Healthcare District Outlines Proposal for Joint Administration of St. Rose and San Leandro Hospitals

The Eden Township Healthcare District would recoup ownership of and pick up a new one, Hayward’s St. Rose Hospital, under a concept paper presented last week at a special board meeting of the healthcare district.

Under the proposal, St. Rose would give up its status as a private independent hospital and become part of the Eden Township Healthcare District. Both hospitals would continue to function as acute care centers and would operate under a joint administration governed by the Eden healthcare district. 

Based on estimates of revenues and expenses in a combined operation model, the district and St. Rose concluded that no immediate financial subsidy would be needed to operate the two hospitals, according to the document. 

"We have shown we can do this in a profitable, sustainable manner," said Michael Mahoney, president of St. Rose Hospital, at the board meeting. "But it is not without its challenges." 

Those challenges include a major legal battle with Sutter Health, which currently operates San Leandro Hospital and signed a contract with the healthcare district in 2007 to purchase it. 

The initial concept paper presented last week is the first public document to emerge from negotiations between the healthcare district and St. Rose after news came earlier this year that the private, independent hospital might be interested in taking over San Leandro Hospital and keeping its emergency room open. 

Sutter Health has plans to close the emergency room and turn the facility into a rehabilitation center. However, the district has sought to block that plan through the courts. 

Local politicians, including State Senator Ellen Corbett, Mayor Stephen Cassidy and County Supervisor Wilma Chan, have repeatedly expressed support for keeping San Leandro Hospital functioning as an acute care facility. 

Mahoney said he had recently met with Wilma Chan and Supervisor Nadia Lockyear to discuss the St. Rose-San Leandro hospital proposal. 

"I think we were all encouraged by their support," he said. "The overriding issue, of course, is could this be done in a prudent way?" 

Mahoney said the financial estimates of combining the two hospitals showed it could. While the concept paper presented to the county includes only broad stroke scenarios, the proposal suggests combining the two hospitals under one administrative structure would allow the hospitals to benefit from economies of scales, joint contracting and other money-saving measures. 

Furthermore, operating as district hospitals would “favorably impact the disparity of reimbursement they now receive from state and federal programs,” according to the proposal. Currently, St. Rose is considered a disproportionate share hospital because it receives a high proportion of Medicaid patients, a designation that allows the facility to receive federal funding that San Leandro Hospital is not eligible for.

Mahoney sent the proposal earlier this month to the Alameda County Health Care Services Agency for review. A majority of the Eden healthcare district’s board of trustees approved a letter of support for the proposal at their April 13 meeting.

The proposal is attached to the right of this article.