Sunday, January 8, 2017
[Alameda County] Mixed opinions on Eden Health District’s future
Blog note: this article references a 2016 grand jury report.
CASTRO VALLEY — An Alameda County-backed study analyzing the often criticized Eden Health District’s operations and management and possible options to dissolve it is getting mixed feedback from the special district’s leaders and East Bay lawmakers.
Eden Health District administrators say the 82-page study by Berkson Associates of Berkeley was unnecessary, since the results vary little from 2013 and 2015 reviews by the county’s Local Agency Formation Commission.
The seven-member county commission is charged with reviewing special districts, including Eden Health District, and overseeing any potential plans to dissolve it and transfer its assets to a another agency or nonprofit.
Eden Health District covers Eden Township, which includes Hayward, San Leandro, San Lorenzo, Ashland, Cherryland, Fairview and Castro Valley.
“Dissolving the district eliminates the option of funding local hospitals and other non-profits from a readily available taxing authority, which is costly and perhaps impossible to re-create,” Eden Health District Chief Executive Officer Dev Mahadevan wrote in a Dec. 14 letter to the commission.
“Liquidating the assets (regardless of whether the district continues or is dissolved) eliminates a perpetual return of more than 10 percent, which could serve the district’s residents in order to improve health,” he said.
Some East Bay leaders disagree and contend the health district has not done enough to financially support struggling St. Rose and San Leandro hospitals; they also are wary of further cuts in federal government funding.
“They talk about an obligation to the community, and I think that the district needs to have some obligation to help continue the viability of those two hospitals,” Alameda County Supervisor Wilma Chan said in an interview Monday.
“I think if the district doesn’t take into account these two hospitals that see more than 65,000 people in their emergency rooms every year, you’re really missing one really, really important asset to what the community needs,” she said.
The report generally found “no evidence of mismanagement that warrants dissolution and discontinuation of services,” but advised the district to track hours and resources allocated to real estate activities and community services.
Local Agency Formation Commission authorized the report amid growing calls by Hayward, San Leandro and county leaders to dissolve or re-examine the health district’s operations after a grand jury report was released in June 2016.
The grand jury criticized the time and money spent on the district’s commercial real estate holdings rather than grants awarded to nonprofit health care service providers.
The health district owns three medical office buildings. It uses some of the rent from them on grants to health service providers; the rest covers the district’s expenses.
San Leandro Mayor Pauline Cutter said she would like to see the district dissolved and its assets distributed to support St. Rose and San Leandro hospitals rather than have the money fund health district employee salaries or its commercial real estate activities.
The district’s $26.4 million budget for the last fiscal year included $7.7 million in operating expenses, including $358,606 for salary and $1.84 million in health care grants, according to an audit.
“I believe they have lost sight of the core mission they were formed for, and this report doesn’t address any of that,” Cutter said in an interview Monday.
“This report had a focus on the regulatory details of the district, but my job as mayor is to see if the needs of my citizens are being met,” she said.
Mahadevan, however, said he is not convinced. The current value of the district’s commercial properties total about $31.3 million, even with an $11.7 million outstanding construction loan on the Dublin Gateway Building.
“By no stretch of the imagination is $20 million going to support both of those hospitals for more than two years at the rate that they’re going. It may not even last two years; it might be 16 months,” he told the district board at its Dec. 21 meeting.
He said he hopes the commission will affirm that the health district is working, but if not, he said the best alternative is for Eden to create a nonprofit and transfer the district’s assets and liabilities to it.
That proposal, crafted by Eden administrators, would allow a 10-member board, including the five current Eden board members, to govern the new nonprofit. The other five would be appointed by the county supervisors or Hayward or San Leandro city councils.
Doing so, however, “isn’t as clean-cut as it appears just in concept,” Eden attorney Colin Coffey told the district board.
A special election would cost about $200,000, and the fees to attorneys and others to create such a nonprofit could be considerable, he said. There also is the issue of the $17.2 million the district owes Sutter Health after losing its San Leandro Hospital ownership legal battle.
Chan, however, said Eden administrators should work more closely with county leaders.
“I also think they have to be a little bit more open, that perhaps some of the ways they’re doing things aren’t correct; any time anyone raises anything instead of putting up a wall. I don’t think that’s the right way to react,” Chan said.
January 6, 2017
East Bay Times
By Darin Moriki