into an acute rehabilitation specialty hospital.

It is an open secret Sutter is not on very good speaking terms with either the Alameda County Board of Supervisors, specifically Supervisor Chan, its health services agency, nor their rival at the Eden Township Healthcare District, Carole Rogers, the chair of the elected Board of Directors. But, according to a letter dated, Dec. 20, 2012, Chan and San Leandro Mayor Stephen Cassidy met with Sutter’s legal counsel sometime during last month. On the table for discussion that day was ACMC’s plan to cobble together three, $3 million subsidies from the county, city of San Leandro and healthcare district to help fund current operations at the hospital for, at least, three years. Sutter, however, told Chan and Cassidy, it had never received such a proposal despite ACMC’s CEO Wright Lassiter publicly touting the plan all over the county. Each entity officially approved the subsidy with the healthcare district pledging half of its revenue over the next two years, or, around $1.25 million.

“It is disappointing that ACMC has publicly stated in hearings that its proposal to Sutter Health was to maintain SLH as an acute care facility,” Sutter’s legal counsel wrote Dec. 20. “Sutter Health has received no such proposal from ACMC, and we were surprised to learn that you were not aware of that fact.”

Chan believes the letter was intended to undermine ACMC’s efforts. “The main thing they’re looking for is a scapegoat,” she said Wednesday. “They’ve already stated they’re not looking for someone to run the hospital.”

Later, Sutter notes a letter, dated Nov. 7, 2012, where ACMC says the subsidies, only approved a week earlier, were “insufficient” and rejected by ACMC as “economically untenable.” The Sutter letter then quotes ACMC as saying; it “was no longer pursuing the option of providing ongoing acute care services.” The only deal offered to ACMC, according to Sutter, was the option to lease the hospital as an acute rehab center—long Sutter’s desired plan and, in some ways, the county’s original plan—but, not the will of the community, which has clearly urged officials to maintain San Leandro Hospital’s emergency room.

Chan’s contention that the true aim of Sutter’s Dec. 20 to them was to undercut ACMC may hold water. In a subsequent letter to Chan and Cassidy, dated Jan. 7, from Lassiter; he references an exclusive non-disclosure agreement between ACMC and Sutter, which limits what he can reveal to them. However, much of the information withheld is contained in the Sutter letter sent two weeks earlier to Chan and Cassidy.

In the latest Lassiter letter, he is under the impression information of the collapsed hospital deal is new to Chan and Cassidy. “I regret to inform you that the negotiations between ACMC and Sutter have stalled, and at present, I am not hopeful that any agreement will be reached whereby ACMC would either operate SLH as a general acute,” wrote Lassiter.

Later, Lassiter adds Sutter, in effect, moved the goalposts on ACMC after it had procured the subsidies it believed would keep the hospital running under its auspices. However, Lassiter writes new financial information provided by Sutter on Dec. 2, 2012 to ACMC showed the hospital performance is, according to Lassiter, “significantly more unfavorable (by several factors) than had been previously disclosed.” He adds, the new estimates now call for a subsidy 3-4 times larger than prior estimates—outlays likely far too large for any of the willing county investors to cough up.

In the absence of deal, Lassiter says ACMC will return to emphasizing acute rehab, the proposed plan from the start and the deal Sutter has discussed since winning title to the hospital in early 2012 following a long legal fight with the Eden Township Healthcare District. “ACMC’s negotiations with Sutter focused in this direction throughout the balance of 2012,” Lassiter writes. But, those discussions only included Sutter entering a long-term lease for the hospital as an acute rehab center, according to Lassiter. However, since ACMC’s estimate of an initial investment of $25-$30 million in upgrades to be profitable, they believe this sort of expenditure necessitated more control of the asset than afforded to a lessee. Negotiations broke down, wrote Lassiter, when Sutter refused to consider any arrangement giving control of the asset to ACMC.

Chan said she never hopeful about the deal to begin with, but viewed it as the only possible deal on the table. “My viewpoint is Sutter has rejected every offer—viable or not,” but, added, Sutter, at least, was willing to talk to ACMC. “There was never any indication Sutter would go along,” said Chan. “I believe it’s a win-win for all, but all they talk about is losing money at San Leandro Hospital.”

Chan also admitted the somewhat surprising call in December for the Eden Township Healthcare District to pay more into the subsidy pot or risk dissolution was solely an attempt to salvage the proposed plan quickly falling apart and assuage some concern by the San Leandro City Council that the District was not paying their equal share of the future burden to run the hospital. District officials were clearly caught flat-footed by the threat and reacted harshly.

“The burden is on Sutter,” said Chan, who denied Sutter has the unfettered ability to do whatever they please with San Leandro Hospital. “They have turned down every option for the hospital and the responsibility is on them if they care if there is an ER in that area.” In the meantime, Chan says various efforts in Sacramento to look into Sutter’s non-profit status and its desire to become a HMO under the Affordable Care Act, will continue. Last Tuesday, Chan pulled an agenda item off consent dealing with the Board of Supervisors reauthorizing a 3-year, $6 million subsidy for trauma services at Sutter’s rebuilt Eden Hospital in Castro Valley. “I want to take a look at it. I want to see if the county should be doing this because their action in that part of the county is unconscionable.”

Categories: Alameda County Board, Alameda County Medical Center, Eden hospital, Eden Township, S.L. Hospital, Sutter, Wilma Chan, Wright Lassiter

9 replies

  1. so now what? the county doesn't want deal with sutter so sutter just closes the doors on SLH and leaves a big empty building on E14th? If so when!!??


  2. Where is Uncle John? I thought he was going to change the world?


  3. In response to the morally deficient, very cynical people who are in the “f*** the hospital, it's not worth fighting for” camp, some facts need to be taken into account:

    – The strategy taken on most recently by the Eden Township Healthcare District has been enormously successful. Sutter was prepared to move to close the ER, ICU, Surgery and other acute care services at San Leandro Hospital in October 2009. Nearly three and a half years later, the hospital is still open, and those services still exist. How many people have had their lives saved, pain reduced, wounds mended, and ailments treated during those years? Given Sutter's behaviors and statements, it was apparent that only the Township's lawsuit had the power to prevent Sutter from closing those services in 2009. Putting District tax revenues to work to preserve irreplaceable health care needs is exactly what the Healthcare Board is tasked to do.

    – “the county doesn't want to deal with sutter”- that's rich. County representatives and previous incarnations of the Eden Board have been very willing to negotiate, even as Sutter Health's various brinksmanships have shown a horrifying willingness to violate each and every word of their own Mission Statement and its values. I highly recommend that everyone who knows the details of the SLH fight take a look at the values Sutter claims for itself- it's a darkly amusing read:

    For me, the value that is at the center of all others is the one which brings the greatest amount of derisive laughter: “Honesty & Integrity- We act openly and truthfully in everything we do.”

    Compare those claims to just a few of the long line of actions Sutter has taken here:

    Honesty and Integrity- Sutter's unwilingness to allow the Healthcare District to conduct a forensic audit of the financial reports of Eden and San Leandro Hospitals; the multifold increases in reported operating losses at SLH which started the moment that Sutter's lease agreement began; Sutter's report from a recent year which claimed a $20 million profit at Eden and a $16 million loss at SLH.

    We act openly and truthfully- Sutter CEO Pat Fry's unwillingness to appear at any public forum to respond to questions about his corporation's operations of health care services in Eden Township, and almost complete absence of any Sutter executive at any public forum as well; Sutter's apparent intentional misreporting of acuity levls of SLH ER patients, meant to support their desired outcome of getting the County to close the ER and install an Urgent Care center with reduced hours and services.

    – Sutter has not closed SLH. Every person who has taken action and every action they have taken has given us that gift, and are part of the roadblocks which prevents Sutter from announcing closure today, even though they might have the legal right to do so.


  4. Sutter would have an easier time landing their cherished deal with the San Francisco Board of Supervisors for approval of plans for California Pacific Medical Center hospitals if they would just let SLH go to another organization which wanted to run it in good faith. Accusations that Sutter wants to terminate healthcare to poorer communities are alive at both St. Lukes and SLH, and have existed elsewhere as well. The fact that Sutter is unwilling to do so reveals the radical, insular nature of their decision-making processes.

    One of the amazing revelations of Steven's reporting here is that Wright Lasseter is now using financial reports from Sutter as a justification to back away from the hybrid model for SLH. Apparently, our ACMC CEO, after securing millions of dollars in funds from three public agencies in the name of concluding a deal with Sutter, was so insincere in that pursuit that he wishes us to believe an unsubstantiated representation from Sutter about SLH finances.

    It would be very foolish for us to do so. I don't think Wright is foolish, but he prefers that we are. I'm not sure why, exactly. We can't wait until we determine the answer for that; we just have to defeat this proposal. People will die and suffer needlessly if SLH acute care services are closed.

    Sutter would still be well-positioned in their increasingly successful drive to gain $1 billion per year in excess revenues if they continued operation of acute services at SLH or allowed others to provide those services in better faith. Question: If “…all (Sutter can) talk about is losing money at San Leandro Hospital”, then why aren't they willing make a deal the community supports to rid themselves of SLH?


  5. The new Eden Hospital is full to the brim; the Emergency Dept. has been on diversion since Saturday. There are no open beds at San Leandro Hospital due to the flu epidemic.


  6. nothing new here; i have known all along that there was no deal to discuss; nothing has changed since 2009-everyone needs to get real-i still think the hospital will eventually be turned over to ACMC; just my opinion. To anonymous who worries about people with flu-they will be treated at SL in urgent care wards when opened. tony santos


  7. So, this article just means that we're back to square one? Is that right? Sutter will still close the hospital and sell the building to Alameda County who plan to end acute care and ER services and replace with rehab and an urgent care center. Can someone confirm. I've heard a lot of rumors but this still seems to be the only thing that's stayed consistent over the years.


  8. Without a doubt, back at square one.


  9. Our ex-Mayor, as usual, is ill-informed on this issue. Paople with the flu, particularly the young and elderly, sometimes develop acute illnesses. The previously proposed Urgent Care center would only be open from 7 am to 7 pm, and would not be equipped to provide care for acute illnesses. Those people would have to be placed in an ambulance and transported to the nearest full-service hospital. Bizarre, huh?

    In addition, Tony's defensive reaction fails to take into account the very basic fact that we are already undersupplied with Emergency Rooms in Alameda County; that is why they are full right now. Losing San Leandro Hospital's ER would tear a gaping hole in the health care system right in the middle of Alameda County. And let it be exceedingly clear that Kaiser's upcoming opening of its San Leandro facility would do nothing to improve that situation. One, because the Kaiser Hayward ER will be closed as San Leandro's opens; two, because Kaiser is meant to treat Kaiser members, and while they will not refuse non-Kaisers unless they are on bypass, they cannot be expected to provide comprehensive, ongoing acute care or ancillary services (X-ray, lab, surgery, etc.) to non-members.

    It is EXTREMELY frustrating how much misinformation is brought into this issue.


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