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.”

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