The embattled Doctor’s Medical Center got a lifeline, albeit a short one, this evening with the approval of a proposed sale of three of the institution’s parcels to the city of San Pablo.
The West Contra Costa Healthcare District voted unanimously to approve the terms of an agreement to sell two medical office buildings at 2023 and 2023A Vale Road, a residential condominium at 2121 Vale Road and a parking lot at 2000 Vale Road for $7.5 million. It will officially sign the purchase and sale agreement next week, according to Board Chairman Eric Zell.
The sale will allow the district’s board just enough time to decide what to do next, but without a significant infusion of cash, Zell said the board will have no choice left but to close the hospital.
“It will give us a little breathing room to decide if we have to use that money to close or if a miracle happens and somebody walks in with another $10 million to $20 million, then that money could be used for operations,” Zell said. “As of this moment, we don’t have any money past this $7.5 million. So, this money as of today will most likely be used to close.”
At the board’s meeting tonight, financial consultant Harold Emahiser displayed Excel spreadsheets projecting the hospital’s operating budget week by week. Without the sale going through, the hospital will be unable to pay its employees past the first week of March, he said.
“What that (sale) would do is allow us to make payroll and get us to the next installment of payroll and take us to the first week of April,” Emahiser said.
But even with the sale, Emahiser said the hospital’s prospects may be short-lived.
It will cost somewhere between $4 million to $6 million just to close the hospital, since the organization will have to pay employees’ pensions and unused vacation time and pay vendors and service debts, among a host of other items, Emahiser said.
If the hospital uses that money to continue operating, Zell said that when the money runs out, there would be no way to close the hospital without borrowing against the value of the buildings.
“We can’t take money and then give away assets,” Zell said. “We would be trading operating money for assets and then we would spend that operating money and we’d have nothing left. We’d have no way to address our debts, no way to address our employee pensions, our expenses, our vacation pay, nothing.”
The hospital’s cash-flow problems stem from the fact that 80 percent of its patients are on Medi-Cal or Medicare, 10 percent are uninsured and only 10 percent pay commercial rates. Because Medi-Cal and Medicare reimburses hospitals at lower rates, the hospital has not been able to make up the $18 million annual budget shortfall, Zell said.
Without a philanthropist walking in and signing over a large check, Zell said there could be no other options.
The hospital still sees some 100 patients in its emergency room each day. Zell said the board is in talks with the city of San Pablo to operate an urgent care center across the street from the hospital in one of the buildings the board is selling to the city, should the hospital close.
Many who currently go to the emergency room at Doctor’s Medical will be able to get treatment at the urgent care center, Zell said. The others will have to find other healthcare facilities.
Still, some were hopeful.
Board member Deborah Campbell said there were at least three organizations willing to make a proposal that would infuse the hospital with the cash it needs to stabilize its current deficits, support operations and help build new facilities since the aging hospital is seismically unsound.
She declined to name the proponents of the proposals because she said doing so could jeopardize their ability to make the offers to the board.
But, she said she expects them to come through as early as next week.
Irene Thompson, who described herself as grateful former patient urged the board to think positively.
“We’ve heard the words of cynicism and despair. We’ve heard the words of cautious optimism, and so I would like to offer a word of encouragement,” Thompson said.
“We’re in the 21st Century and everything is impossible,” Thompson said. “It’s impossible to deal with transportation. It’s impossible to deal with healthcare. It’s impossible to deal with home ownership, you name it, global warming. And yet, we will deal with these things because we have to and I trust you will keep the hospital open simply because we have to.”