State Attorney General Approves New Operator At St. Rose Hospital

HEALTH CARE | California State Attorney General Kamala Harris approved the transfer of operations at Hayward’s St. Rose Hospital to Alecto Healthcare Services last week in a deal public health officials hope will help bring the struggling safety net hospital back to financial good health.

In the eagerly-awaiting decision, dated, Jan. 29, Harris’s office also added a list of conditions intended to hold Alecto to maintaining the hospital’s traditional role as a safety net hospital dedicated to serving the disadvantage since its founding by the Sisters of St. Joseph in 1962.

Built in the agreement is a five-year commitment to keeping the emergency room at St. Rose open around-the-clock, while also remaining open to Medi-Cal patients and alloting a minimum of over $6 million to charity care. The deal also holds Alecto to continue current levels of operation for obstetrics, mammogram and cardiac services along with the same number of critical care beds, 15, as before.

Nowhere in the agreement, however, is mention of the $1.2 million in debt owed to the Eden Township Healthcare District after it advanced a $3 million short-term loan to St. Rose in August 2011 allowing the facility to meet payroll obligations. The District had no comment Tuesday, but the issue is likely to be discussed at its next meeting on Feb. 20.

Even with St. Rose in the hands of new operator, Alameda County Healthcare Services Director Alex Briscoe said last month in an interview with The Citizen, the hospital still has an uncertain future within the new realities of distributing health care. He says St. Rose’s importance to the county and the poor and uninsured is immeasurable and therefore, necessitated a deal “a little more riskier.”

In many ways, Briscoe says, saving St. Rose is paramount to keeping San Leandro Hospital’s emergency room in service, since St. Rose sees 15 percent of all uninsured patients in Alameda County. Major problems could arise if the fifth largest city is minus emergency room access, he said. It’s a main reason why St. Rose’s Board of Directors and the county approached Alecto, blemishes and all.

He says certain covenants wedding Alecto and its owner Lex Reddy, a former executive for the notorious hospital provider, Prime Healthcare, currently under the microscope for questionable billing practices, are in place to maintain St. Rose as a safety net hospital in Hayward.

Briscoe says operations since Reddy took over St. Rose late last year have been extraordinary and believes questions about his relationship to his brother-in-law and former employer, Dr. Prem Reddy, whom Briscoe believes had a falling out last year, are actually a reason for faith. “He needs to distinguish himself from his brother-in-law. He needs to show the attorney general he’s not Prime and not going to come here and shamelessly profit from these safety net hospitals.” With the attorney general’s decision last week, it appears Reddy was successful.

In just a few months, Reddy has begun to win back the trust of skeptical physicians, improved efficiencies and renegotiated third-party contracts, says Briscoe. “Last month was the first time in two years I haven’t received a panicked phone call from St. Rose executives asking for money to cover payroll.”

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