Alameda Hospital joins county health consortium

Alameda Hospital joins county health consortium

Michele Ellson
Alameda Hospital

It’s official: Alameda Hospital is now part of the Alameda Health System, Alameda County’s public health system.

The affiliation deal, finalized at 12:01 a.m. Thursday when the hospital’s license officially transferred into Alameda Health System’s hands, capped an intense effort by the hospital’s leadership to save the financially failing facility from closure as its cash dwindled and a deadline for making seismic fixes loomed.

“With the support of AHS, Alameda Hospital solidifies its position as the hospital of choice for Alameda residents,” Deborah E. Stebbins, now Alameda Hospital’s interim chief administrative officer, was quoted as saying in a press release issued early Thursday. “We will strengthen current services including the emergency department, and enhance our campus for the future.”

The deal also marks another step in Alameda Health System’s plan to broaden its service mix and geographic reach in an attempt to compete with the East Bay’s big health care chains in the age of Obamacare, which is expected to broaden health care choices for the Medicare and Medi-Cal patients who have long comprised most of the health system’s customer base.

“Alameda Health System is proud to play an important role in preserving local care and expanding access at Alameda Hospital,” Wright L. Lassiter, III, Chief Executive Officer of Alameda Health System, was quoted as saying in the release.

The Alameda Health Care District will retain ownership of the hospital and oversight of the $298-a-year parcel tax that supports it. But the hospital will be managed by Alameda Health System, and day-to-day oversight will be transferred to the countywide health system’s board of trustees.

Managers and staff worked through the night to process discharge records for dozens of patients in order to enroll them in Alameda Health System's computer records. By midday, hospital employees were celebrating with ice cream scooped by Tucker's in a conference room festooned with blue and white balloons, the health system's colors. Alameda Health System executives greeted them as they waited in line for their scoops.

The deal will keep Alameda Hospital’s emergency room open along with at least half of the 100 acute care beds the hospital now operates, a letter of intent to pursue the deal released in June 2013 said. At the time, Stebbins said existing patients would have the same access to the hospital and their doctors under the proposed deal.

It will also give Alameda Hospital access to the money it needs to make state-mandated seismic upgrades due in 2020 along with other needed facility and technology upgrades. Alameda Health System managers have not committed to additional fixes that will need to be made by 2030, though.

The deal marks the latest piece of an Alameda Health System expansion effort that has included the recently completed acquisition of San Leandro Hospital from Sutter Health. The system’s campuses include Oakland’s Highland Hospital; John George Psychiatric Hospital, in San Leandro; Fairmont Hospital, an acute rehabilitation hospital and skilled nursing facility in San Leandro; and four wellness centers, based in Oakland, Newark and Hayward.

In addition to a broader geographic reach, the deal will give Alameda Health System access to operating rooms it needs to reduce a backlog in non-emergency surgeries.

Alameda Hospital's managers operate the Waters Edge and South Shore nursing facilities, the Bay Area Bone & Joint Center orthopedic clinic and the Kate Creedon Center for Advanced Wound Care - all services that are slated to continue post-affiliation.

The hospital's workers will become Alameda Health System employees on July 1. Lassiter held town hall meetings with the hospital's workers on Monday and Tuesday, Stebbins said, to lay out his vision for the health system and how the hospital fits in to it.

Alameda Hospital boosters tried to save the hospital – and specifically, its emergency room – from closure when it showed its first signs of poor fiscal health around 2000, when a group of doctors who provided much of the hospital’s patient volume defected to Kaiser Permanente. About half of Alameda’s residents are Kaiser patients.

The hospital’s leaders sought to merge with another health care organization then, but were unsuccessful in their search for a partner. In 2002, voters okayed a parcel tax that has generated about $6 million a year for the hospital – as much as hospital boosters were legally allowed to ask for – but that was never enough to put the hospital’s budget in the black.

As a standalone community hospital, Alameda Hospital struggled to obtain favorable reimbursement rates from private insurers; at the same time, reimbursement rates for services provided to patients with Medi-Cal and Medicare dwindled. In 2010, Kaiser Permanente opted not to renew a contract it had to use the hospital’s operating rooms, a decision that caused a $10 million hit to the hospital’s bottom line and one that forced managers there to scramble to cut costs.

Hospital managers created or took on new services in an effort to boost Alameda Hospital’s bottom line – an effort that was successful, but not successful enough to prevent the hospital form suffering near-monthly losses or to help the hospital secure the financing it needed to pay for near-term seismic fixes estimated at $15.5 million.

Alameda Health System has endured similar struggles, though that organization was also plagued for years by turnover and charges of mismanagement. Under Lassiter, though, the system has been hailed as a model for public delivery of health care services.

Last year, the organization completed the first of three phases of a $668 million, bond-funded modernization program at its flagship Highland Hospital campus in Oakland, and it is paying down more than $100 million it owes to Alameda County.

Health system backers are also seeking an extension of a half-cent sales tax that provides $125 million a year to support health care in Alameda County, through 2034; Measure AA is on the June 3 ballot. Alameda Health System reportedly gets about 75 percent of the money the tax generates.

Related: Alameda Hospital in affiliation talks

Residents offer thoughts on hospital affiliation proposal

County health system hailed as model after decades of trouble

Alameda Hospital board okays affiliation deal with Alameda Health System

Comments

Submitted by David (not verified) on Fri, May 2, 2014

When will Stebbins and her Wall St. corporate-CEO compensation package finally exit?