Doctors Medical Center board to sift through takeover bids
By Robert Rogers rrogers@bayareanewsgroup.com
POSTED: 01/24/2015
SAN PABLO -- While West Contra Costa's only public hospital has languished for
years in a sea of red ink, advocates and members of the hospital's governing
board sought a partnership with other health care providers to save it, to no
avail.
But as Doctors Medical Center's crisis reaches its most critical stage -- leaders say it will be unable to make its vastly diminished payroll by March -- eleventh hour bids have poured in.
"We're at the end of our rope, and these entities see an opportunity to get valuable assets at the lowest price they can negotiate," West Contra Costa Healthcare District Board Chairman Eric Zell said Thursday, one day after four new proposals to buy or take over the hospital were revealed at a public meeting. "You want to buy when the seller is at its most desperate point, and they are seeing opportunities to buy low and sell high."
Doctors Medical Center in San Pablo on May 7, 2014.
Doctors Medical Center in San Pablo on May 7, 2014. (Kristopher Skinner/Bay
Area News Group)
With proposals on the table -- one from a for-profit group, one from a nonprofit,
one from the city of San Pablo and one that combines public and private resources
-- the challenge for board members is to pick the right one, and do so quickly.
Zell said the decision must be made by next month.
"The key is if there are any options on the table to save the hospital and open another facility at another site in the future; that's where we need to go," said board member Deborah Campbell.
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While board members are careful to note that the next several weeks will be critical to determine the viability of the plans, the surge of interest is a welcome development for community members and county health officials who have worried about the loss or drastic downsizing of the hospital, which has 25 of the 40 emergency room beds in West County. By last August, more than 80 employees had resigned, and the facility closed its emergency room to ambulance traffic. Over the past year, the number of full-time employees has dropped from 699 to 343, according to hospital statistics.
"If that emergency room is closed, or the hospital isn't there, the consequences for that community would be devastating," said Pat Frost, Contra Costa County's emergency medical services director.
Fissures among the governing board over which plan looks best have already emerged. Zell said San Pablo's proposal, which would give the board $11 million within the next 30 days to buy the hospital and a nearby plot of land worth more than $7 million on which a smaller hospital may be built, is the most promising because there is no doubt the city has the money.
But Campbell disagreed, saying the city wants the valuable land to develop as commercial and retail property to complement an adjacent casino but doesn't do enough to ensure the district can build a new hospital.
Campbell said a plan proposed by Angels Care Inc., a nonprofit foundation that says it will take over management of the hospital in the short term and finance construction of a new hospital in Richmond, is better for residents.
"The San Pablo offer is a lowball offer, and it doesn't finance a new hospital," she said. "If we go with Angel Care, they will just lease the property, so we aren't selling our asset under market value."
The hospital, which serves mostly Medicare and MediCal patients, has lost money for years. Area private hospitals draw most patients with private insurance, which pays higher reimbursement rates for care, casting doubt on how new investment groups could turn a profit.
Board member Dr. Richard Stern and others note that part of the district's ongoing financial troubles stem from its lack of funding from county government, a situation caused by the hospital's designation as a district hospital, which Stern calls "outmoded."
A proposal from Venturata Economic Development Corp., a for-profit company, offers to buy the hospital for $18 million up front and ultimately pay the district more than $30 million with leasing credits and other deals.
President John Templeton said he and his partners would restore full services and expand research at the hospital to draw federal and state funding. Templeton said economic growth in the region, some of which is linked to a proposed UC Berkeley Global Campus project for Richmond's south shore, make the hospital a good investment.
"The demographics will be changing because West Contra Costa is the only place left for affordable housing," Templeton wrote in an email. "Even before the UC campus is completed, the growth will resemble what's happening in Bayview Hunters Point and West Oakland."
None of the proposals would maintain the hospital at the current site beyond a few years. Millions in seismic retrofit work required by the state make the current building untenable, investors say.
The hospital's governing board has retained a law firm to review the proposals and provide an analysis before a decision is made in mid-February.
"Every proposal has hair on it," Zell said. "We face difficult decisions."
Contact Robert Rogers at 510-262-2726. Follow him at Twitter.com/sfbaynewsrogers.
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San Pablo among investors bidding to save Doctors Medical Center
By Robert Rogers rrogers@bayareanewsgroup.com
POSTED: 01/21/201
SAN PABLO -- Four proposals have emerged to buy Doctors Medical Center and keep
it running -- three from private hospital groups and one from the city of San
Pablo -- fueling hopes that services can be maintained at West Contra Costa
Costa's only public hospital.
Set to run out of money by the end of February and hit with the resignation last week of its interim CEO due to health troubles, the governing board of Doctors Medical Center San Pablo heard the series of proposals at its meeting Wednesday.
West Contra Costa Healthcare District Board Chairman Eric Zell said the most serious proposal came from San Pablo, which offered the board $11 million within the next 30 days to buy the hospital, and a nearby plot of land worth more than $7 million on which a smaller hospital may be built.
"We know the city's proposal is real, and they have the resources to be serious," Zell said.
San Pablo City Manager Matt Rodriguez said the city would lease the current hospital site to the district for $1 per year for the next five years while helping find additional capital to build a smaller facility nearby.
Other proposals that emerged late Wednesday included one from Venturata Economic Development Corp. President John Templeton said he and his partners could buy the hospital with $18 million up front, restore full services and expand research at the hospital to draw federal and state funding. Templeton said he and his partners can avert closure and ultimately make money running a full service hospital.
"We have to keep the doors open in the near term to draw more private insurance patients and build the research component," Templeton said. "We have to get this car through this intersection before the light turns red."
Another proposed investor said she would work to partner with UC Berkeley and the city of Richmond to move the hospital to Richmond's southern shoreline area, which is the site of a proposed UC Berkeley campus project. A fourth proposal was not revealed by press time.
Zell said the board will have to decide in mid-February whether to accept a proposal or commence closing the hospital.
Rumors surfaced last year that the adjacent San Pablo Casino, which is run by the Lytton Tribe, was in preliminary talks with DMC CEO Dawn Gideon about potentially buying the property. But those talks did not materialize into a proposal Wednesday. The casino paid $4.6 million in June for a 20-year lease on parking spaces in the back of the hospital.
The hospital has experienced new hope recently, as Contra Costa County supervisors last month forgave $12 million in debt owed by DMC on previous cash advances. The Richmond City Council also voted to earmark $15 million for DMC from a Chevron community benefits package tied to a refinery modernization, but that money won't become available until the refinery receives final permission to begin the project.
Meanwhile, the hospital, which has West Contra Costa County's only public emergency room, was forced to stop accepting ambulance traffic in August due to staffing shortfalls. The ambulance diversion has inundated private hospitals in the vicinity with patients and dramatically lengthened emergency transport times.
The downsizing has helped reduce the hospital's deficit from $1.5 million to $1.1 million monthly, officials said, but the hospital is still projected to run out of money and be unable to meet payroll for its 600-person workforce by March.
County health officials have said the situation will grow more dire if DMC, which still accepts emergency patients who self-transport or are brought by others, closes its 25-bed emergency room completely.
The beleaguered hospital runs deficits because it serves mostly patients on MediCal a