The Richmond City Council is backing a plan to use Chevron community benefits funds to keep financially-struggling Doctors Medical Center open as a full-service hospital for another three years, but the proposal comes with many question marks.
The plan, presented Tuesday by Richmond City Manager Bill Lindsay at the request of council, attempts to come up with roughly $54 million, the sum it would take to keep DMC open as a full service hospital for three more years.
To achieve that goal, the plan would redirect $15 million of the $90 million community benefits package tied to the Chevron Richmond Refinery Modernization Project to support the hospital, Lindsay said.
It would also require the Contra Costa County Board of Supervisors to forgive some of the hospital’s debt ($8.7 million); convince surrounding hospitals to shell out a combined $12.9 million, ask voters to approve a parcel tax, and force DMC to identify $2.4 million in additional cost savings.
Most of the plan’s requirements face obstacles, Lindsay said.
Firstly, the Chevron community benefits funds cannot be released until lawsuits filed by environmental groups against the Modernization Project are resolved, which could take months to years. The funds might not come in time to save DMC, which is slated to close in March.
The plan also assumes that surrounding hospitals that would be affected by DMC’s closure – including Kaiser, Summit and John Muir – would be willing to shell out money for an unsustainable hospital.
“The hospital community has been generous in the past,” Lindsay said “We understand that their patience may be limited in terms of what they might do in the future.”
The plan also hopes voters who rejected a May parcel tax that would have raised $20 million annually for DMC will vote in favor of a parcel tax in 2015 raising about $5 million annually.
Even if all the plan’s funding requirements are successful, Lindsay stressed there is no guarantee that DMC will remain as a full-service hospital after three years. With the healthcare industry shifting toward a focus on primary care, he said, it isn’t yet known that a full-service DMC is needed. Keeping DMC open for another three years will at least allow health care officials to develop a “sustainable West County healthcare system” of some kind, Lindsay said.
The 60-year-old DMC has had financial problems for years, mainly related to the low reimbursement rates from the hospital’s many MediCare and Medi-Cal patients. Despite the passage of two parcel taxes over the years, the hospital was impacted by the Affordable Care Act’s passage, which began expanding coverage last year.
The May failure of the parcel tax all but doomed the hospital, according to hospital officials. And last month a group of health experts tasked with finding solutions to DMC’s financial troubles ruled out the possibility of preserving a full-service hospital, citing a lack of possible funding sources from the county and other agencies.
Lindsay added the hospital requires a seismic retrofit by 2020.
On Oct. 7, Richmond council asked Lindsay and his staff to come up with a plan to save DMC that would use Chevron community benefits funds. Of the $15 million, $10 million would be taken from the $35 million Richmond Promise program, which aims to provide full tuition for all Richmond high school students over 10 years.
Three months before, the same council voted against tapping those funds following warnings that the Chevron money would not be available soon enough. Lawsuits filed against the $1 billion Modernization Project by Communities for a Better Environment (CBE) and Asian Pacific Environmental Network (APEN) would need to be resolved.
Chevron Richmond officials urged environmental groups to drop the legal challenges so the community benefits funds can be released.
“The availability of the existing funding from the investment agreement is linked to the ability to implement our Modernization Project,” said Heather Kulp, a Chevron Richmond spokesperson. “I ask the city council and Richmond residents to call on CBE and APEN to stop standing in the way of this project.”