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HomeMy WebLinkAboutMINUTES - 01141986 - T.5 T.5 THE BOARD OF SUPERVISORS 'OF CONTRA COSTA COUNTY, CALIFORNIA Adopted this Order on January 14, 1986 , by the following vote: AYES: Supervisors Fanden, McPeak, Torlakson, and Powers NOES: None ABSENT: None ABSTAIN: Supervisor Schroder SUBJECT: Future of Merrithew Memorial Hospital In response to the request of the Board, Mark Finucane, Health Services Director, submitted his report presenting options for consideration pertinent to the future of the Merrithew Memorial Hospital . He also transmitted a report prepared by The NBBJ Group analyzing and identifying the costs of maintaining in operation the exisitng physical facilities of Merrithew Memorial Hospital for the next five years, fiscal year 1986 through fiscal year 1990. Phil Batchelor, County Administrator, in a report to the Board dated January 14, 1986 , (copy attached hereto and by reference incorporated herein) commented on the scope of the study and the consensus reached after an extensive interviewing effort. Mr. Batchelor summarized the key issues in the report of the Health Services Director and submitted three recommendations for the Board to consider: 1 ) Approve in concept the Health Services Director' s recommendation for a new facility and immediately verify its feasi- bility by obtaining data relative to-.identifying a funding source, determination of the optimal size of the general acute psychiatric and geriatric portions of the proposed facility, examination of the impact financing the proposed new facility would have on the County' s debt limit, and the investigation of the interest of the private medical corporations in entering into a public-private part- nership with the County for the project and other issues identified in Mr. Batchelor' s report. 2) Direct the County Administrator and Health Services Director to make a status report to the Board of Supervisors on these issues within ninety days. 3) Direct that this report and transmittal letter be distributed to the administrators and medical staffs of all hospi- tals in the County, all individuals who were interviewed by the Health Services Department, or were sent questionnaires to complete, and any other individual or organization who are requesting a copy of the study with a request for their comments . Mark Finucane gave a brief overview of changes that have occured in the last few years in the health care field. He com- mented on the physical condition of the present hospital and the costs that would be incurred to remodel it. Mr. Finucane also expressed reservations with a proposal to contract with private hospitals who would provide care for the indigent and the poor. The Health Services Director proposed replacing the existing the County Hospital with a new 120 bed facility that would cost approximately $60 million. OFFICE OF COUNTY ADMINISTRATOR CONTRA COSTA COUNTY Administration Building Martinez, California To: Board of Supervisors Date: January 14, 1986 From: Phil BatchelorQ � Subject: The Future of Merrithew County Administrator Memorial Hospital INTRODUCTION AND SUMMARY COMMENTS: In April, 1985, the Board of Supervisors directed that a study be made of the options for the future of the Merrithew Memorial Hospital, and that recommendations be made for the Board' s- consideration. That study has been completed and is attached for the Board' s consideration. In preparing this report, the Department conducted the most extensive interviewing effort ever undertaken on this subject. The consensus of these interviews is that a county hospital is not only needed, but is, in fact, critical to assure the future delivery of health care services to indigents and other medically underserved members of the community. In reviewing all available options, the study makes the following findings: o Based on a new architectural study by the NBBJ Group, who also reviewed all prior studies, continuing to simply maintain the existing physical plant is not possible over the long term, although with the infusion of sufficient funds, the facility can continue to be serviceable for several years. o Because of the outdated physical layout of the present plant major remodeling of the existing hospital will not achieve the desired goal of providing an efficient facility of optimal size and flexibility. o Rebuilding the existing hospital should only be considered in conjunction with changes in its size and function designed to better meet the needs of the Page 2 community and take into account available financing and revenue sources. o Closing the hospital without making adequate alternative resources available to meet the County's health care responsibilities is at least irresponsible and is probably illegal. o Creating a countywide hospital district is one alternative governance mechanism which deserves further exploration. o Leasing space from other hospitals in the County is not practical. o Transferring the hospital to a nonprofit organization is another governance alternative which has been suggested for further exploration. o According to the extensive interviews conductedby the Health Services Department staff, contracting with other hospitals to meet the County' s statutory responsibilities does not appear to be feasible or workable at present. RECOMMENDATIONS: As a result of these findings, the Health Services Director has recommended replacing the existing hospital facility by a new 120 bed, acute care hospital, including 80 medical/surgical beds and 40 psychiatric beds plus a geriatric institute which would be able to provide a full range of services to the elderly poor and medically-underserved citizens of the County. The County Administrator recommends that the Board of Supervisors: 1. Approve in concept the Health Services Director' s recommendation for a new facility and immediately verify its feasibility by obtaining the following data, portions of which have been identified in the Health Services Director' s report: Page 3 A. Analyze the feasibility of identifying funding for all, or a portion, of any new facilities which can be justified based on need, market analysis, and revenue projections. B. Determine the optimal size of the general acute, psychiatric, and geriatric portions of the proposed facility based on an analysis of funding and medical care requirements. C. Review the cost of building the proposed new facility in relation to the overall priorities established by the Board of Supervisors in terms of the ability to continue to provide for other County-mandated services. D. Determine the operational impacts of building these facilities on future County budgets, taking into account that the operational costs of staffing and maintaining a new facility are far more critical in the long term than the one-time capital costs of constructing the facility. E. Determine the availability of Federal and State funding sources to finance such a facility and investigate the possibility of proposing new State funding sources, such as a Statewide, voter-approved Bond Act for county hospital capital expenditures. F. Explore existing or potential sources of funding based on information from the office of Statewide Health Planning and Development, the State Department of Health Services, the State Legislature, and the U. S. Department of Health and Human Services. G. Examine the impact that financing the proposed new facility would have on the County' s debt limit and credit rating. H. Investigate the interest of private medical corporations in entering into a public/private partnership with the County for the project. I. Study the feasibility of a countywide hospital district and explore other governance issues in more detail concurrent with gathering the additional information noted in A-H above. Page 4 2. Direct the County Administrator and Health Services Director to make a status report to the Board of Supervisors on these. issues within 90 days. 3. Direct that this report and transmittal letter be distributed to the administrators and medical staffs of all hospitals in the County, all individuals who were interviewed by the 'Health Services Department or were sent questionnaires to complete, and any other individual or organization requesting a copy of the study, with a request for their comments. BACKGROUND AND REASONS FOR RECOMMENDATIONS: Preparation of the Report o In preparing the attached report Health Services Department staff conducted 36 interviews with members of the Board of Supervisors, administrators and medical staffs of other hospitals, as well as of Merrithew Memorial Hospital, employee organizations, the Taxpayers' Association, consumer representatives, and staff from other counties and the State of California. o In order to incorporate a broader segment of the community than was possible through face-to-face interviews alone, questionnaires were sent to 25 legislators, administrators, advisory board chairs and physician organizations. o In addition, an all-day retreat was held to generate alternatives not previously identified and to examine the strengths and weaknesses of each alternative. In addition to senior Health Services Department and County Administrator' s Office staff, several experienced and knowledgeable individuals from the private sector volunteered their time to assist in this endeavor. o Finally, all studies, position papers, Board actions and community discussion since the issue of the future of the county hospital was raised in 1978 were reviewed in an effort to capitalize on past examinations of this question. Page 5 A new architectural study was conducted by the NBBJ Group to determine the present condition of the existing physical plant and the cost of maintaining it over the next several years. Among the conclusions of this most recent outside architectural study are the following comments: "The buildings and systems are almost out-of-date and at or beyond the limits of their projected useful life. . . .The facilities generally do not meet the standards of current health, safety, building and engineering codes." The architects estimate that over the next five years it will require an investment of nearly $10.9 million simply to maintain the present facility and make repairs considered essential to eliminate safety and other serious hazards. Identified Options The attached report lists eight options which encompass the range of suggestions made during the interviews. Each option, and the conclusion of the County Administrator' s Office regarding the viability of each option follows: 1. Maintain the Status Quo This option, which includes continuing with only basic and essential repairs for some period of years, is not feasible in the long term, but may be essential, at least for the near future. As has been noted, the architects project at least an average of $2 million per year being required over the next five years. From the projections made it is reasonable to assume that those costs will continue to grow each year as additional maintenance and repairs become essential. However, there are no indications that the hospital cannot continue to operate at least for a reasonable number of years as long as sufficient funds are dedicated each year to the essential maintenance and repairs. This option, however,. is neither cost-effective nor possible over the long term. The buildings can be expected to deteriorate at an increasing rate, requiring the dedication of more and more financial resources with less and less return on the invested funds. While the hospital can continue to operate in its present facilities for the time being, other options must be explored and agreed on in the very near Page 6 future. 2. Remodel Existing Structure A prior architectural consultant commented that when you remodel a dinosaur you are still left with a remodeled dinosaur. That perhaps best summarizes the prospects for a major remodeling of Merrithew Memorial Hospital. The physical layout is outmoded and many of the design characteristics would not be permitted in a hospital built today--probably not even in a hospital which is extensively remodeled today. Many millions of dollars would have to be invested in the present facility to make it operable for any reasonable period of time. The physical layout is inefficient in terms of utilization of staff, materials and energy. After an extensive remodeling effort, many of the physical layout problems would continue to exist and a great deal of money would have been invested in what was an inadequate facility to begin with. 3. Rebuild the Hospital It is clear that simply rebuilding the existing hospital, whether at the present site or another site, is unnecessary and probably impossible if what is suggested is a hospital the size of the current facility in terms of bed capacity. In addition, simply rebuilding what now exists in terms of available services does not reflect changes in current and future medical care practices and community need. Any rebuilding that is considered should take into account specialized services that are available elsewhere in the community, overall community needs and the particular needs of the population the County serves. There is, for instance, a demonstrated need for compre- hensive geriatric services that are presently provided by Merrithew Memorial Hospital on "H" Ward and are un- available elsewhere in the community. By the same token, Merrithew Memorial Hospital provides an essential psychiatric inpatient service. Rebuilding alone is not the answer. If rebuilding is to be considered, . it must be targeted to the needs of the community, the particular skills of a public facility and the resources available elsewhere in the community. Page 7 It is also likely that rebuilding the hospital along these lines would make the Contra Costa Health Plan a more viable entity in soliciting members and would certainly make the Plan itself a more valuable asset for the County. 4. Close the Hospital Simply closing the hospital without making adequate provision for the patients that are the clear statutory responsibility of the County would be irresponsible and probably illegal. The following options discuss combinations of alternatives combined with closing the hospital which make adequate provision for the County' s responsibilities in the health care area. No county the size of Contra Costa has simply closed its hospital without making provision for the indigent of the community. Based on past Board actions, we do not believe that the Board of Supervisors would seriously consider such a move at this time. 5. Create a Countywide Hospital District The possibility of forming a single, countywide hospital district, which would combine the resources and assets of Brookside, Mt. Diablo, and/or Los Medanos hospitals with those of the County, has considerable appeal in -terms of better potential utilization of resources, a reduction in unneeded capacity if Merrithew Memorial Hospital could be closed and the ability to better share outpatient clinic resources than is presently possible. Because a vote of the residents in each of the three existing hospital districts would probably be necessary, such a proposal would have to be carefully thought out and planned. It might also generate considerable opposition from the communities and the existing district hospital governing boards. It is, however, one alternative governance mechanism which deserves more study and discussion with the three district hospitals in order to test its feasibility. 6. Lease Space in Other Facilities While the idea of having an existing private or district hospital lease its unused space to the county initially has a certain appeal, there are practical problems which probably make it not a feasible alternative. Few hospitals have large blocks of Page 8 6. (continued) unused space. Most underutilized space is represented by a few beds on one ward or service and a few on another. However, it is clear from the results of the interviews that such an alternative is not viewed with much favor by the administrations and medical staffs of the other facilities. There would be considerable logistical problems if county patients were to be staffed by county physicians and a number of issues of medical practice would have to be addressed. Such an alternative would also only be feasible while the other hospitals had available space. If the hospital' s census were high, there would be a natural desire to displace a lower paying county or Medi-Cal patient with a higher paying private patient. The results of the interviews and historical practice indicate that this does not seem to be a feasible alternative. 7. Transfer to a Nonprofit Organization This, again, is primarily a governance issue, although it is possible that there may be some financing alternatives which would be more available or more attractive if Merrithew Memorial Hospital were transferred to a nonprofit organization. Such an arrangement removes the hospital from the immediate control of the County, but leaves the County with the same responsibility to provide care for indigents. This presumably would be provided through a contract with the nonprofit organization in return for the transfer of the assets of the hospital. Whether this alternative actually provides substantial benefits to the County deserves further exploration. 8. Contract for Services with Other Hospitals While this alternative, similar to the lease of space in a private or district hospital, seems on the surface to have obvious benefits, particularly when many hospitals are operating at relatively low censuses, there are major administrative, medical and attitudinal f problems. Medical staffs who were interviewed expressed strong support for a county hospital as a separate institution and strong opposition to caring for county patients in their facilities. While it is Page 9 possible that favorable terms could be negotiated over the short term, the County would be in a very poor negotiating posture once Merrithew Memorial Hospital was closed because the County would have no alternative to contracting with other facilities, probably at unfavorable rates. There are major and very real problems with medical practice differences among facilities which, from past experience, are difficult to resolve. Ample- opportunities have been given to the private and district hospitals to enter into meaningful negotiations with the County to care for indigent patients and none has yet progressed to the point of reality, with one or two specialized exceptions. This, unfortunately, does not appear to be an alternative worth pursuing at this time, beyond arrangements for overflow activity at the County's hospital. CONCLUSIONS• ' Given the content of the interviews, past experience, a great deal of study by many professionals in the field, and the reality of the County's responsibilities to provide medical care for the indigents in the community, my office is drawn to the conclusion that the recommendation made by the Health Services Director is a viable alternative available to the County. As we have indicated above in our recommendations, and as is obvious to anyone who has followed the financial problems of the County over the past few years, the recommendation to rebuild even a portion of the hospital at a projected cost of $250,000 to $300,000 per bed presents a significant challenge. Whether this is truly a feasible alternative must, in our view, await the answers to the additional information we have suggested obtaining in our recommendations. It should also be noted that this additional information is not suggested because we believe the Health Services Department should have provided it before forwarding their recommendations to the Board of Supervisors. Most of the areas touched on in our recommendations involve overall County impacts from the recommendation to rebuild even a portion of the hospital and are thus more properly the concern of this office and the Board than of any individual department. We raise these questions because we believe that the next logical step is to examine these questions and determine whether we can arrive at a funding plan, and specific parameters for a hospital, which meets the needs identified by the Health Services Department and is still fiscally sound. Page 10 I would like to express my appreciation to Mark Finucane, and all the members of his staff, as well as all members of the community who participated in this study. PJB:clg