San Leandro Hospital may be sold

0 Comments | Oakland Tribune, Aug 29, 2008 | by Karen Holzmeister

SAN LEANDRO -- San Leandro Hospital's days as a community-owned facility -- providing short-term patient care, surgeries and an emergency room -- may be coming to an end.

A scenario is unfolding in which Sutter Health affiliate Eden Medical Center of Castro Valley may buy the 122-bed San Leandro Hospital for little or no cash over the next two years.

Eden could leave San Leandro Hospital as a full-service hospital, scale back its operations or convert the East 14th Street complex for other medical programs, such as psychiatric or rehabilitation services.

"The citizens of San Leandro use that hospital, and the ER is very busy," said anesthesiologist Frank Rico, a director of the Eden Township Healthcare District, which owns San Leandro Hospital.

If San Leandro's emergency room is closed, Rico said during a directors' meeting Wednesday, "it's going to be a significant burden" on Eden's emergency room.

The district can't afford to independently subsidize and operate San Leandro Hospital, Rico added.

So, directors voted to spend $40,000 on a consultant. Healthcare Financial Solutions of Oakland will evaluate whether San Leandro Hospital can operate as an independent general hospital.

If a negative report comes back in September or October, directors are likely to move toward an Eden-Sutter purchase of San Leandro Hospital.

San Leandro Hospital continues to lose $250,000 to $500,000 a month, Rico said.

Nearly two-thirds of its admissions are Medicare or Medi-Cal patients, he added, and government reimbursements either don't cover care costs or are break-even.

San Leandro Hospital loses income-producing outpatient medical procedures to surgery centers. George Bischalaney, Eden's chief executive officer, also said San Leandro Hospital's in-patient cases average between 35 and 70 people a day.

Contractually, Eden and Sutter can stop providing emergency medical, surgical and intensive care services at San Leandro Hospital next year. The district paid $35 million for San Leandro Hospital in 2004. Since then, it has leased the hospital to Eden and Sutter.

As part of a long-term agreement approved by district directors last November, Eden and Sutter have infused cash into the financially strapped San Leandro Hospital. Eden and Sutter also hold the state licenses for San Leandro Hospital patient beds.

Eden and Sutter have an exclusive option to buy the hospital in 2009-10, transferring this district asset at a price to be determined.

Dev Mahadevan, the district's chief executive officer, said Eden and Sutter could choose to buy San Leandro Hospital for what they have invested up to that point and no actual cash.

"The (operating ) losses will equal the value of the (San Leandro) hospital," he explained.

San Leandro Hospital, known in the past as Doctors and Humana hospitals, opened in 1960.