Board votes to close Doctors Medical Center

Despite an eleventh-hour proposal to inject new life into the beleaguered Doctors Medical Center, officials voted Thursday to close the 60-year-old safety-net hospital.

Board chairman Eric Zell said it was a sad day for residents of Contra Costa County:

“It’s tragic that in today’s healthcare system that a safety-net hospital that brings services to the poor and to the elderly is being lost at a time when we actually think and hope that we’re providing a better healthcare system to our community. … In the case of west county, that’s clearly not the case.”

Zell said the reality of the hospital’s finances gave the board little choice but to close. The West Contra Costa Healthcare District Board of Directors voted 4-0 in favor of closing the hospital on April 21, with board member Deborah Campbell abstaining.

Doctors Medical is run extremely efficiently with costs per patient 24 percent lower than other East Bay hospitals, the hospital’s financial advisor, Harold Emahiser, said. But, 90 percent of patients who come into Doctors Medical are either on Medi-Cal, Medicaid or are uninsured, and the hospital runs an annual deficit of $18 million to $20 million, Emahiser said:

“The issue isn’t if the hospital was only run better,” Emahiser said. “It’s not a cost issue. It’s reimbursement. That’s a discouraging thing because there’s no fix found internally, it has to come from outside.”

The hospital’s cash flow problems date to the mid-1990s when there was a change in the way hospitals are reimbursed for services. In 1997, Tenet Healthcare, a for-profit hospital management company, stepped in as an institutional partner to operate the hospital and provide needed capital investment, Emahiser said.

Unable to sustain the annual losses, Tenet terminated their affiliation with Doctors Medical in 2004. Voters passed parcel tax measures in 2004 and 2011 to provide additional funding for Doctors Medical, but it wasn’t enough to stop the financial bleeding.

Emahiser said he’s had roughly two-dozen conversations with potential outside investors over the past several years but only one advanced to a formal discussion. That investor also concluded there was no way to close the annual deficit, Emahiser said.

On Thursday, the board approved the second of two agreements to sell two medical office buildings and a condominium to the city of San Pablo. The board earlier this month approved the sale of a parking lot to San Pablo, which together totaled $7.5 million.

That money will be used to operate the hospital until April 21 and then to close the hospital, with much of the money going to pay for employees’ pensions and accrued vacation time, as well as to pay vendors and service outstanding debts.

If the board chose to use the money to keep the hospital operating, it wouldn’t be able to pay those outstanding debts, Emahiser said.

Doctors Medical Interim CEO Kathy White said:

“Even today, it amazes me that we have very competent, wonderful staff who continue to come to work and give the best every day and we want to honor them to make sure they have a paycheck.”

Some people at the meeting urged the board to close the hospital with dignity. Stephen Scott, a registered nurse in the cardiac lab at Doctors Medical, said:

“We’ve been closing for 10 years. … I’ve spoken to many coworkers from different departments and the consensus is, please set the date and let us close with dignity.”

Others pleaded with the board to not turn its back on the hundreds of thousands of west county residents who have no other full-service hospital nearby.

Nurse Maria Sahagun said she agreed with the closure if there is no long-term financial solution, but cautioned that she had already spoken with two families who say they lost family members because they couldn’t get to a hospital soon enough or were discharged early because they didn’t have health insurance.

Doctors Medical stopped accepting 911 ambulances in August as a cost-savings measure. But one group of healthcare providers at Doctors Medical is hoping that they can save the hospital.

Dr. Brazell Carter has been a physician at Doctors Medical Center for 37 years, he said. He’s representing other medical staff who are hoping they can entice enough investors to buy the hospital and turn it into a for-profit enterprise.

Carter said he understands the financial constraints that have squeezed the hospital for decades but thinks there are still stones that have not yet been unturned:

“I’ve seen the hospital go through all the changes it’s gone through, from non-profit to for-profit, the whole nine yards, but the bottom line is we need to take care of people in this community. … Buying it would allow the hospital to remain open under a new administration and to make some changes in the business model so things that have not been tried could be tried.”

he said. He estimated they would need between $10 million to $13 million to buy the hospital and its assets and take on the hospital’s debt. He said there is also some money slated to come in as part of the previously-passed parcel tax measures, along with some $15 million that was negotiated by the city of Richmond in a deal with Chevron.

The board extended the closing date of the hospital by one week to give the group time to raise the needed funds by end of next week, Zell said:

“The criteria by which we would even engage in any further discussions with this group is that they have to put potential funds into an account that will be available for hospital operations.”

Zell added he didn’t want to risk the money slated to be used for closing the hospital if the promised money never materializes.

Carter said he is optimistic:

“That’s a very high bar for them to achieve. … I’m hopeful that we’ll be able to present to the board more than a promise but an escrow account. … This is something that’s been done before when Tenet took over, they had to do the same thing. It’s not new territory, but we simply have to find the right people to do it.”