HomeMy WebLinkAboutMINUTES - 12131988 - 2.5 2 . 5
THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY, CALIFORNIA
Adopted this Order on .__December 13 , 1988_, by the following vote:
AYES: Supervisors Powers, Fanden, McPeak, Torlakson, Schroder
NOES: None
ABSENT: None
ABSTAIN: None
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SUBJECT: Merrithew Memorial Hospital Replacement Facility Study
The Board considered the recommendations of the Mark Finucane,
Health Services Director, pertinent to the Merrithew Memorial
Hospital Replacement Facility Study. A copy of the referenced
recommendations are attached and included as a part of this
document.
The following persons spoke:
Jeff Smith, City of Martinez, 4991 Alhambra .Valley Road,
Martinez, in support for a replacement facility;
Don Christen, Executive Director, Contra Costa Taxpayers
Association, 820 Main Street, Martinez, on the scope
of the proposal; and
George Degnan, M.D. , 5355 Alhambra Valley Road, Martinez.,
in opposition to the proposal.
All persons desiring to speak having been heard, the Board
discussed the recommendations and approved them as amended.
Therefore, IT IS BY THE BOARD ORDERED that the recommendations .
of the Health Services Director are approved as presented with
Recommendation No. 3 amended to direct the County Administrator and
Health Services Director to prepare an RFP for a schematic design.
consultant for subsequent presentation for the Board' s review; and
Recommendation No. 9 amended to include a request for a specific
timetable for further actions, a determination whether or not an
Environmental Impact Report will be required, and a request to hold
workshops to inform the Board and the public of the activities
related to the replacement study.
hereby certify that this is:a true and comr Lz:opy of
an action taken and entered on the minute cf the
Board of Supervisors on the data shown.
ATTESTED:
PHit. BATCHELOR, Clerk of the Berard
of Supervisors and County Administrator
cc: Health Services Director
County Administrator By Deputy
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Tom: BOARD OF SUPERVISORS
FROM: Mark Finucane, Director Contr,
Health Services Department Costa
DATE: December 9, 1988 Count
SUBJECT: Merrithew Memorial Hospital
Replacement Facility Study
SPECIFIC REQUEST(S) OR RECOMMENDATION(S) BACKGROUND AND JUSTIFICATION
RECOMMENDED ACTION
1 . Accept the Arthur Young/SMP report entitled "Strategic, Architectural and
Financial Planning --Replacement County Hospital ".
2. Direct the County Administrator to work with Auditor-Controller and
Treasurer-Tax Collector to determine funding resources available to address
the urgent capital needs associated with rebuilding or repairing the Hospital ,
in light of the Arthur Young/SMP report.
3. Authorize the Directors of General Services and Health Services to proceed with
selection of consultants for Schematic Design and Project Construction
Management, in conjunction with the financing review outlined above, and con-
tingent upon final Board approval .
4. Direct the County Auditor-Controller to reserve Tobacco Tax revenues accruing
to the County effective January 1 , 1989 and all subsequent years to be used for
either a) subvention requirements of the replacement facility_ or b) financing
(estimated at $15,000,000) the repair of the existing facility, in compliance
with State and Federal mandates to correct existing deficiencies , and related
operational costs. k
5. Direct the Health Services Director to utilize SB1732 revenues to the maximum
possible extent in planning for a replacement facility or carrying out mandated
facility repairs .
6. Direct the Health Services Director to aggressively pursue securing a state
commitment for SB1732 funds at the earliest possible date.
7. Direct the County Administrator to convene the Project Oversite Committee on a
regular basis for the duration of the Replacement Hospital Project.
8. Direct the County Administrator, Auditor-Controller and Treasurer to evaluate
with Bond Counsel and Financial Advisors the impact of hospital replacement
'financing on the County' s total debt structure, and bond rating capacity.
9. Direct the County Administrator and Health Services Director to provide monthly
status reports to your Board on the above recommendations .
CONTINUED 'JN ATTACHMENT: __ YES SIGNATURE:
�. RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
APPROVE �_ OTHER
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FINANCIAL IMPACT
None. Contracts for schematic design and project management firm will be funded from
the Health Services Department's approved 1988/89 budget. Source of funds , con-
sistent with previous Board action, will be from the past sale of licensed. hospital
beds to National Medical Enterprises (NME) .
BACKGROUND
In January 1986, your Board accepted the Health Services Director' s report on the
future of the County Hospital . After extensive interviews with hospital and com-
munity leaders_ to explore all options for the hospital ' s future, the Director of the
Health Services Department recommended replacement of the existing County Hospital
facility. Your Board approved this recommendation, subject to a determination of its
financial feasibility. In order to generate the information required for this deter-
mination, the County Administrator engaged the services of Arthur Young (AY),
Certified Public Accountants, and their architectural consultants , Stone, Maraccini
and Patterson (SMP) . The final report of this study is submitted herewith.
After assessing Contra Costa' s demographic and healthcare environment and projecting
utilization of the public and private hospitals, the Arthur Young report outlined the
role which the County Hospital must play in the future. ' In order to carry out this
role, the report recommends development of major programs in the areas of Geriatrics,
Obstetrics/Women' s Health, and expanded psychiatric seryices . This market focus is
projected to have a favorable impact on the hospital ' s finances . To house these
programs along with other medical and existing psychiatric services, the report
recommends building a new hospital with 227 licensed beds . In addition, the Arthur
Young report recommended constructing a Skilled Nursing Facility (SNF) , pending a
full financial review and assessment.
Not surprisingly, SMP' s architectural analysis of Merri'thew's functional and space
requirements identified significant space shortages, poor configuration of available
space, and numerous instances of departmental fragmentation in the current facility.
Their conceptual plan for a replacement hospital includes a core hospital connected
to separate psychiatric services and outpatient buildings, with separate entrances
for the various services. They have also identified the 'site for a separate Skilled
Nursing Facility.
Existing hospital operations would be maintained during construction. Replacement
could occur in two phases: the first would include psychiatric services and a
central plant/maintenance building; the second, the core hospital and
outpatient/family practice clinics .
SMP estimates construction and project-related costs for the replacement Hospital at
$95 million . In the final section of the report, AY presents financial projections
for the base case (status quo) and the replacement hospital alternative.
RECENT DEVELOPMENTS
A number of events , which significantly affect the hospital project, have transpired
since the Department, Arthur Young and Stone, Maraccini and Patterson collected their
data for the report:
1 ,
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p In July, review teams from the state and federal governments cited
Merrithew Memorial Hospital for lack of compliance with current physical
plant licensing standards. County staff have been aware of the cited con-
ditions for many years. Coupled with the deteriorating physical condition
of the hospital , these basic design problems led to your Board' s original
concerns regarding the hospital 's future. Now we are faced with not only a
price tag of $12-15 million for required renovation and modifications, but
also the threat of having our major sources of hospital revenue, Medi-Cal
and Medicare, terminated if we remain out of compliance. We do not feel
feel that spending' $12 - 15 million on an outdated facility would be a wise 1
expenditure.
This cost estimate, it must be noted, results only from a partial review.
Shortly, the facility will undergo a more comprehensive investigation
that likely will result in a higher price tag.
Because of the current licensing problems, the independent firm of Derver
and Berkoff, together with mechanical , electrical and cost estimating con-
sultants, were engaged to review, in detail , the costs associated with
correcting selected deficiencies involving major facility modification and
renovations which were cited in the July licensing review. In summary,
the Derver and Berkoff report concludes that the $12 - $15,000,000 in
construction "MIGHT RESOLVE THE OUTSTANDING CITATIONS, BUT WOULD NOT
CONTRIBUTE IN ANY OTHER POSITIVE WAY TO THE FUNCTIONAL OPERATIONS OR
EFFICIENCIES OF MERRITHEW MEMORIAL HOSPITAL". The report continues "PRIOR
STUDIES OF PHYSICAL FACILITIES AT MERRITHEW MEMORIAL HOSPITAL HAVE
CONCLUDED THAT THE COMPLEX HAS OUTLIVED ITS USEFUL LIFE AS A HOSPITAL AND
SHOULD BE REPLACED. THE DERVERIBERKOFF EVALUATION TEAM CONCURS
o The exploding census which was originally thought to be a transient -pheno-
menon has become an enduring fact. Merrithew is now serving more patients
than it has in many years. This exacerbates the problems identified in the
negative state and federal reviews of the facility. This high level of
utilization also underscores Arthur Young' s conclusion that Merrithew plays
a unique, indispensable, and expanding role in the region' s medical deli-
very system.
o The passage of SB1732 was a major victory for counties. In Contra Costa's
case, the legislation guarantees subvention of 40% to 45% of the debt ser-
vice for a replacement hospital . With $4.7 - 5.2 million share of the debt
service covered, it significantly increases the feasibility, desirability,
and practicality of replacing the county hospital .
o Turbulent changes , in the health care industry have occurred in Contra
Costa County, as elsewhere in the country. A review of local events
reveals high turnover in top management positions, fierce competition, and
an uncertain future; for many institutions . Simultaneously, the County has
expanded its role `and has become a stabilizing force in the health care
system.
o The percentage of the gross national product devoted to health care con-
tinues to increase. The resultant pressure on expenditures will mean
fewer and fewer hospitals will remain open and fewer still will take the
marginally insured,; thus forcing more patients into the county system.
Merrithew's Medi-Cal inpatient days have increased 27% in just two years.
o Proposition 99, the Tobacco Tax initiative, was passed on November 8,
1988. The language of the initiative is clear: a large percentage of
the money was intended for hospitals who treat a high percentage of
poor or unsponsored patients . The amount directed to Merrithew could
approach $5 million annually. However, the initiative provides that
the formula for distribution of these monies is to be developed by the
Legislature and the State Department of Health Services . Our experience
with both over the past four years forces us to note that the only
funding certainty at this time is the Presley bill (SB1732) . However,
the tobacco tax initiative could provide major additional relief.
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. RECOMMENDATION
We request that you authorize the next step in the design process , and approve
the actions described in recommendations 1 through 7. These recommendations are
consistent with the step-by-step approach which has characterized the planning
for the future of the County Hospital . The schematic design phase will
translate the general require ments and conceptual plan contained in the Arthur
Young/Stone, Maraccini , and Patterson report into a more specific form and will
provide refined cost estimates. Your Board would then decide whether to proceed
with the - next phase of this project. The requested desiqn work would be
required if your Board should approve, at a later date, replacement of the
County Hospital . It would also demonstrate to the State and Federal govern-
ments that we are seriously pursuing the hospital replacement option, and thus
should prevent a devastating loss of revenues or an inprudent expenditure of
$12 - 15 million on ;the existing facility. Additionally, it will place Contra
Costa at the "head of the line" for obtaining funding approval as provided for
in SB1732. It must; be noted that SB1732 has a limited five year window for
application for these funds . This window can conceivably be changed legislati-
vely; however, once ?approved, funding will continue for the life of the bond
issuance.