POC Members Fight on for San Leandro Hospital

August 29, 2012

Medical staff unwavering in their demands for a 24-hour acute care hospital

Speaker, Dr.sawney Vin

POC members (Left to right) Subroto Kundu, M.D.,Vin Sawhney, M.D. and Miles Adller, M.D.,with California state senator Ellen Corbett, urge attendees at a June 6th, 2009 “white coat rally” to join the fight to save San Leandro Hospital from closure as an acute-care facility with a 24-hour emergency room.

On 6 December, nearly three dozen Physicians Organizing Committee (POC) members and their colleagues on the San Leandro Hospital (SLH) medical staff, infuriated by renewed threats to close their hospital, convened a special meeting to discuss the next steps in their year-and-a-half long fight to win back community control of San Leandro, California’s only acute-care hospital. Attendees reaffirmed their pledge to make government officials accountable to the community served and those who provide that essential medical care.

At stake is the hospital’s ability to care for a host of critical medical conditions ranging from fractured hips and shoulders to renal failure, vascular abscesses and strokes, among other conditions afflicting patients in the area, a high percentage of whom are elderly. The doctors contend surrounding hospitals will not be able to absorb the extra patients should SLH close, as its ER alone receives 27,000 visits a year, a third of which are critical cases.


The doctors were flabbergasted when Alameda County Superior Court Judge Marshall Whitley ruled in November against the cross complaint by Eden Township Healthcare District (ETHD) seeking to block Sutter Health from using the terms of a disputed Memorandum of Understanding (MOU) from 2008 to acquire SLH from the District for no money.

The doctors galvanized as a force in mid-2009 after Sutter announced their intention to terminate SLH’s hospital functions, convert it into an acute rehab center and lease it to Alameda County. Dozens of physicians spoke at town hall meetings and meetings of the Healthcare District throughout 2009 charging that closing SLH would remove essential hospital services for the poor and underinsured, forcing them to seek care at the overcrowded county hospital. Others accused Sutter of trying to remove competition for insured patients from their nearby Eden Hospital.

Former San Leandro Hospital Chief of Staff, Miles Adler, M.D. opened the December meeting by summarizing a decade of broken promises, deceit and “a general lack of integrity” on the part of Sutter Health that left the District with few options but to counter sue.

Doctors air grievances, commit to action

Adler stressed the need for the doctors to continue to cultivate allies in the community and to call upon responsible elected officials to act consistent with the health needs articulated by the medical staff and patients who rely on the hospital.

Eden Township Healthcare District board members debate future of San Leandro Hospital. POC members Carole Rogers, R.N. (left) and Harry Dvorsky, M.D. (second from left) and then-board chairman Rajendra Ratnesar, M.D. (right)

POC members at the meeting pledged to redouble the efforts they initiated in June of 2009 to save the facility from closure by Sutter, one of the nation’s largest non-profit hospital chains. Some agreed to participate in phoning sessions with POC volunteer organizers to inspire more of the medical staff to document the medical needs for the facility. Others agreed to contact their professional societies. Several committed to speaking engagements and community education programs to inform people throughout Alameda County of SLH’s important role in relation to the ability of other hospitals in the region to function, given the pending loss of inpatient beds and current conditions of severe overcrowding at Highland General, the county’s only public hospital.

Vinod Sawhney, M.D. of San Leandro Hospital confirmed that the District had voted unanimously to appeal Judge Whitley’s decision, which will keep the hospital open up to a year and a half while the matter is settled. Without the appeal, the judge’s ruling would have allowed Sutter to close the hospital as early as 1 May 2011.

Sawhney led a discussion about the range of potential management and financing options to keep the hospital operating in the long term. Although attendees did not come to consensus on whether a “hybrid model” run jointly by the District and Alameda County was more viable than having an independent operator (be it Sutter or another company) run the hospital, they were unanimous on the need to get the message out about what people can do to advocate to county and state officials to act decisively to preserve vital patient care. These officials have the power to stop the prioritization of gluttonous profit grabbing of a corporation that was entrusted to provide adequate and vital medical care.

“No doubt, the court decision was a setback,” said Bob Gingery, M.D., a vascular surgeon at SLH. “But whoever ends up managing it, we’re going to have to fight to make sure they respond to the community’s need for a full service hospital with a 24-hour emergency room. We have to keep up the quality of patient care and not give in to those who say we can’t make this hospital work. If our care is top quality, the patients will come.”

Robbed with a fountain pen

The District’s cross complaint alleged that George Bischalaney, then CEO of ETHD, and former District board member Francisco Rico, M.D. violated California Government Code section 1090 when they took part in crafting the 2008 MOU that granted Sutter rights to the hospital.

In 2006 the District served Sutter and Eden Medical Center (EMC) with a Notice of Default and Anticipatory Breach for reneging on their commitment to rebuild Eden Hospital by
1 January 2007 per the terms of their 2004 lease agreement. The disputed 2008 MOU was a product of the lengthy negotiations that ensued and was a focus of the District’s countersuit against Sutter. Sutter had first instituted legal proceedings against the District in October 2009 when a newly constructed ETHD board refused to relinquish SLH to Sutter.

Section 1090 prohibits public officials from negotiating contracts when they have a financial conflict-of-interest. While serving on the District board that negotiated the 2008 MOU, Fank Rico, M.D. was a partner in an anesthesiology practice that derived 90% of its income from contracts with Sutter. George Bischalaney served as the District’s CEO while simultaneously being employed by Sutter as the CEO of Eden Medical Center,an entity that was initially created between Sutter and the District to run Eden Hospital in Castro Valley, an adjacent city.

In addition to ownership rights over SLH, the disputed 2008 MOU directed the District to give Sutter sole control of EMC — and thus ownership of Eden Hospital as well. (For more background, see sidebar on page nine: The Fight for San Leandro Hospital: Key Parties, Facilities and Agreements)

Appeal to reason

District lawyers filed a Writ of Mandate on 2 December 2010 with the California State Court of Appeals, hoping to overturn the Alameda County Superior Court ruling claiming, “The respondent court abused its discretion and erred as a matter of law.”

According to a District statement, “Our goal, when filing this suit, was to keep San Leandro Hospital and its emergency medical facility open. This remains our goal. After reviewing our options with legal counsel, the Board of Directors decided unanimously to pursue appellate court review of the decision. When we initially filed this suit, Sutter Health was preparing to close San Leandro Hospital. Our efforts have kept the doors open for months longer than originally planned. This has saved lives and protected the health of our community. This is the mandate of the Eden Township Healthcare District. It is why we decided to pursue legal action in the first place and why we are pursuing appellate review now.” Some estimate the appeal process may cost upwards of $5 million, in addition to the $1.7 million the healthcare district has already spent in legal fees.

According to Shane Kangas, POC Membership Coordinator, “Perhaps more important than any potential legal gains stemming from the appeal itself, is the fact that the ongoing legal battle may delay the closure of the hospital for another 12 to 18 months, maintaining critical care for the patients and giving POC time to organize additional physicians, community members, business supporters and patients to save the hospital in the long run.”

Doctors affirm viability of the hospital

Several doctors at the meeting disputed Sutter’s mantra that the hospital had to be shut down because it wasn’t financially viable. Bryan Walker, M.D. spoke to the fact that since community scrutiny of the hospital’s financial data had increased, “for the last 11 months, the hospital has all but twice made budget.” Other doctors spoke about how Sutter Health threatened legal action to block the offer of a rival non-profit hospital corporation, Prime Healthcare, to take over and maintain the facility, even though Sutter claims that the hospital is a money loser.

Since 2004, Sutter has made a total of $50 million in equity transfers from Eden Medical Center to its general operating fund, which is controlled by Sutter’s corporate headquarters in Sacramento. Since Eden and SLH operate under the same license, it is impossible to discern whether these profits were extracted from SLH, Eden or both. System-wide, non-profit Sutter had an income of nearly $697 million in 2009, according to an Ernst & Young audit that was commissioned by Sutter itself.

“They are even inflating their bed vacancy figures to justify shutting the hospital down,” explained Adler. “They are counting SLH’s 4th floor as having beds, but that floor has been completely closed for years.

They are counting those hospital beds when figuring vacancy, but not the ones that are truly available.”
“The thing that Sutter doesn’t want is a hospital that will compete with their boutique hospital [Eden Hospital] down the street,” said Gingery, speaking to what his colleagues have alleged at various rallies to save SLH. “But even if they close it, we will have to continue to fight, because the patients aren’t going anywhere.”

No question the hospital is vital

According to Abdullah Wakeely, a POC member and radiation technologist at SLH who performs CT scans, x-rays and fluoroscopies to assist surgeons, “The community needs the hospital because of the volume of patients we see. Our ICU is full 90% of the time, including severely injured people. Highland Hospital is already beyond capacity. They cannot absorb our patients and they are too far away for some of the patients to make it in time. Likewise Eden Hospital’s ICU is full a lot of the time already. The wait time at Eden’s ER is 5-6 hours and their new hospital is going to have fewer beds. When you close SLH on top of that, the patients won’t have anywhere to go. Just look at our schedule, we do over 1,100 vascular surgeries a year.”

At a November rally in front of the Alameda County Administration building in Oakland to protest the possible closing of SLH, Carol Barazi, an RN with the California Nurses Association, said, “the emergency room at San Leandro Hospital is bursting at the seams with patients.” She also noted that beds in its ICU are in high demand, with surgeries scheduled well into the night.

Economic and political prognosis puts things in perspective

At the December 6th meeting, POC Operations Manager Brian Tseng provided some perspective on what the organization’s pursuit and advocacy will entail in the context of the country’s current economic situation. “Start with the $13.8 trillion national debt, the threatened 20-30% Medicare reimbursement cuts that take an act of Congress every year to forestall and a total senior population that will increase from 38 million to nearly 64 million by 2025 as the baby boomers start reaching 65 in 2011 — and you get a picture of vastly increased patient care demands at a time when the government is paralyzed by burgeoning debt. The feds are already cutting the states, and the states are cutting their Medicaid programs. In the private sector we have increasingly aggressive entities competing for a diminishing pool of insured patients in the wake of record unemployment and loss of medical benefits.”

The call to action: “Organizing for health”

Tseng called upon the 33 attendees to participate with POC to the fullest extent possible as an essential part of their practice of medicine. He stressed the necessity to learn the advocacy and organizing skills required to save the very institutions, programs and resources that are essential to patient care.

Seven doctors who were not yet part of POC joined the association on the spot by signing membership authorizations and several made commitments to participate in reaching out to doctors at Highland General, which will bear the main brunt of patient overflow if SLH closes.

As far back as March of 2010, District board member Carol Rogers, R.N. admonished her fellow POC members who had worked to save the hospital not to reduce their community organizing just because a lawsuit had been filed. She emphasized that the District’s own lawyers stressed the battle for the hospital needs to be fought on three fronts: the courtroom, organizing in the community and in the political arena.

Attack of the “foundation practice” model

Chaplin Liu, M.D. underscored the need to organize with others in the community stating, “When we went together with the California Nurses Association and bus loads of people to the Alameda County Board of Supervisors hearing recently, there was no question the Board could feel the desire of everyone present to keep the hospital open. The message was simple, ‘The community really needs this hospital.’”

As an example of the aggressive business practices Tseng warned of, Liu referred to Sutter’s attempts to gain monopolistic control over patient populations by buying out physician practices via a “physician foundation model,” whereby Sutter’s East Bay Medical Foundation has been offering to purchase and subsidize medical practices in the community. The “foundation practices” then put non-foundation practices out of business by re-directing patients exclusively to other foundation practices who are likewise connected to Sutter hospitals. Dr. Liu added, “Right now it’s like Sutter is engaged in cold war with us, but pretty soon it’s going to be all out war, and they don’t play nice. They are out to assimilate and then exterminate us as a force directing patient care.”

According to Adler, a gastroenterologist, the facility charge at his endoscopy center is about $700 for a colonoscopy whereas Sutter’s fees are nearly $6,000. “You can see their interest in buying out the private practices to be able to divert all the procedures to their facilities. It’s disturbing because it doesn’t appear at any time that we had an honest partner to talk to.”

County an accomplice after the fact

As early as July of 2009, when Sutter announced its plans to lease SLH rent-free to Alameda County for the purposes of downsizing it to an acute rehab center to replace the county’s aging Fairmont Hospital, many doctors questioned why the county supervisors would enter into such an agreement. According to Dr. Gingery, “SLH is an earthquake-fit hospital, the only one currently standing in the region, and the County is going to help Sutter dismantle it? That’s outrageous!”

San Leandro Hospital is a potential rival to Eden Hospital in terms of competition for insured patients. Sutter is in the process of rebuilding Eden into an upscale facility in a wealthier neighborhood, while reducing the number of beds from 178 to 130. When the new Eden Hospital is completed in 2013, it will have lost its award-winning inpatient psychiatric unit, among other services. At the time Sutter was granted County approval to downsize Eden, they claimed that the loss of beds would have little impact given the existence of San Leandro Hospital, a disingenuous claim given they had already planned to eliminate SLH.

Liabilities of non-profits who seek to profit with impunity

One salient liability raised at the meeting that participants believe would give Sutter pause is the fact that, as a “non-profit” hospital corporation, Sutter is obligated to provide a level of charity care commensurate with the tax benefits they receive. “San Leandro is a major source of indigent and uncompensated care for Sutter in the East Bay,” noted Tseng. “Without SLH, their non-profit status deserves reevaluation. Challenging their tax status will take a serious time commitment from several of the people here. Even after California State Senator Ellen Corbett (D-San Leandro) and 12 other Bay Area legislators took up the demands of POC members in Alameda, San Francisco, and Marin Counties to investigate revoking Sutter’s tax-breaks for failing to meet their charitable obligations, the state Attorney General, now Governor-elect, Jerry Brown, took no action.”

Tseng went on to explain how when Sutter’s state and federal tax breaks are factored in, the hospital chain is able to avoid paying tens of millions of dollars each year. “In Alameda County alone they receive millions of dollars each year in property tax breaks. But what does the county get, except more indigent patients being sent to an overcrowded Highland Hospital? The County is still failing to make Sutter’s county property tax exemption dependent on actually performing a specific level of charity care. Alameda is slashing its own services to the indigent at the same time it is letting Sutter off the hook. At the very least, the County shouldn’t grant tax breaks when Sutter is actively preventing others from running a hospital they claim is costing them too much money. Sutter is trying to become the only game in town, so that no one can compete. It’s a lucrative business model for them.”

Sutter’s abuse of their monopoly position to aggressively raise prices was another liability doctors at the meeting announced their intent to explore. According to an article that appeared in Bloomberg News this summer, Sutter “has market power that commands prices up to 40 to 70 percent higher than its rivals for typical procedures — and pacts with insurers to keep those prices secret. Sutter can charge these prices because it has acquired more than a third of the market in the region between San Francisco and Sacramento, by taking over more than 20 hospitals in the past 30 years, said executives of Aetna, Healthnet and BlueShield of California, who asked not to be named because their agreements with Sutter ban disclosure of prices.”

The end of the beginning, not the beginning of the end

“With the commitments we got from our San Leandro members we will be very busy over the next year reaching out to physicians and others throughout the county to save this hospital,” said Kangas. “We will start with doctors at Highland Hospital and the John George Psychiatric Pavilion. Then we will expand to Eden Hospital, Summit-Alta Bates Hospital, and local clinics so that they too can join our efforts.

Just as Sutter is a regional entity, our members in the East Bay can follow the example of building this fight from our members in San Francisco and Marin counties where the boards of supervisors are beginning to question Sutter’s tax breaks.”

In April of 2010 the San Francisco Planning Commission adopted the
8-Point Resolution of the Health Commission to demand a 79% increase in Sutter’s charity care contributions over the next five years, an increase in its care of Medicaid patients, replacing lost skilled-nursing facility beds and other measures before building permits would be issued. (See article, SF Doctors Unite to Ensure New Hospital is Adequate to Meet City’s Needs, on page one.)

Said POC founding organizer, Geoffrey Wilson, “Our members have committed to a range of community organizing activities as part of what physicians must be willing to do on behalf of their patients these days. Some are speaking to local Rotary clubs and other service organizations, reaching out to business owners and merchant associations, submitting articles to local newspapers and contacting county and state officials to demand that they do their jobs and protect the health of their constituencies. Others are encouraging their patients to sign petitions and to phone in to county officials and supervisors. This campaign has kept the hospital open so far. We hope doctors across the country will follow our example as part of what it takes today to advocate for the ethics of the profession such that the availability and quality of care is increased for all working people. It’s a tall order and we’ll need all the participation we can get.” For those interested in building this campaign, please call (415) 434-9335 and ask to speak to David.

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