Last Supper? Eden Township Healthcare District Board, Mar. 13, in Castro Valley.
Left-right: Les Friedman, Dr. Bill West, Carole Rogers, Dr. Vin Sawhney, Dr. Ronald Hull.

 HEALTH CARE | The Eden Township Healthcare District, a local government agency facing the possibility of having no hospitals to oversee and dwindling revenues, is facing an identity crisis. Should it reorganize and move forward or cease to exist, as some county officials have intimated recently? On Wednesday, the publicly-elected board of directors attempted to plot a course for the district’s future, despite its tenuous current situation.

“We need to have a convincing story to tell. Why should we need to exist?” said Eden Township District CEO Dev Mahadevan. Ironically, the district’s greatest accomplishment over the past years may also be the reason for its demise. A three-year legal dispute with Sutter Health over title to San Leandro Hospital starting in 2009 drained the District of revenues previously reserved for allocating millions of dollars in health care-related grants to the community.

The District reaches from the southern portion of Oakland to Hayward, including San Leandro, Castro Valley and parts of the Tri Valley.

Although, the District ultimately lost its bid to retain San Leandro Hospital in a state appellate decision last year, the protracted legal battle is viewed by many as a success in it kept the hospital from certain closure. Sutter Health proposed closing the facility in late 2009 and advocated leasing it to the Alameda County Medical Center as a reconfigured acute rehabilitation center. The hospital’s future as a general acute facility with around-the-clock emergency room services is still unclear as the community awaits Sutter Health’s next move.

At issue is whether the District, presently without a hospital to oversee, is worth keeping. Last year, Alameda County Supervisor Wilma threatened the District with dissolution if it did not financially contribution more to a since-failed proposal to subsidize San Leandro Hospital with $1 million each annually from the county, City of San Leandro and health care district.

Mahadevan says the Alameda County Local Agency Formation Commission (LAFCO), of which Chan is a member, is currently performing a limited review of the District’s viability as a government body. Mahadevan insists the review is periodic, but political pressure clearly exists from the county-level. However, Mahadevan say shutting down the District, approved by voters in 1948, is “untested legal ground.” Of the 70 health care districts in the state, 22-24 operate without a hospital and those which do, he said. can range from a few hospital beds to hundreds. He believes most will strongly support the District if dissolution is ever attempted. “’Eden today, tomorrow us,’ they say.”

A district survey last year found nearly three-fourths of residents were either unaware of the District’s existence or its function. In the same report, some county officials said the District’s current state is their own fault for wasting money on the Sutter lawsuit. “I’m not even going to go into the question of how they can say that because some of them encouraged us to sue Sutter. I won’t get into that,” said Mahadevan. “Simply, that’s what they feel. It’s not unusual for public officials to change sides when something fails.”

Nevertheless, declining revenues amid a poor economy have cut into the District’s ability to offer grants to local non-profits to aid residents in a wide-ranging number of health care-related causes. Over the past decade, it has handed out over $8.6 million, but none in the past tthree years because of its legal battle with Sutter. The District has not been supported by taxpayers since 1977 and has recently relied on its real estate assets to generate positive cash flow. Because of a poor market, its holding at the Dublin Gateway medical office is only now begin to retain its lost value incurred during the Great Recession. And a recently constructed medical building across the street from Sutter Health’s new Castro Valley hospital is slowly attracting new tenants.

“Right now we’re functioning as an investment management firm—a real estate management firm—and we’re not doing it very well,” said Les Friedman, a member of the District board of director, who also characterize it as the District’s “worst weakness.”

Friedman and others, like board director Dr. Vin Sawhney believe a way out of doldrums currently facing the Distirct is through servicing a niche in the market for lower cost urgent care centers in the East Bay. “The most ideal case would be to open urgent care centers right across the emergency rooms of every hospital which is run independently and not by the hospital and by their interests,” said Sawhney. “This, I see as a significant opportunity, if we’re not going to be running a hospital, is to get into urgent care centers in critically situated locations across the district.” For instance, said Sawhney, a patient with a laceration could be billed up to $15,000 at a hospital, while a more cost-efficient urgent care center could profitably charge just $1,500.

Although the District’s demise does not appear imminent, Mahdevan hypothetically said, if the board were to vote to dissolve it today, it would still take between 12-18 months to be finalized. “Like the fall of the Roman empire,” he said, “things don’t happen that quickly.”