The Eden Health District, a local government agency that represents most of Central Alameda County, announced Thursday that Michael Mahoney is out as its CEO after more than two years. He will likely be replaced by George Bischalaney, a former Sutter Health official who previously led Castro Valley’s Eden Hospital and strongly advocated for the closure of San Leandro Hospital earlier this decade.

In a special closed session meeting, the Eden Health District Board of Directors announced the at-will contract of Mahoney, a former CEO of Hayward’s St. Rose Hospital, would be terminated immediately.

In addition, the board directed contract negotiations to begin for Bischalaney to take over on an interim basis. The earliest Bischalaney could be officially hired as the new Eden Health District CEO is at the board’s next regular meeting on Nov. 20.

Mahoney was hired in June 2017 to replace the district’s long-time CEO Dev Mahadevan, who had announced his retirement. But the writing had been on the wall for Mahoney’s dismissal since late last summer. His contract was allowed to expire in July. Mahoney had been working on a month-to-month contract ever since.

Following a closed session meeting last month, the Eden board announced an intention to hire full-time CEO. Mahoney’s contract had required him to work the equivalent of three-fourths time. Despite the move last month, Mahoney was urged to apply for the full-time CEO position.

The imminent return of Bischalaney is a surprising twist in the Eden District’s long-term struggle to survive after a lawsuit against Sutter Health in 2010 greatly diminished its ability to fund its core mission of supporting health care-related matters in the San Leandro, Hayward, and unincorporated areas, through grants.

The lawsuit, which the Eden District lost in 2013, however, ultimately saved San Leandro Hospitl from closure, but cost the Eden District $20 million in damages paid to Sutter Health over 10 years. The Eden District, formerly the Eden Township Health District, still owes Sutter Health roughly $10 million as result of the lawsuit.

In recent years, the Eden Health District has been the target of dissolution by some local, county, and state legislators. They argued the district no longer oversees a hospital and its grant-giving functions could be better distributed by the county and other non-profit health care groups. It later staved off dissolution by the Alameda County Local Agency Formation Commission (LAFCo), but the issue of excessive executive expenditures was highlighted during the process.

As CEO of Sutter Health’s Eden Hospital, Bischalaney was a key point man for the reconstruction of the hospital located on Lake Chabot Road in Castro Valley.

At the same time, Bischalaney was openly working with Alameda County leaders to shutter San Leandro Hospital as a full-service medical facility with a 24-hour emergency room. The presence of the nearby San Leandro Hospital was viewed a potential pinch on the new Eden Hospital’s bottom line.

San Leandro community leaders and the California Nurses Association pushed back on the proposal to close hospital. It is now operated by the Alameda Health System.