Jan 22, 2015

Encouraging news from the Contra Costa Times.

Financially crippled Doctors Medical Center, which is slated to close at the end of February, could possibly end up saved by one of three hospital groups or the city of San Pablo, each of which introduced proposals Wednesday to purchase the safety-net hospital and keep it running.

Here’s the basics of three of the proposals as reported by the Times: (The fourth proposal was presented after the Times’ deadline Wednesday night)

  1. City of San Pablo: The city offered $11 million to buy the hospital within the next 30 days along with a nearby plot of land worth more than $7 million, where a smaller hospital may be built (West Contra Costa Healthcare District Board Chairmen Eric Zell called it the most serious proposal).
  2. Venturata Economic Development Corp. president offered $18 million to buy the hospital, and promises to restore full services and focus on research to attract federal and state funding.
  3. Unnamed investor proposes partnering with UC Berkeley and the city of Richmond to move the hospital to Richmond’s southern shoreline area, where UC Berkeley is proposing to locate a research center.

Aside from these proposals, the healthcare district has been working to fulfill the 5×8 Plan, a five-year, eight-part proposal to preserve a full-service DMC. The plan is ambitious, however, as it seeks funding from various sources along with more cost cutting measures.

Some goals of the 5×8 plan have been achieved: An infusion of $15 million was secured from the City of Richmond, although those funds are tied to the Chevron Richmond Modernization Project and won’t be available until that project gets the legal green light to break ground.

Another success from the 5×8 plan includes $12 million in debt forgiveness from Contra Costa County, which was approved last month. But the plan still faces other significant hurdles, including the need to pass a less expensive parcel tax, to procure additional contributions from hospitals in the region, and to further slash DMC’s payroll and employee benefits.

In 2013, the hospital declared a fiscal emergency, and then in May of last year voters rejected a parcel tax that would have closed a $20 million annual deficit.

The 60-year-old DMC has had financial problems for years, mainly related to servicing uninsured patients and also due to low reimbursement rates from MediCare and Medi-Cal patients.


  1. More questions then answers :

    “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. ” Contra costa Times

    ” City of San Pablo: The city offered $11 million to buy the hospital . ”
    Based upon the reposted deficit of $ 1.1 million monthly , so the $ 11 million is less then a year of operational deficit .
    Questions :
    1) The annual deficit for DMC is running over $ 13 million a year down from $ 18 million plus Question : by selling DMC’s only remaining major asset for $ 11 million , is that money going to cover operational deficits ? If yes what happens when these funds run out ?

    2) What are the terms of the gift of land from the city of San Pablo to DMC , does DMC have the absolute right to sell the property in the event , DMC plan falls apart and they never open up a emergency room facility ?

    3) What Happened to the reported $ 20 million offer from the casino to purchase the property from DMC , as Reported By Chairman Zell and Supervisor Gioia to the chamber of commence ? Will DMC , get any upside , if the city of San Pablo sells the property down the road to the Casino ?

    4) Is there any brokers commissions in the transaction ? Since the property was listed by a broker http://www.loopnet.com/Listing/18911026/2000-Vale-Road-San-Pablo-CA/

    5) What are the details of the 5 x 8 plan . Our understanding is that the $ 15 million from the Richmond promise program redirected to DMC was condition on a full service hospital remaining in operation and the key was a real plan that was DMC was sustainable as a full service hospital , nothing has been disclosed that DMC meets those requirements , are we missing anything ???

    Richard Poe | Jan 22nd, 2015
  2. Contra Costa Times editorial: Doctors Hospital proposals only bury the district deeper in debt

    Contra Costa Times editorial © 2015 Bay Area News Group
    Posted: 01/26/2015 04:00:00 PM PST0 Comments

    For all the chatter, none of the latest proposals to “save” West Contra Costa’s public hospital do anything of the sort.

    We’re witnessing a cruel hoax that provides false hope that, with a few sleights of hand, Doctors Medical Center in San Pablo will suddenly start operating in the black. Nothing could be further from the truth.

    It’s time to move on. The health care district must change its business model. It cannot afford to operate a full-service hospital. But by shifting to urgent care and preventive health services, it could still do a lot to save lives.

    Meanwhile, none of the latest proposals changes the fundamental fact that a full-service hospital will continue to lose money. For years, we’ve witnessed attempts to stem the red ink, all of which have failed.

    These new proposals would not fix that. Instead, in one form or another, they all call for the hospital district to sell off assets to raise short-term cash. That’s just another form of borrowing that will drive the district, and taxpayers, deeper in debt.

    We would welcome a plan in which a company with the requisite expertise risks its own funds to try to turn this hospital around. But we’re tired of watching hospital district leaders inflate the mortgage to keep the doors open.

    In 2004, voters approved a $52 annual parcel tax to help keep the hospital running. In 2011, they increased it to $99. In 2014, the district sought to triple that, to $309, but could muster support of only 52 percent of voters for a measure that required two-thirds approval.

    Meanwhile, the district continues to spend more than it takes in. To cover its current bills, it borrows against future tax revenues. It’s now more than $75 million in debt to the county and bondholders, a liability that won’t be retired until 2042. Yet it will run out of cash in March.

    It had been assumed that, if the hospital were to fold, the property, worth about $28 million, could be sold to help pay down that debt. What these supposed saviors propose is that the district sell the hospital property to raise operating cash for the district.

    The district would be allowed to keep operating the hospital under a lease-back arrangement or rent-free. But the primary point is that the asset would be lost and the proceeds would be used to cover operating expenses. The equity would no longer be available to help pay down debt. That additional burden would shift to taxpayers.

    Once again, the district would be kicking the can down the road. That’s not a solution

    Richard Poe | Jan 26th, 2015

About the Author

Mike Aldax is the editor of the Richmond Standard. He has 13 years of journalism experience, most recently as a reporter for the San Francisco Examiner. He previously held roles as reporter and editor at Bay City News, Napa Valley Register, Garden Island Newspaper in Kaua’i, and the Queens Courier in New York City.