Tuesday, January 31, 2012


It is clear that the Hospital (as opposed to the District) is going to fail at some point.  The reasons for that failure are manifest most prominently the lack of financial viability.  Relying on the kindness of strangers (or friends) is not a business plan.  At this point almost anything - the Bank of Alameda, DPHS, or a vendor - could trigger the event that shuts the Hospital down.  What is the appropriate course of action?

1.  Fire Debi Stebbins.  Of course, I have been saying this for quite some time, but whether it is a football team or a corporation, the head of the organization needs to be held accountable.  The advantage in terms of moving the District forward is that it publicly signals change AND it saves money (~25,000 per month).

2.  Hope the State does not approve the Waters Edge transfer.  There is one last hurdle before the District becomes contractually obligated to the Zimmerman family for millions of dollars.  The financial strength (weakness) of the Hospital being what it is could provide the basis for California to not approve the Waters Edge license transfer.  This would be a gift by the State to the District(and it has the advantage of being the correct decision  given the tenuous financial position of the District).
2a.  Enter into negotiation with the Zimmerman family immediately (would require a emergency or special Board meeting).  Maybe they would be willing to take 250,000 right now to void the contract given the risk that the State may deny the license transfer.

3.  Create a complete  accounting of liabilities.  As I have said in the past, the balance sheet debt of the District is only the tip of the iceberg.  Until the Board understands how bad the problem is then it will be difficult to put the necessary plan into place.  The liabilities that I am currently aware of that do not appear on the balance sheet:  Employment contracts, Marina Village lease, Bank of America lease, fine payable to DPHS,   Vendor contracts with guarantees and/or termination clauses, and the Waters Edge lease.  My best guess is that these total between 3 and 5 million dollars excluding the WE project.    I am not sure if there are certain unfunded pension/benefit liabilities that do not currently appear on the balance sheet.

4.  Have legal counsel prepare a complete accounting of regulatory obligations including any notice timelines for things like closing the ER or for potential layoffs of employees.  Also, any regulatory notice that must be provided to government payers.

5.  Approach the County.  Of course Alex Briscoe has his hands full already with the possible closure of San Leandro by Sutter plus the St. Rose financial debacle, but the County needs to be engaged.  The question should not be "how can you give us money to keep the Hospital open?", but, rather, how could the District be restructured to provide a bigger bang for the buck for Alameda taxpayers.

6.  Create a strategic plan.  I am reluctant to suggest this because this step usually involves low quality, highly paid BS artists (otherwise known as consultants - see the compensation presentations done earlier last year for example).  Maybe a non-profit (that was not compromised politically) would be willing to take on the task;  perhaps the Berkeley school of public policy could provide resources.  I would like to see this strategic plan include an urgent care center.  It is also possible that the wound care center might survive closure of the Hospital.  Obviously, the plan would be dependent on whether the District was burdened with the Waters Edge facility or not, but South Shore nursing would need to be addressed.

7.  Put the plan before the voters.  The District would need to make its case hopefully without misleading the public the way proponents did in the original vote.  Terminating the District might be problematic, but drastically reducing its taxing authority could easily be done even if the District lived on.

No comments:

Post a Comment