Embattled Hospital Sells Land for Emergency Funds, But Closure Still Looms

February 25, 2015 23:37 pm · 33 comments

doctors

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.”

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1 Dr. Jellyfinger February 25, 2015 at 11:59 PM

San Pablocord?

2 optimistic February 26, 2015 at 6:14 AM

That Irene Thompson has a good attitude. Probably only time she wrings her hands is to warm them up before getting to work on something.

3 Mom of the Horde February 26, 2015 at 6:33 AM

Not to mention that the reduced functions of this hospital have already impacted us, by the ambulance traffic that Doctor’s Hospital used to serve getting shuffled to the county hospital in Martinez…

4 Always Right February 26, 2015 at 6:49 AM

A clueless democrat permanent majority on the CoCo board of supervisors assures high costs and wasteful expenditures like this will continue.

Private businesses fail every day, and the best managed ones survive and prosper. That Is the genius of market competition, but the socialists running our county and state continue to ignore this reality and pursue their equal outcome vision.

5 Thank You Democrats February 26, 2015 at 7:15 AM

From a Doctor

I was saddened, but not surprised, by Tracy Seipel’s article reporting the dire shortage of doctors who can care for the huge influx of Medi-Cal patients under Obamacare.

Medi-Cal reimbursements are laughable: Witness Doctors Medical Center’s bankruptcy.

They cannot survive on mostly Medi-Cal and Medicare payments.

Physicians entering practice today can have $500,000 in debt to pay for college and medical school. Understandably, many won’t accept Medi-Cal patients when their reimbursement is continually cut.

When I practiced, I netted $5 per follow-up Medi-Cal patient visit, after office overhead. With some 12 years of school beyond high school and potentially $500,000 in debt, that’s insulting.

http://www.highbeam.com/doc/1P2-37698652.html

6 MamaP February 26, 2015 at 7:23 AM

I personally want to THANK the mayor for keeping us abreast of this story. It impacts ALL of us! Thank you, Mayor. Keep up the good work.

7 Anonymous February 26, 2015 at 7:28 AM

Something doesn’t smell right. That’s a lot of property changing hands for $7.5 million.

Is it possible the Hospital owes money to creditors that it doesn’t intend to pay back? And, with the property sales, the creditors will have little or no hospital assets to seize in a bankruptcy situation.

I also heard the hospital will have to pay an indian tribe $5 million if it sells/loses the parking lot. Reportedly, in the last one to two years, the tribe purchased the right to use about 230 hospital parking lot spaces for five years and paid $5 million for the privilege.

This whole deal stinks. Somebody needs to follow the money and see who is really benefitting from this property deal.

8 Anonymous February 26, 2015 at 7:35 AM

This is more then the Board of Supervisors. This is a result of a one party state that doesn’t do management very well. As an example where was DeSaulnier when they ran the bridge costs sky high?What’s Bonillas stand on BART striking. The answer is these “Leaders” are simply tools of the unions.

We should fire a good many of these people.

9 Sick Of It February 26, 2015 at 7:37 AM

Because the real problem is medicare doesn’t reimburse enough

10 MamaP February 26, 2015 at 8:14 AM

I worked there. I never saw so many highly overpaid contractors in my life who did so little. No one had a dog in the fight who worked there at the senior level. When they finally got a perm CEO, he left after about 6 months while the contractors (and he) made beaucoup bucks. (They paid mightily to woo this CEO from the east coast-all expenses paid.) The hospital needs to be cleaned up (it’s filthy), made compliant and that would take much more money. I don’t have an answer, but if you pay these outsiders like the way they did when I worked there, I’m surprised it’s lasted this long. A really good finance person would have helped along the way. Sorry, but it was like pouring money down a rat hole…just my opinion.

11 RunDogRun February 26, 2015 at 8:40 AM

Tax and spend Democrats running the
show.

12 Anonymous February 26, 2015 at 8:43 AM

@Sick Of It #10
I think you mean Medi-Cal, not medicare.

@Anyone Who Knows
It would be interesting to compare Doctor’s Medical Center and its operations and finances to our County hospitals. I think both probably receive mostly Medi-Cal patients or patients with no medical coverage. And yet, the County clinics and hospitals appear to be thriving. In fact, they are experiencing significant growth – opening new clinics and expanding services.

Is the County pouring money into the County hospitals and clinics – more money than ever before? Or, are the County hospitals and clinics better managed than Doctor’s Medical Center?

13 Mr DC Bradley February 26, 2015 at 9:00 AM

I’m no fan of the Republicans but the Democrats are spending the country into oblivion.

I think we need some hardheaded Republicans or Independants running things.

Look at BART . The board is petrified of labor (and protestors). Local politicians wouldn’t dream of offending them. If there are any Bonilla supporters could they explain why she won’t vote to ban BART strikes?

14 Michelle February 26, 2015 at 9:25 AM

My son was born here, I hope everything is done to maintain the hospital. So many people rely on that hospital although we moved many years ago.

15 Michelle February 26, 2015 at 9:42 AM

I’m sure his father feels the same way.

16 The Mamba February 26, 2015 at 9:50 AM

Doesn’t the ACA address this?

17 Graceful February 26, 2015 at 9:55 AM

Lets face it, with 90% of who they service being Medi-cal, it is one giant free clinic. Basically it is serving under-served/indigent population. Something that 30 or 40 years ago was only served at the County level. Its hard to close the barn door after the horses have left, but it is what it is, West County has too large a number of welfare medical cases now, and the employees continue to make what the employees make at paid clinics and hospitals, pay an employee $20. bucks an hour and they take in $5-10. in payments per hour from Medi-Cal…..eventually, the deficit catches up and here you go!

18 Yes Indeed February 26, 2015 at 10:46 AM

” A clueless democrat permanent majority on the CoCo board of supervisors assures high costs and wasteful expenditures like this will continue. ” – Always Right

Aye, Aye. Whether we like it or not.

“And yet, the County clinics and hospitals appear to be thriving. In fact, they are experiencing significant growth – opening new clinics and expanding services.

Is the County pouring money into the County hospitals and clinics – more money than ever before? Or, are the County hospitals and clinics better managed than Doctor’s Medical Center?” – Anonymous

I don’t think its better managed or thriving – it’s just that CoCo County taxpayers are being forced to bear the burden of supporting a money pit.

19 Anon February 26, 2015 at 11:45 AM

Grateful hit it on the head. Medicare and medical will only pay a certain amount of money per admittance, procedure, and so on. Since there is a large indigent/low income population in west county they end up having these patients all the time. kaiser patients go to Kaiser and many people with insurance want to go to Alta Bates in Berkeley. Add that into the homeless patient that it admitted and released from the hospital twice in a 24 hour period 2x a week and you have many budget problems.

20 73 MONTE CARLO February 26, 2015 at 12:10 PM

I wonder how county hospital in Martinez survives. Most of their patients are probably uninsured, or on Medi-Cal or Medicare.

21 Patty February 26, 2015 at 12:31 PM

As the story states, about 80% of the patients that go to that hospital are medicare/medicaid patients. But, 80% of the residents in the area are NOT medicare/medicaid residents. They make choices NOT to go to Doctor’s Hospital. They purchase Kaiser, or they use their insurance to go to Alta Bates. I was told that doctors do not refer their patients to Doctor’s Hospital. Why? Why do patients choose NOT to go there? I assume it is because of bad service, bad care, poor management, dirty place. The voters already voted down the parcel tax. It is time to CLOSE THIS PLACE DOWN.

22 Grateful February 26, 2015 at 12:38 PM

nytemuvr YES first hand knowledge…..and that is why I am posting anonymously, and any healthcare worker, will tell you that. In fact, the hospital is basically run on SEIU employees…no one there make minimum wage trust me. If they are saying that, they are lying. They pay out more money on hourly wages than what comes in via Medi-Cal.
AND that will put a significant number of SEIU employees out of work, and if they are out of work, SEIU won’t get the $50-$100 union dues per month they are getting. SEIU stands to loose allot of revenue. If you don’t work healthcare then you are not informed on what is going on. Pure Dollars and “Sense”…Take in less than what you pay out..and there ya go.

23 RANDOM TASK February 26, 2015 at 12:58 PM

yeah wait they own the land …..yeah why are they being bailed out 4- 5 times Obama Crack is on line better start you paperwork now its a year wait to see a doctor………all that money and not one tracked it …wonder who got most of it ……??????…kudos voters these are your toons giving away money for nothin

24 anon February 26, 2015 at 1:07 PM

Something really stinks!

DMC borrowed $40 million in December 2011 from investors by selling securities collateralized with hospital property just sold to San Pablo.

DMC burns through the $40 million in 2 years, and then burns through $4.6 million received by the casino January 2014, $6 million from the County in June 2014, and then $3 million from Governor Brown in late 2014.

Somehow, all that money is gone.

Then San Pablo, which is so broke they had to pass a sales tax in November 2014, sells about $16 million in bonds they can’t afford so they can give bond money to Doctor’s Medical Center to pay for salaries and pensions.

It makes zero sense for a City to go into millions in debt to use their public funds to pay for someone else’s payroll and pensions.

It’s time for a serious forensic audit to follow the money thrown at DMC.

25 Patty February 26, 2015 at 2:56 PM

#28 – Well, for one thing, I thought Obamacare was supposed to give insurance to EVERYONE. Secondly, in the past, many people that do not have insurance go to the Emergency Room because everyone must be treated, regardless of whether they have insurance or not. This is what so many patients at Doctors Hospital were doing. But Emergency Room care is so much more expensive than any other kind of care.Thirdly, hospitals give free care to people all the time. They are required to give so much to charity. My brother-in-law got very sick and had no insurance. Ambulance took him to Kaiser, so he stayed in Kaiser for about 1 month, much of it in acute care. He had no insurance. Kaiser covered it all.

26 ... February 26, 2015 at 3:32 PM

Politicians (democrat) have no problem at all throwing YOUR tax payer dollars down a bottomless hole. In the free market world hospital can’t break even it closes. Unless a hospital has a high rate of people with private insurance they can not survive.
Watch for possible problems at County Hospital.

Both the FEDs and State have CUT reimbursement rates.
2014 Dec. “California officials have no plans to make up for an expiring federal pay incentive designed to entice doctors to treat low-income patients.

The end of the subsidy with the start of the new year could result in steep pay cuts for many doctors participating in the Medicaid system for needy Californians.

An analysis of the pay cut’s expiration by the Urban Institute, a nonpartisan think tank in Washington, D.C., calculated that California doctors’ fees would drop 58.8% when the subsidy disappears.”
http://www.latimes.com/local/california/la-me-doctor-pay-20150101-story.html
An by the way CA already had a Doctor shortage before obamacare.

‘…How Much Could Medicaid Physician Fees for Primary Care Fall in 2015’
http://www.urban.org/UploadedPDF/2000025-Reversing-the-Medicaid-Fee-Bump.pdf
‘ As Medicaid Rolls Swell, Cuts in Payments to Doctors Threaten Access to Care ‘
http://www.nytimes.com/2014/12/28/us/obamacare-medicaid-fee-increases-expiring.html?_r=1

‘Have been saving these URLs for such a thread as this one.
Rural hospitals in critical condition’
‘Rural hospitals serve many of society’s most vulnerable.’
http://www.usatoday.com/longform/news/nation/2014/11/12/rural-hospital-closings-federal-reimbursement-medicaid-aca/18532471/

‘Obamacare blamed for killing hospitals’
“Eighteen acute-care hospitals across the United States shut their doors in 2013.

At least 12 more hospitals have closed this year (2014) in rural areas alone. More are getting out the plywood to nail over windows and barricades for doors.”
http://www.wnd.com/2014/12/obamacare-blamed-for-killing-hospitals/

On a separate note, Union members and those with job based coverage here’s a story.
Union members Kiss your hard won health care plans goodbye. it’s coming, that’s why obama pushed off the 40% Cadillac tax until he’s out of office.
‘ Obamacare architect: We’ll kill job-based health plans ‘
http://www.wnd.com/2014/03/obamacare-architect-well-kill-job-based-health-plans/

Face it obamacare was not well thought thru, is a highly flawed bill shoved thru congress by panicked, and we find out later extremely DISHONEST, democrats.

27 Anderson February 26, 2015 at 4:08 PM

I’m getting tired of hearing “free market” bandied about whenever discussions come up about hospitals going under, or the pathetic state of health care in this country in general… but I don’t have any better solutions to the problem. Clearly any form of “central planning” isn’t working well, and probably cannot work as long as human beings are so frequently capable of corruption. Clearly widespread insurance isn’t going to work well, since (a) there’s just as much price jousting as in “free markets”, and usually ineffectively so when the government is involved, and recompensing overpriced health care so effectively, and (b) ACA is going to come under some serious legal challenges this year (Supreme Court) which may well kill it by, among other things, eliminating federal subsidies. Guess we should just leave it all the hell alone, and acknowledge that health care, like so many other things these days, will increasingly be only available to the most affluent among us, and the rest of us… nature will just have to take its course. Think of it as Darwin In Action!

28 Dr. Dick February 26, 2015 at 6:50 PM

Coming soon to a theatre near you…..”The Hospital that Wouldn’t Die!!”.
Time to pull the plug on this one.

29 Eddie Monsoon February 26, 2015 at 9:34 PM

Here is the plan………..county takes over DMC. That way the county can create the Contra Costa Health Care District. When this happens they can place a district tax on every property tax bill in the county. This has been the plan since they rebuilt the county hospital in Martinez. That way the BoS can run another district (just like they run ConFire) and get an extra stipend for doing so. The Smurf John Gioia is wetting his drawers with delight over this.

30 anon February 26, 2015 at 10:04 PM

@38 – The county can’t take over DMC since was operating at $30 million operating losses. Also, the West Contra Costa Healthcare District cannot dissolve until the investors have been paid back…about another $130 million to go between now and 2042.

See page 13 which shows principal and interest “installment payments”

http://emma.msrb.org/ER546481-ER423315-ER825444.pdf

31 Eddie MOnsoon February 27, 2015 at 8:51 AM

#33 – DMC will go bankrupt, the bonds will go into default and the county will swoop in and take over with zero debt. It has all been planned out.

32 working class stiff February 27, 2015 at 9:39 AM

Any hospital that closes should become the property of the Public Health Service and mothballed, to be available during the next major epidemic. The current system has been cut so close to the bone that we have no extra hospital beds available for emergencies and mass casualties.

33 WC February 27, 2015 at 1:00 PM

Where is the Calif Nurses Association??? They jump on everything to get more money in the name of patient safety and care. I’m sure they have the bank account to cal it CNA hospital. CNA? Where are you???

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