SAN LEANDRO//HEALTH CARE | Sutter Health and the Alameda Health System are set to sign a letter of intent to begin negotiation terms of an agreement that will keep San Leandro Hospital open for, at least, the next two years.

Under the proposed deal, Alameda Health System (AHS), formerly known as the Alameda County Medical Center, would gain title to the entire facility, estimated to be worth between $30-40 million, along with a one-year subsidy from Sutter in the neighborhood of $18-20 million, said Alameda County Supervisor Wilma Chan.

Sutter, would, in essence, wipe its hands clear of San Leandro Hospital, which would maintain emergency room services, in addition, to remodeling its vacant fourth floor with up to 30 beds set aside for acute rehabilitation services. Sutter would also walk away from an operation it estimates is bleeding monthly losses of $2 million.

Under the proposed terms of the non-binding letter of intent, which will run through July 1, Chan said, there is no covenant for how AHS will run San Leandro Hospital in its current configuration, nor how long. If a deal is struck the facility could be turned over to AHS as early as this October, said Chan.

The proposal is similar to one that broke down earlier this year calling for the county, city of San Leandro and Eden Township Healthcare District to each contribute a 3-year/$3 million subsidy to cover the hospital’s operations under AHS. That framework is also part of this deal, said Chan.

The Eden Township Healthcare District, though, balked at the terms of the previous deal and charged Chan was deliberately threatening the body with dissolution. After losing San Leandro Hospital in a lengthy legal case to Sutter, the District no longer possesses a hospital to oversee.

Those terms appear to be again on the table for the District. Part of the deal involves asking the health care district to contribute a one-time $20 million subsidy to cover the hospital’s second year of operations. The District’s Board of Directors meets for their monthly meeting on Wednesday.

Alex Briscoe, the director of Alameda County Healthcare Services, says the deal on the table today is nearly identical to those discussed in 2009 when Sutter first announced its intention to close the hospital and turned it over the Alameda County Medical Center for acute rehab services. Those beds were lost with the closure of nearby Fairmont Hospital, which the county deemed too costly to undergo seismic upgrading.

One key difference this time around may be Chan’s decision in April to withhold a nearly $2 million county subsidy earmarked for Sutter’s rebuilt Castro Valley Medical Center for trauma services. The subsidy is matched by federal funding doubling its value to Sutter. Chan pulled the item from the board’s consent agenda in what now appears to be a move to leverage the trauma subsidy against Sutter. Under terms of the letter intent, said Briscoe, the county would release the trauma funding to Sutter by May 21.

Chan lauded the deal for its ability to keep San Leandro Hospital in operation while gaining a valuable asset for the community at no cost to taxpayers. “Worst-case scenario, said Chan of AHS, “they own a building and have to decide about other services.”

There is still room for great caution, though, says Briscoe. “I have deep concerns,” he said. “It’s not a done deal.” While this may be the facility’s last great hope for staving off closure after four years of tumult, great uncertainty still remains. “If the deal goes under,” Briscoe added, “Sutter will close the facility.”