HomeMy WebLinkAboutMINUTES - 01311995 - 2.1 2 . 1
THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY, CALIFORNIA
Adopted this Order on January 31, 1995, by the following vote:
AYES: Supervisors Rogers, Smith, DeSaulnier, Torlakson, Bishop
NOES: None
ABSENT: None
ABSTAIN: None
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SUBJECT: Dr. Henry Zaretsky's Report on the Replacement
Project for the Merrithew Memorial Hospital
The Board considered the report from Dr. Henry Zaretsky,
the consultant to the Ad Hoc Committee on the County Hospital, in
response to issues he was requested to investigate related to the
partial replacement project for the, Merrithew Memorial Hospital.
A copy of the report is attached and included as a part of this
document.
The Chair invited comments on the report and all persons
desiring to speak were heard.
At the conclusion of the presentations and consideration of
the comments of the public and staff, the Board took the
following actions:
DETERMINED issues for response by the District Hospitals
relative to the provisions contained in the report and
CONTINUED the matter to February 7, 1995, Determination
Section of the Board Agenda, for responses from the
District Hospitals, consideration of the construction bids
received for the Merrithew Memorial Hospital Replacement
Project Bid Package, and reports from staff addressing
concerns raised today.
I HEREBY CERTIFY THAT THIS IS A TRUE AND
CORRECT COPY OF AN ACTION TAKEN AND
ENTERED ON THE MINUTES OF THE BOARD OF
SUPERVISORS ON THE DATE SHOWN .
ATTESTED: _January 31, 1995
Phil Batchelor,Clerk of the Board of
Supervisors and County Administrator
By I?'/ Deputy
cc: Health Services Director
County Administrator
HENRY W. ZARETSKY & Associates, Inc.
U.S. BANK PLAZA
980 NINTH STREET, 16TH FLOOR
SACRAMENTO, CALIFORNIA 95814-2736
(916) 447-2018
January 25, 1995
Mr. Phil Batchelor
County Administrator
Contra Costa County
County Administration Building
651 Pine Street, I 1 th Floor
Martinez, California 94553-1229
RE: Merrithew Memorial Memorial Ho�ital Replacement StudyReplacement Study
Dear Mr. Batchelor:
Enclosed is my report, "An Assessment of Options Facing Contra Costa County Regarding
Provision of Hospital Services," to be presented to the Board of Supervisors in its January 31
meeting.
I appreciate the opportunity of assisting the Board in dealing with this highly important
and controversial issue,with far-reaching implications for the health care consumers and providers
in Contra Costa County.
I look forward to meeting with you and the Board on January 31.
Sincerely,
Henry W. Zaretsky, Ph.D.
HWZ:cs
Enclosure
HENRY W. ZARETSKY & Associates, Inc.
U.S. BANK PLAZA
980 NINTH STREET, 16TH FLOOR
SACRAMENTO, CALIFORNIA 95814-2736
(916)447-2018
AN ASSESSMENT OF OPTIONS FACING CONTRA COSTA COUNTY
REGARDING PROVISION OF HOSPITAL SERVICES
Henry W. Zaretsky, Ph.D.
January 25, 1995
Prepared for presentation to the Contra Costa County Board of Supervisors on January 31,
1995.
CONTENTS
I. INTRODUCTION
II. THE PROBLEM
III. THE SETTING
IV. EVALUATION OF ALTERNATIVES
Overall Objective
Alternatives
1. Partial Replacement Project
2. Contracting with:the District Hospitals
3. Use of Los Medanos as the County Hospital
V. RECOMMENDATION
END NOTES
TABLES
AN ASSESSMENT OF OPTIONS FACING CONTRA COSTA COUNTY
REGARDING PROVISION OF HOSPITAL SERVICES
January 25, 1995
I. INTRODUCTION
The purpose of this report is to set forth an assessment of options available to Contra
Costa County with regard to fulfilling its obligations to provide hospital care to its indigent
population, and to recommend a specific approach for consideration by the Board of
Supervisors. The guiding principle underlying the recommended approach is the assurance
that indigent residents of Contra Costa County have access to needed, high quality hospital
and emergency medical services provided in a fiscally-responsible manner.
Three specific options are examined:
(1) Proceed with the construction of the partial replacement of Merrithew
Memorial Hospital, as envisaged in the Board action taken in 1992 which
resulted in the issuance of certificates of participation in the amount of$125.6
million;
(2) Abandon the replacement project in favor of contracting with the three
district hospitals located in Contra Costa County (Brookside Hospital District,
Mt. Diablo Hospital District and Los Medanos Hospital District), operating
under the guidance of a joint powers agreement. (The analysis of this option is
based on a proposal submitted by the district hospitals on January 17, 1995);
and
(3) County operation of the currently-closed Los Medanos Community
Hospital, complemented by contracts with the two remaining district hospitals.
This report begins with a discussion of the complex problems facing the Contra Costa
County Board of Supervisors as it considers which policy to pursue. Next is a discussion of
the setting in terms of the health care environment in Contra Costa County, particularly with
respect to indigent care. An analysis of each alternative is then presented. The report
concludes with a recommended approach. The recommendation is two-fold: If the Board is
compelled to take final action at this time, I recommend proceeding with the hospital
replacement project. If, on the other hand, the Board could allow a brief period (e.g., 30
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days) for the district hospitals to modify their proposal to substantially comply with the
provisions set forth in the last section of this report, my recommendation would tilt in favor
of the district hospitals' proposal, provided it in fact complies with these provisions. These
recommendations are not being advanced as negotiating points. They are viewed as providing
essential components of a system that would serve as a viable alternative to the hospital
replacement project, in the best interests of indigent consumers and county taxpayers.
II. THE PROBLEM
If Contra Costa County is to continue to operate a county hospital, the current aging
and seismically-unsafe facility will have to be replaced with a new facility. Moreover, such
replacement will have to occur within a few years due to licensing requirements. In 1992, the
Board of Supervisors approved construction of a replacement facility and the issuance of
$125.6 million in certificates of participation to finance construction and acquisition of
associated equipment. The project has been delayed due to a law suit filed by the NAACP
Legal Defense and Educational Fund in 1993, claiming that the location of the facility
discriminates against Blacks, Hispanics and Asians, denying them equal access to health
services.
As a result of this delay, the County was approached, also in 1993, by the three
hospital districts in Contra Costa County (Brookside, Los Medanos and Mt. Diablo) with a
proposal to provide inpatient and emergency medical services to all county-responsibility
patients (mainly the indigent population not qualifying for other public programs such as
Medi-Cal and Medicare, and county jail inmates) under.a contractual arrangement, as an
alternative to construction of the county hospital replacement facility. This proposal is
justified on the basis that it is a less costly and less risky alternative for the County to meet
its indigent care obligation; given the current health care environment which is placing greater
financial risk on hospitals, drastically reducing inpatient use, creating greater competitive
pressures; and given uncertainty regarding the future availability of federal and state subsidies
required to support a county hospital.
There are several important complications with respect to the latter scenario including,
but not limited to, the following: First, one of the district hospitals (Los Medanos) has
recently been forced to closed due to bankruptcy. Second, there is skepticism within
segments of the community regarding the districts hospitals' ability and commitment to
deliver. This is due to historical and recent financial problems at the hospitals; Brookside
Hospital's cancelling of its Medi-Cal contract in 1992 (it has subsequently negotiated a new
contract); perceptions that indigent patients are not welcome at Mt. Diablo Medical Center;
and a variety of other problems, including the ability of the hospitals to serve special indigent
populations, including AIDS patients, certain psychiatric patients and jail patients. Third, in
order for this arrangement to be financially feasible for the County, payment rates for county-
responsibility patients would have to be set below the hospitals' full costs, which may violate
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State law. And fourth, integrating the County medical staff with the staffs of the district
hospitals may be a complicated process.
The purpose of this report is to set forth an assessment of options available to Contra
Costa County with regard to fulfilling its obligations to provide hospital care to its indigent
population, and to recommend a specific approach for consideration by the Board of
Supervisors. The guiding principle underlying the recommended approach is the assurance
that indigent residents of Contra Costa County have access to needed, high quality hospital
and emergency medical services provided in a fiscally-responsible manner.
Three specific options are examined:
(1) Proceed with the construction of the partial replacement of Merrithew
Memorial Hospital, as envisaged in the Board action taken in 1992 which
resulted in the issuance of certificates of participation in the amount of$125.6
million;
(2) Abandon the replacement project in favor of contracting with the three
district hospitals located in Contra Costa County (Brookside Hospital District,
Mt. Diablo Hospital District and Los Medanos Hospital District), operating
under the guidance of a joint-powers agreement; and
(3) County operation of the currently-closed Los Medanos Community
Hospital, complemented by contracts with the two remaining district hospitals.
III. THE SETTING
The county hospital, Merrithew Memorial Hospital (MMH), located in Martinez, with
174 licensed beds, cannot continue in operation due to its obsolete plant. While the hospital
is located in the central part of Contra Costa County, the greatest concentrations of indigent
populations are in the eastern and western regions. For example, of the County's 91,161
Medi-Cal eligible population (as of March 1994), 31 percent reside in the eastern region, 45
percent in the western region and 25 percent in the central region. The county hospital is thus
complemented by a network of clinics distributed throughout the county.
The Contra Costa County health system has a national reputation as an innovator,
largely due to its own health maintenance organization, the Contra Costa Health Plan (CCHP),
which enrolls the county indigent population, Medi-Cal and Medicare beneficiaries, county
employees and small employers. The county system also has a family practice residency
program affiliated with the University of California at Davis. This program is viewed as
responsible for placing a large number of its graduates throughout the community.
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In 1992, the Board of Supervisors approved the issuance of$125.6 million in
certificates of participation to finance a 144-bed partial replacement hospital, to be
complemented by a contracting arrangement with Brookside Hospital for provision of
inpatient and emergency care to a portion of medically-indigent west county residents. The
replacement project is termed a partial replacement because of the reduction in licensed beds
and increased reliance on contracting with Brookside Hospital.
In addition to MMH and the two currently operating district hospitals (Brookside and
Mt. Diablo), Contra Costa County residents are served by two Kaiser hospitals (in Richmond
and Martinez),Delta Memorial Hospital in Antioch, Doctors Hospital of Pinole, East Bay
Hospital in Richmond (which is mainly psychiatric), John Muir Medical Center in Walnut
Creek and San Ramon Regional Medical Center. The existence of three hospital districts with
hospitals currently operating far below reasonable capacity-utilization levels (less than 40
percent occupancy at Brookside and Mt. Diablo [and zero occupancy at Los Medanos]),
strategically located in the three regions of the county, and with semi-public sponsorship, adds
an important dimension to the decision process regarding continued operation of a county-
sponsored hospital.
While these district hospitals have previously not expressed serious interest in taking
responsibility for all county-responsibility patients in addition to the bulk of Medi-Cal patients
residing in the Contra Costa County, the combination of construction of the proposed
replacement facility and low occupancy levels has prompted a reassessment. This
reassessment has resulted in a serious proposal by the district hospitals to collectively take
responsibility for the inpatient and emergency medical services portion of the county
obligation to provide health care for unsponsored, indigent residents.'
These hospitals would fulfill the county obligation in a manner that would:
(1) Use the county-run clinics and medical staff;
(2) Maintain, and relocate, the family practice residency program;
(3) Use the CCHP as the contracting vehicle;
(4) Provide all inpatient and emergency services for an aggregate cost to the
county not to exceed the current county subsidy of approximately $12 million
annually, with annual adjustments for inflation and enrollment;
(5) Include a commitment to accept all county-sponsored patients regardless
of diagnosis (e.g., AIDS, tuberculosis, psychiatric) or social status (e.g., jail,
homeless); and presumably
(6) Better accommodate the geographic accessibility disparities, provide
"seamless" care (i.e., better integrate indigent and private patients), and enable
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the County to avoid the growing economic risks inherent in operating a hospital
and meeting debt-service requirements.
The financial feasibility of the replacement hospital hinges on the continued
availability of disproportionate-share hospital (DSH) funds mainly provided through two
mechanisms -- SB 855 (significant supplemental Medi-Cal inpatient payments based on the
volume of Medi-Cal patient days and the percentages of Medi-Cal and unsponsored patient
days at Merrithew Memorial Hospital) and SB 1732 (Medi-Cal sharing in debt-service
payments based on the percentage of Medi-Cal patient days). Should funds from both these
sources continue to flow at current levels and should the replacement hospital maintain
reasonable utilization levels (MME, with occupancy rates inthe mid-to-high 70 percent range,
currently has the highest utilization level in Contra Costa County), debt service costs to the
County would be minimal. Should these funds be reduced significantly, the County's risks
increase markedly.
Along with this risk is the risk associated with operating a hospital in general, public
or private. The general character of the "hospital" has changed significantly over the past
decade, resulting in far less reliance on inpatient care. This is due to the increasing
prevalence of managed-care programs and continued advancements in medical science that
enable more and more services to be provided on an outpatient basis. At the same time,
competitive forces have led to a major expansion in managed care market share, the "hospital"
has been changing in character. Today's hospital is far less reliant on inpatient volume than
in the past. Besides hospitals and groups of hospitals becoming vertically-integrated health
systems, within their own four walls hospitals have experienced a marked increase in
outpatient activity, at the expense of inpatient activity. While in 1982, 15 percent of hospital
gross charges in California represented outpatient activity, by 1991 this had grown to 22
percent, a 45 percent increase. Patient days per 1,000 population dropped 35.2 percent over
this period, from 682 to 442.'
Outpatient visits have increased 48 percent over this period, while patient days have
decreased 20 percent. In 1982, 19 percent of hospital surgeries were performed on an
outpatient basis. By 1991, this had more than doubled, to 47 percent.' And this excludes the
growing number of surgeries performed in free-standing surgery centers and in physicians'
offices.
At the national level, from 1984 to 1991 the proportion of hospitals with organized
outpatient departments grew from 50 percent to 87 percent. Between 1980 and 1990, hospital
outpatient revenue increased from $11 billion to $63 billion. While in 1983 12.5 percent of
hospital revenue was attributed to outpatient volume, by 1990 it represented 25.4 percent.
These increases are mainly attributed to greater volume and greater complexity of outpatient
services provided.'
Managed care plans have experienced rapid growth in market penetration locally and
nationally. Nationally, health maintenance organization (HMO) market penetration increased
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from 4 percent in 1980, to 14.6 percent in 1990 (an enrollment increase from 9.1 million, to
36.5 million).' While comparable data on preferred provider organizations (PPOs) are not
available, it is estimated that by 1990, 33 percent of all insured employees were enrolled in
either HMOs or PPOs.6 By 1993, HMO enrollment reached 46.7 million, 18.5 percent of the
entire U.S. population.'
Clearly, managed care is likely to be the predominant method of health care delivery
in the future. In many parts of the U.S., it already is. For example, in 1989 the San
Francisco-San Jose-Sacramento metropolitan areas had a 46 percent HMO penetration rate,
and the Minneapolis area a 44 percent rate.$ For California as a whole, in 1993 HMO
penetration was 36 percent of the entire population, up from 30.6 percent in 1991, and 17
percent a decade earlier.9 Anecdotially, it has been reported that in Contra Costa County,
approximately 90 percent of privately-insured residents are enrolled in managed-care plans.
Thus, in deciding to continue as a hospital provider, Contra Costa County has to
consider the twin risks inherent in dependence on DSH funds, and in running any kind of
hospital in an era of growing competitive pressure and declining inpatient use. Against these
risks must be weighed the equally important risks facing the would-be contracting hospitals
operating in this competitive environment. Should even one of them fail, county-
responsibility and other indigent patients could be placed at great risk, and the Board of
Supervisors would have to devise a potentially-high-cost mechanism to fulfill the county
obligation.
IV. EVALUATION OF ALTERNATIVES
Overall Objective
In assessing the alternatives available to Contra Costa County, I was guided by the
objective of maintaining access to needed, high quality health services on the part of the
County's indigent population (the county-responsibility population as well as Medi-Cal and
Medicare beneficiaries who have difficulty receiving care in the private sector), provided in a
manner at least as culturally sensitive and dignified as in the current county health system,
and affording the County necessary predictability and control over its health services budget.
Other objectives include the ability of Contra Costa County to maintain its innovative role in
health care through maintaining, and expanding, its health plan and maintaining its family
practice residency program, which has become increasingly important to the entire County
population as managed care expands in a health system currently unbalanced in favor of
medical specialists.
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Alternatives
1. Partial Replacement Project
Pursuing the partial replacement of Merrithew Memorial Hospital would involve the
following advantages and disadvantages:
(1) It would place the County in the "driver's seat" regarding the ability to
contract with other hospitals for services at reasonable payment rates. Once the
replacement project is abandoned, the relative negotiating strength shifts to the
potential contracting hospitals, who could be in a position to demand higher
payment rates. It should be noted that in 1992 both Brookside and Los
Medanos cancelled their Medi-Cal contracts in an effort to increase their
payment rates;
(2) It would preserve the status quo regarding indigent access to services, in
addition to providing such access in greatly improved facilities;
(3) It would enable the continued flow of DSH funds to the extent they are
available statewide. With the closing of MMH, the bulk of the $10 million to
$13 million in DSH funds would be diverted away from Contra Costa County,
although it is likely that Brookside Hospital could eventually recover a portion
of these funds. In addition, all the SB 1732 (Medi-Cal debt-service assistance)
Rinds would be lost (approximately $5.1 million annually should the project
proceed). Total annual debt service payments for the replacement hospital will
be approximately $9.9 million, with $5.1 expected from SB 1732 subsidies,
$1.3 million from Medicare capital reimbursement and $3.5 million set aside
from DSH payments, resulting in no county general fund expenditures;
(4) If the DSH funds continue at current levels and the new facility is well
utilized, the County General Fund should not be placed at significant risk for
debt service requirements;
(5) The new facility is likely to be the only fully seismically safe facility
available to indigent patients. As a result of the Northridge earthquake, new
requirements will be placed on hospitals to meet seismic safety standards
through SB 1953 (Alquist), which was enacted in 1994. By 2008, all
hazardous structures (i.e., generally pre-1960 buildings) will no longer be able
to be used for hospital inpatients. By 2030, all hospitals treating inpatients will
be required to at least meet 1973 building standards. Hospitals using pre-1960
buildings for inpatient care will, within the next few years, be required to make
decisions regarding partial, or full, closure or new construction. For some
vulnerable hospitals, this will result in closure by 2008, if not before.
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.^ =
Brookside Hospital, whose major inpatient facility was constructed prior to
1960, will be particularly vulnerable, and will most likely be required to
undertake major construction prior to 2008;
(6) The replacement plan envisages expanded contracting with Brookside
Hospital, which would improve access for West County residents. Given the
need, however, to fully utilize the new hospital, there may have to be some
restrictions on diversion of potential Merrithew patients to Brookside;
(7) The replacement hospital, due to financial constraints, will not be self
contained. In particular, psychiatric services are to be provided in a wing of
the current facility (which is apparently seismically safe);
(8) While the replacement facility will be centrally located, it will not be
located where the indigent populations are most concentrated (West and East
County). Thus, geographic proximity to inpatient services will not improve for
indigent residents of these areas, other than with respect to the limited
contracting with Brookside discussed above;
(9) Given the considerable and continuing movement away from inpatient
acute care, there are no guarantees the new facility will be utilized to the extent
required for efficient operation. Moreover, implementation of Medi-Cal
managed care, scheduled to commence in 1996, should result in reduced overall
inpatient use by the Medi-Cal population, in addition to increased competition
from other hospitals for Medi-Cal business as the Local Initiative (the county-
organized health plan) competes with a commercial plan for capitated Medi-Cal
enrollees. These potential threats to inpatient use at the new hospital should be
considered in light of expected'population growth in Contra Costa County,
from 818,300 in 1990 to 1,212,800 by 2020, a 50 percent increase.10 The share
of this projected population growth represented by indigents, however, is not
known;
(10) The project's dependence on the continued availability of DSH funds at
approximately current levels is a major concern. With, or without, a new
hospital, continuing as a county-hospital provider would not be economically
viable without access to such subsidies. Continuation of the SB 855 program
of substantial payment supplements for disproportionate-share Medi-Cal
hospitals is far from assured. This program accounts for approximately $1.1
billion in federal Medicaid funds flowing to California annually. Of this, the
State Department of Health Services receives over $250 million to partially
support its administrative functions. Should this source of revenue be
significantly curtailed without replacement from another source, all counties
operating hospitals (in addition to the State of California) will be placed in
severe jeopardy, to the extent that a major reduction would not be politically
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feasible. If there are aggregate reductions, they are likely to be complemented
by a shifting of the remaining funds away from private disproportionate-share
hospitals, to county hospitals through greater weight being given to outpatient
services and to services provided to unsponsored patients.
While the availability of DSH funds is essential to running a county
hospital in general (new or old), the most important source of funds earmarked
for debt service is through SB 1732. These debt-service-specific subsidies
account for approximately half the projected debt service payments. These
funds should be more secure than the SB 855 funds since this is a closed-end
program. To be eligible for such funds, eligible disproportionate-share
hospitals were required to submit final construction plans to the Office of
Statewide Health Planning and Development (OSHPD) by June 30, 1994. In
addition, projects under this program on behalf of several major county hospital
replacements are either planned or in progress, and bonds have been issued
under the expectation of availability of this source of funds. Reneging on this
obligation by future governors and legislatures is highly unlikely. Unless
universal coverage is implemented at the national level, which appears unlikely
for the foreseeable future, disproportionate-share funding is expected to
continue.
Table 1 is an attempt to show the impact on the county subsidy for
inpatient and emergency care for three alternative levels of SB 855 funding cuts
-- 100 percent, 50 percent and 25 percent. The County during the 1993-94
fiscal year received $13.4 million through both SB 855 ($12.7 million) and SB
1255 ($0.8 million). (The latter subsidy is obtained through negotiations with
the California Medical Assistance Commission [CMAC], rather than through a
formula.) Of these funds, $3.5.million has been set aside for the past two
years, as this amount is earmarked by the County to be dedicated to annual
debt service payments. The 1993-94 county subsidy was $11.8 million. If
these DSH funds are lost altogether and the project is implemented, the county
subsidy rises from $11.8 million to $25.2 million. A 50 percent reduction
pushes the subsidy to $18.5 million, while a 25 percent reduction pushes it to
$15.1 million. While there is a high degree of uncertainty regarding what, if
any, reduction is likely, the 0 to 25 percent range appears more likely than a
higher range. Under this scenario, the county subsidy could increase from the
current $11.8 million to $15.1 million;
(11) No major counties in California without a University of California (UC)
hospital have closed their county hospitals. Major counties with UC hospitals
that no longer operate county hospitals (Sacramento, Orange and San Diego),
converted their hospitals to UC hospitals and then contracted with those
hospitals for indigent care; and
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(12) Moving ahead with the replacement project would enable the
maintenance of the family practice residency program without disruption.
2. Contracting with the District Hospitals
This scenario offers the potential for the following advantages and disadvantages:
(1) If the district hospitals support the reopening of Los Medanos and bring
that hospital into the network (Mt. Diablo indicated an interest in doing so),
access to inpatient services for East County indigent residents will be improved,
in that they will not be required to travel to Martinez, or Concord in the case of
only two participating district hospitals. In both cases (two-or three-hospital
network), access for West County residents is improved;
(2) Since the district hospitals are semi-public, there may be more
accountability to the public than is the case with private for-profit or not-for-
profit hospitals. Moreover, this opens the possibility of a joint powers
agreement (JPA) between the county and the districts, which could enable cost-
effective operation as an integrated system;
(3) If the county obligation is capped at the current level (with annual
adjustments for economy-wide inflation and enrollment changes), county funds
are protected and the risk of operating a hospital is avoided. On the other
hand, while the county will avoid this risk, the district hospitals obviously will
not. Should one or more of the district hospitals run into economic problems,
county taxpayers may be vulnerable;
(4) If the County maintains its network of clinics and the county-employed
and contracted medical staff is fully integrated into the district hospitals'
medical staffs, indigent access would be maintained and the ability to provide
culturally-sensitive care to indigent groups would remain intact;
(5) The viability of this approach requires the continuation of the family
practice residency program. Splitting the program among multiple sites could
cause problems, as could conflicts between the training program and specialty
physicians, especially at Mt. Diablo. Family practice residents must be given
exposure to specialty practice. The Merrithew Residency Program Director
believes that under the district hospitals' proposal, the program is unlikely to
survive, and if it does its costs would increase;"
(6) This approach should enable continued operation of the Contra Costa
Health Plan, and could, under an integrated delivery system operating under a
JPA, enable further expansion of the CCHP into the commercial and Medicare
markets;
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(7) Psychiatric inpatient services could become more community based,
through use of the Mt. Diablo Behavioral Medicine Pavilion and a subcontract
with East Bay Hospital in Richmond;
(8) The ability of the district hospitals to gain substantial volume from
accommodating former Merrithew patients will enable more efficient use of
existing capacity, and thus enable the hospitals to contract with the County on a
marginal cost basis. This would be the only way, if any, the district hospitals
could assume the entire inpatient and emergency services obligation at the
current county subsidy level with the loss of$13.4 million in DSH funds.
There is not sufficient information in the district hospitals' proposal to
determine its long-run financial feasibility.
In an attempt to better understand this issue, Table 2 calculates the
added revenue to the district hospitals assuming they recover all of Merrithew's
net revenue (county subsidy, Medi-Cal, Medicare, self-pay and commercial),
excluding DSH payments, which will not be available. The table shows that
they could gain $54.5 million in net revenue ($42.7 million from the health
care payers and $11.8 million from the county subsidy). This assumes the
district hospitals on average receive the same payment rates as Merrithew from
the various payers. (This is doubtful with respect to Medi-Cal and Medicare.)
The cost to the county of providing these services was $65.8 million. For
inpatient services only, average cost per patient day was $1,172, compared to
net revenue (excluding DSH payments), plus the county subsidy, of$933 per
patient day. Thus, under this scenario, marginal cost per patient day for the
district hospitals could not exceed $933 (including inpatient physician costs for
county indigent patients and Medi-Cal payment shortfalls for physicians). If
marginal costs exceed this level, the proposal is not economically viable. As
indicated above, the County is currently setting aside $3.5 million annually for
future debt service payments. Thus, a case could be made that the "true"
county subsidy is $8.3 million ($11.8 million - $3.5 million). Under this
assumption, added revenue to the hospitals would fall to $50.1 million, $857
per patient day on an inpatient basis (again, including physician costs for
county patients and Medi-Cal payment shortfalls for physicians).
Table 3 provides an equivalent analysis, under the assumption that the
district hospitals would receive lower inpatient payments (from primarily Medi-
Cal and Medicare), which would average 20 percent below aggregate payment
rates received by Merrithew. Under this scenario, the hospitals' marginal
inpatient costs could not exceed $775 per patient day, assuming the $11.8
million subsidy, or $699 assuming the $8.3 million subsidy.
While there is no doubt that filling excess beds with former Merrithew
patients should result in lower costs in the aggregate, the matching of these
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costs with added revenue flowing to the district hospitals is not clear in the
current proposal;
(9) Given the current patient population at Mt. Diablo, an infusion of
indigent patients (including homeless, jail and AIDS) could result in cultural
shock, especially if Los Medanos is not part of the network. Table 4 projects
the increase in only AIDS patients, based on the current distribution of these
patients among hospitals and county-wide projections to 2000. Note that if
Los Medanos is not included, AIDS patients at Mt. Diablo would increase from
one per day to over five (a five-fold increase). With Los Medanos included,
the increase would be from one to three;
(10) Besides the financial issues raised in (8) above, the arrangement may
not be financially feasible if Mt. Diablo is more specialty oriented than
Merrithew (for a given mix of diagnoses). The Merrithew medical staff is 70
percent primary care and 30 percent specialty, the opposite of most private
hospital medical staffs. A related financial issue involves Merrithew's payment
of Medi-Cal physician payment shortfalls (i.e., the difference between the
physician's salary and Medi-Cal receipts). The district hospitals will be
responsible for this component for inpatient professional services provide by
county-employed physicians. Finally, charity costs at Brookside and Mt.
Diablo totaled $2.6 million in the 1994 fiscal year. If such costs are transferred
to the "county indigent patient account" through annual enrollment adjustments,
county costs would increase by this amount. (This is analogous to providing
publically-funded school vouchers to parents with children already in private
schools.);
(11) Some aspects of the district hospitals' historical track record is not
encouraging, raising doubts regarding their ability to follow through. This
includes previous management at all three facilities;
(12) The annual loss of$10 million to $13 million in DSH funds and $5.1
million in Medi-Cal debt service subsidies largely represents a dead weight loss
to the County's entire health system and economy (although a portion of the
DSH payments could flow to Brookside);
(13) Defeasance costs on the $125.6 million certificates of participation are
estimated at approximately $25 million. This is built into the district hospitals'
proposal. But, as with the DSH and debt-service subsidies, these costs
represent a loss to the local health system and economy;
(14) If the arrangement fails after the replacement project is abandoned,
Contra Costa County will have no alternative but to contract with whatever
hospitals are willing to do so, at their dictated price. There will be no way to
-12-
recoup the lost SB 1732 debt service subsidies, and thus no way to resurrect the
replacement project. This could be a political and economic catastrophe.
Given Los Medanos' current, and Brookside's immediate past, financial
difficulties and given a potential major change in the composition of patients at
Mt. Diablo, this worst-case scenario is not that unlikely;
(15) More efficient use of existing resources necessarily entails reduced
overall staffing levels. Even if the added jobs at the district hospitals are filled
only with displaced Merrithew employees, which the district hospitals have not
committed to, there are bound to be job losses among county employees and
associated law suits. Since the added employment opportunities at the district
hospitals would derive solely from Merrithew's closure, Merrithew employees
should be given the first opportunity to fill these jobs;
(16) The inevitable seismic-safety issue with respect to at least Brookside
Hospital was discussed above. County tax payers could end up subsidizing
construction of a replacement hospital for Brookside; and
(17) Finally, Section 32125 (b) of the Health and Safety Code prohibits a
district hospital from contracting to care for indigent county patients at below
the cost of care. If this section is not interpreted in terms of marginal costs,
the proposal is not feasible. A scenario where a disgruntled district resident
(unhappy with the environmental impact of the new patient mix, for example)
files suit against the district on the basis of this section is entirely feasible. It is
also not unlikely that a future district board would demand a substantial
payment increase from the County based on this provision.
3. Use of Los Medanos as the County Hospital
This does not appear to be a practical substitute for the Merrithew replacement project
or for the arrangement with the district hospitals for the following reasons:
(1) Given its location and size, it would have to be supplemented with
contracts with other hospitals for most of the current Merrithew volume. The
County would thus remain in the hospital business with its associated risks,
would not be eligible for the SB 1732 debt-service subsidies and, under current
law, the issued certificates of participation could not be used to fund this
acquisition;
(2) Contracting for only a portion of the former Merrithew patient volume
would not be as attractive to the two remaining district hospitals, especially Mt.
Diablo, and thus these hospitals would demand higher payment levels;
(3) With less Medi-Cal volume than currently occurring at Merrithew, DSH
-13-
payments would be reduced, adding to the current county subsidy. As
indicated above, SB 1732 subsidies would not be available for acquisition or
lease payments;
(4) The district's bankruptcy receiver is requesting a $25 million
purchase price, which is most likely negotiable; and
(5) The outstanding debt incurred by Los Medanos is approximately $18.5
million, with bond proceeds of$5.5 unspent. The district receives local tax
revenue of approximately $1.6 million annually. Should the hospital be
converted to a county hospital, it is doubtful the district's voters would allow
the district's taxing authority to remain. It appears preferable for the hospital
to reopen as a district hospital, and thus be integrated in the district hospital
network under consideration.
V. RECOMMENDATION
While the proposal presented by the district hospitals has substantial potential, it
requires significant elaboration, modification and strengthening. If the Board is compelled to
act based solely on currently available information, my recommendation is to authorize
proceeding with the Merrithew replacement project. If, on the other hand, the Board could
allow a brief period (e.g., 30 days) for the district hospitals to modify their proposal to
substantially comply with the provisions set forth below, my recommendation would tilt in
favor of the district hospitals' proposal, provided it in fact complies with these provisions.
These recommendations are not being advanced as negotiating points. From my perspective,
the only viable alternative to the hospital replacement project is the structure set forth below.
The arrangement with the district hospitals should be structured as follows:
(1) Los Medanos Hospital be reopened and become part of a three-district-
hospital network;
(2) A Joint Powers Authority be created to govern the three-hospital system,
the county clinics and the Contra County Health Plan. The JPA governing
body should have equal representation from each of the hospitals and the
County. This JPA will enable the creation of an integrated health system
comprised of three hospitals, the county clinics and the Contra Costa Health
Plan, which would become a mixed staff-model-IPA-model HMO. Governance
by the JPA necessarily entails placing all three districts under one governing
body. Given that the three hospitals are generally non-competing, their
consolidation could only strengthen them collectively. Resistance by the
individual district boards should evaporate once the benefits of such
-14-
consolidation become apparent in this era of cut-throat competition, excess
hospital capacity and vertical and horizontal integration. Without a county
hospital, the County has a vital interest in the economic viability of the health
delivery system on which it depends, and this form of governance appears to be
the best mechanism to foster economic viability. The JPA should be
established and become operational within six months.
A less effective, although less controversial, arrangement would entail
limiting the JPA's authority to planning, monitoring and coordinating the
delivery of health services by network providers (i.e., the three hospitals and
the county clinics) to the indigent population, including county-responsibility
patients as well as Medi-Cal and indigent Medicare patients. Given the limited
scope of this governing authority, the County should be entitled to at least half
the votes on the governing body. A JPA with this narrow a scope will be less
effective in creating an economically viable, competitive, integrated health
system. While a minimal requirement for dealing with indigent health care
delivery, it misses the mark in terms of recognizing that cost-effective
provision of health services cannot be accomplished on a payer-specific basis.
It must involve all classes of purchaser. Over the long run, providing services
to county patients through cost shifting to other payers is not a viable option,
especially if the system is not competitive in the private market. Thus, the
limited JPA is not recommended. Establishment of this limited-authority JPA
should take no more than 60 days;
(3) The JPA should be advised by a Consumer AdvisoEy Council (CAC),
representing the indigent_population;
(4) The governing body and the CAC should jointly hold monthly public
meetings, alternating among the three regions within the County. These
meetings should encourage public participation and should focus on the
provision of care to indigent consumers in terms of quality, waiting time,
appropriateness of care and cultural sensitivity. All identified deficiencies
should be thoroughly investigated and the findings and plan of correction
announced in public meetings. Progress on the plan of correction should be
monitored and reported back to the public. This process should include
employment of a patient ombudsman at each hospital and periodic patient
surveys;
(5) All hospitals should be obligated to a 30 year contract, with severe
financial penalties for cancellation;
(6) All services to county-responsibility patients should be provided within
an aggregate expenditure limit approximating the current county subsidy for
inpatient and emergency medical services. Within this limit, the hospitals
-15-
should recognize their responsibility to reimburse the County for inpatient
services provided by county-employed physicians at levels comparable to their
salaries (i.e., Medi-Cal payment shortfalls will be a hospital responsibility);
(7) The aggregate expenditure limit should be adjusted annually for
economy-wide inflation and changes in enrollment. The inflation adjuster
should be based on the Hospital Market Basket Index, which serves as a basis
for Medicare prospective payment adjustments. This index is designed to
measure specific inflationary pressures on hospitals, as opposed to the
Consumer Price Index, which measures retail price changes affecting
consumers;
(8) Just as the County would have a maintenance of effort requirement
regarding the base-line subsidy, with annual adjustments, so should the
hospitals have a maintenance of effort requirement regarding provision of
unreimbursed charity care. Mt. Diablo and Brookside, during the 1994 fiscal
year, collectively provided approximately $2.6 million in charity care, on a cost
basis. These expenditures should not be shifted to the county taxpayers through
the enrollment adjustment process;
(9) The hospitals should be required to accept all patients who would have
been treated at Merrithew, including AIDS, detention, homeless, substance-
abuse, tuberculosis and psychiatric patients. Psychiatric patients should be
treated on the Mt. Diablo campus, and unless, or until, Brookside develops an
inpatient psychiatric program, adequate capacity should be obtained from East
Bay Hospital through a subcontract with Brookside;
(10) The family practice residency program should be maintained,
headquartered at one location and administered by the current leadership.
There are serious doubts whether it will be feasible under the proposed
arrangement to maintain the program. These doubts concern potential
decentralization, lack of experience in the district hospitals and possible
incompatibility of medical practice patterns at the district hospitals and
requirements for an effective family practice training program. This is a highly
valuable program for the entire health care community and its continuation
should be assured;
(11) Merrithew Memorial Hospital medical staff should be fully integrated
into the staffs of the appropriate district hospitals, with privileges consistent
with those held at Merrithew. Given Merrithew's reputation for high quality
care, such integration should not be a problem. Thus, should credentialling
problems occur, the most likely cause will be "turf' conflicts, not medical
competence. These conflicts should not be tolerated. At least for some interim
period, Merrithew staff should remain as county-employed, salaried physicians,
-16-
with hospitals reimbursing the County for their services at agreed-upon rates,
consistent with current expenditures. If, and when, under the comprehensive
JPA model, health care is provided in a seamless manner to public and private
patients, other arrangements could be considered (e.g., employed by Contra
Costa Health Plan or another group);
(12) Current Merrithew Memorial Hospital employees shouldremain
employees of the County and be dispatched to the district hospitals as
appropriate. Health care effectiveness dictates that the personnel most able to
care for the Merrithew patient population should be utilized to the maximum
extent feasible. Fairness dictates that since the surge in volume to occur at the
district hospitals, and associated employment opportunities, derives solely from
closing Merrithew, all staffing increases at the district hospitals should come
from the Merrithew pool. Maintaining these employees' county-employed
status, at least during a reasonable transition period, will minimize conflicts
involving pensions and fringe benefits. The district hospitals would contract
with the County for employee services. Moreover, this arrangement should
enable the district hospitals to increase staffing without offering first rights of
refusal to their former employees. Since the proposed network, by more fully
utilizing excess capacity at the district hospitals, should result in a less costly
system, total employment (i.e., present employment levels at Merrithew and the
three district hospitals) may shrink. This could be ameliorated by the districts'
offering early retirement incentives to their current employees and the
reopening of Los Medanos. With respect to the latter, the bulk, if not all, of
the restaffing should be obtained from the Merrithew pool. Again, the only
realistic hope of Los Medanos reopening as an acute facility comes from the
closure of Merrithew;
(13) The district hospitals should immediately collectively absolve the
County of its defeasance obligation of approximately $25 million. While the
current proposal from the district hospital deals with this issue on an annual
basis in the context of a reduction in annual reimbursement, should the program
fail, the County will be responsible for the outstanding balance of the
defeasance costs. Under this recommendation, should the program fail prior to
the defeasance obligation being fully retired, the district hospitals would be
required to fully defease the obligation;
(14) The district hospitals should collectively establish and fund a "Seismic
Safety Construction Account" to assure that all facilities will comply with all
state seismic-safety codes through the year 2025. This account will be funded
by annual contributions of at least $2 million by the district hospitals. If
necessary, the debt incurred in financing construction to meet seismic safety
codes will be secured by the hospitals on a collective basis. Should required
construction or facility acquisition not proceed and an essential facility be
-17-
forced to close (e.g., Brookside Hospital), all proceeds in the fund will revert to
the County. The district hospitals, through the JPA, should develop, and
periodically update, a seismic safety construction and acquisition plan,
prioritized in terms of the most vulnerable facilities. The probability of at least
Brookside Hospital being required to undertake a costly construction project
prior to 2008 is high (a virtual certainty). Should such construction not
proceed, the County will be left with a major hole in its delivery system and
could be pressured to partially finance needed construction, above and beyond
its annual expenditure. Thus, such a fund is necessary, along with significant
sanctions for noncompliance; and
(15) To preserve and enhance the Contra Costa Health Plan, that plan should
be granted "most favored nation" status with respect to all managed-care
contracts negotiated by the district hospitals. The "most favored nation"
provision should guarantee the CCHP the lowest price received by each district
hospital according to business line (i.e., Medi-Cal, Medicare, commercial and
Workers' Compensation), regardless of volume.
END NOTES
1. "Joint Hospital str t Proposal to: Contra Costa County Board of Supervisors," January
17, 1995.
2. Annual Hospital Financial Disclosure Reports, Office of Statewide Health Planning and
Development, hospital fiscal periods ending between June 30, 1982 and June 29, 1983, and
between June 30, 1991 and June 29, 1992.
3. Ibid.
4. Prospective Payment Assessment Commission, Medicare and the American Health System:
Report to Congress, Chicago: Commerce Clearing House, June 1993, 91-92.
5. M.R. Gold, "HMOs and Managed Care," Health Affairs, 10:4 (Winter 1991), pp. 189-219.
6. op. cit.
7. Marion Merrell Dow Managed Care Digest, 1993.
8. Gold, op. cit.
-18-
9. Marion Merrell Dow, op. cit.
10. Population Projections by Race/Ethnicity for California and its Counties 1990-2040,
Department of Finance, April 1993.
11. Letter from T. Rich McNabb, M.D., January 23, 1995.
-19-
TABLES
Projected Impact of Reduction of Disproportionate-Share Funds
If DSH re SB 855 and SB 1255 are zero and SB 1732 remains
Subsidy before bldg $21,700,434
Capital $3,500,000
Medicare shortfall
Total subsidy $25,200,434
If DSH drops by 1/2
Subsidy before bldg $16,730,252
Capital $1,750,000
Medicare shortfall
Total subsidy $18,480,252
If DSH drops by 1/4
Subsidy before bldg $14,245,160
Capital $875,000
Medicare shortfall
Total subsidy $15,120,160
TABLE 1
Based on 1993-94 Volume and Subsidies
Incremental Revenue to District Hospitals
ti
Total Inpatient Per PD
Net Rev Less DSH $42,730,758 $36,374,974 $789
County Subsidy $11,760,069 $6,639,739 $144
Marginal Revenue to Districts $54,490,827 $43,014,713 $933
Total Cost to County $65,782,595 $54,049,800 $1,172
Net DSH $13,440,365 $13,440,365 $292
Non oper $1,351,403 $1,094,722 $24
Subsidy $11,760,069 $6,639,739 $144
Set Aside $3,500,000 $3,500,000 $76
Net Subsidy $8,260,069 $3,139,739 $68
Marg. Rev Less$3.5M $50,990,827 $39,514,713 $857
TABLE 2
Based on 1993-94 Volume and Subsidies
Incremental Revenue to District Hospitals
Total Inpatient Per PD
Net Rev Less DSH $42,730,758 $36,374,974 $789
Less 20%Inpatient $35,455,763 $29,099,979 $631
County Subsidy $11,760,069 $6,639,739 $144
Marginal Revenue to Districts $47,215,832 $35,739,718 $775
Total Cost to County $65,782,595 $54,049,800 $1,172
Net DSH $13,440,365 $13,440,365 $292
Non oper $1,351,403 $1,094,722 $24
Subsidy $11,760,069 $6,639,739 $144
Set Aside $3,500,000 $3,500,000 $76
Net Subsidy $8,260,069 $3,139,739 $68
Marg. Rev Less$3.5M $43,715,832 $32,239,718 $699
TABLE 3
Based on 1993-94 Volume and Subsidies
? Projected AIDS Patient Days at District Hospitals
AIDS Days 11992 12000 1 Change I Without Merrithew and Los Medanos
Total IChange JTotADC jChngADC
Los Med 115 205 90 0 -115 -0.32
Mt. D. 268 616 348 1923.5 1655.5 5.27 4.54
Brookside 329 628 299 1935.5 1606.5 5.30 4.40
Merrithew 1121 2410 1289 0 -1121 -3.07
All Other 942 2181 1239 2181 1239 5.98 3.39
Total 2775 6040 3265 6040 3265 16.55 8.95
AIDS Days 11992 12000 lChange I Without Merrithew
Total IChange ITotADC IChngADC
Los Med 115 205 90 1008.33 893.33 -0.32
Mt. D. 268 616 348 1419.33 1151.33 3.89 3.15
Brookside 329 628 299 1431.33 1102.33 3.92 3.02
Merrithew 1121 2410 1289 0.00 -1121.00 -3.07
All Other 942 2181 1239 2181.00 1239.00 5.98 3.39
Total 2775 6040 3265 6040 3265 16.55 8.95
TABLE 4
Based on August 16, 1994 Memo from Wendel Brunner, MD
P ;ins
County Hospital Petition
We, the undersigned Nurses at Mt. Diablo Medical Center, have always
demonstrated our commitment to care for all types of patients. We are ready
and willing to care for all County patients and feel that adequate resources
exist in the community to do so. For this reason, we do not support the
rebuildiniz of Altrrithew County Hospital.
Date Name Department/Unit
t-aO gam'
�1"j �� �1�Q► /
Co r L.0 . ("' � G
136
i s i Q
County Hospital Petition
We, the undersigned Nurses at Mt. Diablo Medical Center, have always
demonstrated our commitment to care for all types of patients. We are ready
and willing to care for all County patients and feel that adequate resources
exist in the community to do so. For this reason, we do not support the
rebuilding of MQrrithew County Hospital.
Date Name Department/Unit
County Hospital Petition
We, the undersigned Nurses at Mt. Diablo Medical Center, have always
demonstrated our commitment to care for all types of patients. We are ready
and willing to care for all County patients and feel that adequate resources
exist in the community to do so. For this reason,we do not sungort the
rebuilding of Merrithew County Hospital.
MOM
Date Name Department/Unit
CIA-
%!tl �
County Hospital Petition
We, the undersigned Nurses at Mt. Diablo Medical Center, have always
demonstrated our commitment to care for all types of patients. We are ready
and willing to care for all County patients and feel that adequate resources
exist in the community to do so. For this reason, we do notsunnnrt the
rebuilding of Merrithew County Hospital.
Date Name Department/Unit
AbLje_
74
11
a S— c -P ¢,
County Hospital Petition
We, the undersigned Nurses at Mt. Diablo Medical Center, have always
demonstrated our commitment to care for all types of patients. We are ready
and willing to care for all County patients and feel that adequate resources
exist in the community to do so. For this reason, we do not sunnortthe
rebuilding of Merrithew Countv Hospital.
Date Name Department/Unit
JU
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1-22
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County Hospital Petition
We, the undersigned Nurses at Mt. Diablo Medical Center, have always
demonstrated our commitment to care for all types of patients. We are ready
and willing to care for all County patients and feel that adequate resources
exist in the community to do so. For this reason, we do not support the
rebuilding of Merrithew County Hospital.
Date Name Department/Unit
County Hospital Petition
We, the undersigned Nurses at Mt. Diablo Medical Center, have always
demonstrated our commitment to care for all types of patients. We are ready
and willing to care for all County patients and feel that adequate resources
exist in the community to do so. For this reason, we do not support the
rebuilding of Merrithew County Hospital.
GNMONNOWNDate Name Department/Unit
County Hospital Petition
We, the undersigned Nurses at Mt. Diablo Medical Center, have always
demonstrated our commitment to care for all types of patients. We are ready
and willing to care for all County patients and feel that adequate resources
exist in the community to do so. For this reason, we do not support the
rebuilding of MQrrithew County Hospital. �)
0
Date Name Department/Unit
l
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Lg-7
13-5
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County Hospital Petition
We, the undersigned Nurses at Mt. Diablo Medical Center, have always
demonstrated our commitment to care for all types of patients. We are ready
and willing to care for all County patients and feel that adequate resources
exist in the community to do so. For this reason, we do not support the
rebuilding of Merrithew County Hospital.
Date Name Department/Unit
U
1
-
County Hospital Petition
We, the undersigned Nurses at Mt. Diablo Medical Center, have always
demonstrated our commitment to care for all types of patients. We are ready
and willing to care for all County patients and feel that adequate resources
exist in the community to do so. For this reason, we do not support the
rebuilding of Merrithew County Hospital
Date Name Department/Unit
i/�9/9 s JA-0
County, Hospital Petition
We, the undersigned Nurses at Mt. Diablo Medical Center, have always
demonstrated our commitment to care for all typesrof patients. We are ready
and willing to care for all County patients and feel that adequate.resources
exist in the community to do so. For this reason, we do not support the
rebuilding of Merrithew County Hospital.
Date Name DepartmentiUnit
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County Hospital Petition
We, the undersigned Nurses at Mt. Diablo Medical Center, have always
demonstrated our commitment to care for all types of patients. We are ready
and willing to care for all County patients and feel that adequate resources
exist in the community to do so. For this reason, we do not support the
rebuilding of Merrithew County Hospital.
Date Name Department/Unit
County Hospital Petition
We, the undersigned Nurses at Mt. Diablo Medical Center, have always
demonstrated our commitment to care for all types of patients. We are ready
and willing to care for all County patients and feel that adequate resources
exist in the community to do so. For this reason, we do not support the
rebuildina of Merrithew County Hospital.
Date Name Department/Unit
/q S--
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1-078-?5 -
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i pRICHMOND BRANCH
3 NgACP National Association For The Advancement of Colored People
IMS
1;117 MACDONALD, Richmond, CA;;94801 : (510) 2i6`4*166 Fax 2±15-9223,`
_
January 3 0,; 19 45
Gayle Bishop, Chair:
Board 'of Supervisors
Contra Costa County
Pine Street-, Room -�1�07
Martinez, CA 94553
Dear -Supervisor Bishop
In'J'antic ipat1on``of the potential \closure, of Merrithew Hospital,`At
ssential that you be reminded about thewmpact on ,employees,
not only in , ,e' Yio'spita1-an d°-the Health Services :Department, but
several other County `departments as .well The magnitude of the\
pro�ect`ed layof.:fs .f.ar surpasses .any previous `reductions in force
"experienced in,,the. `County's 'entire history
If the /hosp.1talL-were' to,, .1 e," an estimated 1, 100 (permanent and
temporary) filled-positions,',could',be.'eliminated As you are aware,
' before:, 'any , of these permanent "employees could be ,,;laid `offk, ` .all
temporary employees; in";the .effected .classes throughout° the entire
Department:'°would need . to be separated first.. If ';rthe need, :for, '.
temporary , staff, rn`, other ''divisions .,reinains,i laid .off ,permanent
employees, :would fill those: needs
'.
When layoff's occur, :the ;least, senior .employees1 will be -displaced- or
laid-off Some' clerical employees may be placed -in other: county
departments, assuming there `are existing funded vacancies. Because
the majority o'f' the other .positions 'that would be,,,' ,eliminated •are'
s,pecif' c to health"care, the individuals would not .be ' laced; in
P
other departments;.ii-h�1ess r-etra n ng ;is avaii3abie
An additional consequence yet undefined will result The Health
Services Department suppbrts _, Ymany, "overhead" departments
s .
throughout-the ,County To be specific,, the closure of ;the ;hosp tai
will ; inevitably impact j ;other- departments sand `;could , result.,'in• ;
layoffs in"the'-General-`Services,, AuditorPersonnel ' 4,
County;:.Counsel`' and probably a few 'others.
In:
Dr.,.'-HenkvW. Zaretsky1s report to the :Board, he'recommends that
any Merrithew .emp,loyees laid off by a decision to`. close the
hospital :and contract with district' hosptalsmust be:given
F - absolute priority -ithe hir`ing ,of any,new ,staff; at,;the district
hospitals This; condition " is essential and must ':not be
compromised.. Dr_ , Zaretsky's assessment thatMerrithew employees
should;•remain em to ees„ of:`.the; Count
- p' y -y, tb ensure .that seniority,:.
ret irement;, and- other interests are ".preserved I lequaily,,important
-2-
we believe it is imperative to include one additional assurance to
these conditions; that the significant strides in affirmative
action which Contra Costa County has achieved in recent years not
be decimated by the agreement with the district hospitals. we have
worked too hard and too long to allow years of careful, productive
and progressive change to unravel in one board action.
sincerely,
Lloyd G. Madden, President
cc: Board of Supervisors
Phil Batchelor, County Administrator
Black Employees' Association Contra Costa County
`
PUBLIC AND ENVIRONMENTAL
a.
HEALTH ADVISORY BOARD
Members:
Scott Anderson
Kevin Barnett
Doris Copperman
Carlota Dunhower
Donna Gerber January 25, 1995
An Hatchett
Michele Jackson
Edith Loewenstein
Bessanderson McNeil
Julio Mendoza
Dorothy Oda
Carolyn Robinson Members, Board of Supervisors
Mary Rocha Contra Costa County
Jean Siri
Inh Sooksampan 651 Pine Street
Rev. Curtis A.Timmons Martinez, CA 94553
William Vega
Ex-Officio Members: Dear Board Members:
Joseph Hafey
George Kaplan
The Public and Environmental Health Advisory Board (PEHAB) has
Mary Anne Morgan closely followed the debates over the county hospital and has recently
Executive Assistant to the nim
organized two community forums to educate the public about the County's
Public&Environmental Health or g � P �'s'
Advisory Board health care system and about the role of hospital care in the public health
of our communities. We received many positive comments about the
forums from those who attended, indicating that they provided residents
with an opportunity to hear different perspectives, ask questions and have
a voice in this important debate.
PEHAB strongly believes that a replacement county hospital is an
essential component of a comprehensive public health care system. We
are sending you a copy of the guest editorial PEHAB originally wrote last
September, which outlines our position on this critical issue. After
reflecting on the community forums, and particularly on the concerns that
were repeatedly raised regarding quality of care and guaranteed access to
care for low income and minority residents, we have reaffirmed the
position we outline in this editorial.
As you reach a decision on the replacement hospital, we urge you to
weigh strongly the needs of the client population currently served by
Merrithew Memorial Hospital, and the integrity of the public health care
system.
Sincerely,
Julio Mendoza Jean Slri
Contra Costa County Co-Chair, PEHAB Co-Chair,PEHAB
Health Services Department
597 Center Ave., Ste.200
Martinez, CA 94553
(510)313-6715
FAX: (510)313-6721
PUBLIC AND ENVIRONMENTAL
HEALTH ADVISORY BOARD
Members:
Scott Anderson
Kevin Barnett
Doris Copperman
Carlota Dunhower
Donna Gerber
Art Hatchett GUEST EDITORIAL
Michele Jackson December 27, 1994
Edith Loewenstein
Bessanderson McNeil
Julio Mendoza The importance of a comprehensive public health care system to all of us who live
Dorothy Oda in Contra Costa County has gotten lost in the increasingly personal debate over the
Carolyn Robinson countyhospital replacement project. As our focus is primarily Public health, theMary Rocha
Jean Siri Public and Environmental Health Advisory Board (PEHAB) has never before taken
lnh Sooksampan a.position in the hospital debates of the last seven years. After extensive discussion,
Rev. Curtis A.Timmons
William Vega however, we are moved to do so because of our concern for the County's public
health care system.
Ex-Officio Members:
Joseph Haley
George Kaplan We represent all regions of the County and diverse ethnic and interest groups, and
Mary Anne Morgan our differing personal opinions regarding the replacement project reflect this. As
Executive Assistant to the a whole, however, we do agree that:
Public&Environmental Health
Advisory Board 1. The county needs a comprehensive public health care system. This
includes community-based prevention, advocacy and education, and
access to neighborhood health centers and hospital-based services.
2. Contracts with hospitals in East and West County and a replacement
county hospital are critical parts of that comprehensive system. Only
the county has the legal obligation to provide both public health services for
all county residents, and medical care to the poor and indigent. The
existence of a county hospital will continue to guarantee adequate hospital
services for low income residents. The existing county facility, because of
its substandard condition, represents discrimination of the worst order and
must be replaced.
3. Access to hospital services and primary care must be guaranteed for
all county patients. As the replacement project goes forward, the Health
Services Department should immediately supplement the services available
at Merrithew with contracts for hospital care in East and West County.
These contracts should continue through, and after, completion of the
replacement project. Community hospitals have a. responsibility to
collaborate in good faith with the county on implementing these contracts.
Adequate transportation to Merrithew must also be available, particularly in
East and West County. The recent quadrupling of the Department's shuttle
bus service from the Richmond and Pittsburg clinics to Merrithew is a step
in that direction.
Contra Costa County
Health Services Department
597 Center Ave., Ste.200
Martinez, CA 94553
(510)313-6715
FAX: (510)313-6721
Accessibility, as well as choice in selecting community-based health care and
hospital services is important to the overall health of our community. The
Center for Health in North Richmond, jointly being developed by a
partnership of the Health Services Department and the community, is an
excellent example of accessible community health services. The joint
County/Brookside venture, which allows West County residents the option of
delivering their babies either at Merrithew or Brookside Hospital, is an
example of choice.
We are aware of the tremendous financial implications involved with the Merrithew Hospital
replacement project. If the replacement hospital is not built, state and federal funds for construction
will be withdrawn. Based on the responses from two previous requests at the legislative and
administrative levels, we know that this money is not available for any other purposes or services.
In addition, the county would have to pay up to an estimated $25 million from county funds in
penalties and costs. Contra Costa County also currently receives $11 million yearly in federal
money specifically for public health care for the indigent. Without the hospital, this funding will
cease. This financial loss would drastically reduce the level of health and medical care services to
every Contra Costa resident. It would result in nothing less than a public health disaster.
PEHAB believes that the comprehensive public health care system that we envision, which includes
community and county hospital services, will ensure the best public health care for everyone.
Submitted by Jean Siri and Julio Mendoza, Co-Chairs, for the Public and Environmental Health
Advisory Board.
The Public and Environmental Health Advisory Board (PEHAB) is a citizens group appointed by the
Board of Supervisors to advise the Contra Costa County Health Services Department on public and
environmental health issues.
2
u RICHMOND BRANCH
NSP National Association For The Advancement of Colored People
~ 1117 MACDONALD, Richmond, CA 94801 (5.10) 236-1166 Fax 215-9223
January 30, 1995
Gayle Bishop, Chair
Board of Supervisors
Contra Costa County
651 Pine. Street, Room 107
Martinez, CA 94553
Dear Supervisor Bishop:.
In anticipation of the potential closure of Merrithew Hospital, it
is essential that you be reminded about the impact on .employees,
not only in the hospital and:the Health Services Department, but
several other County departments as well. 'The magnitude of the
projected layoffs far surpasses any previous reductions in. force
experienced in .the County's entire history.
If the hospital were to close, an estimated 1, 100 _(permanent and
temporary) filled positions could be eliminated. As you .are aware,
before any of these permanent employees could be laid-off, all
temporary employees in the -effected classes throughout the entire
Department would need to be separated first. If .the need for
temporary staff in other divisions remains, laid-off permanent
employees would fill those needs.
When layoffs occur, the least senior employees will be displaced or
laid-off. Some clerical . employees may be. placed -in other county
departments, assuming there are existing funded vacancies. Because
the majority of ' the other .positions that would be eliminated are
specific to health care,. the individuals would not be placed in
other departments unless retraining is available.
An' additional. consequence yet undefined will result. The Health
Services , Department supports many, "overhead" departments
throughout the County. To beispecific, the closure of 'the hospital
will inevitably impact other , departments and` could result in
layoffs in the General Services, Auditor:, Personnel Department,
County ,.Counsel and probably a few others.
In Dr. Henry. W. Zaretsky's report to the Board, -he recommends that
any . Merrithew. employees". laid-off - by a decision. to--. close the
hospital and contract-with district hospitals must be given
absolute priority in the ,hiring of any new:.staff. at .the' district
hospitals. This: .' condition is essential ,and must not be
compromised. Dr. Zaretsky's assessment that Merrithew employees
should remain employees of.-.the County to ensure, that seniority,
retirement and other interests are preserved is eqally_ important.
r
-2-
We believe it is imperative to include one additional assurance to
these conditions; that the significant strides in affirmative
action which Contra Costa County has achieved in recent years not
be decimated by the agreement with the district hospitals. - We have
worked too hard and too long to allow years of careful, productive
and progressive change to unravel in one board action.
Sincerely,
�j llr�,o�C �• ��t.a�.cY.P.�t�
Lloyd G. Madden, President
cc: Board of Supervisors
Phil Batchelor, County Administrator
Black Employees' Association Contra Costa County
} THE LEAGUE OF WOMEN VOTERS OF DIABLO VALLEY
500 ST.MARY'S ROAD,P14,THE BOARDROOM,LAFAYETTE,CALIFORNIA 94549(510)283-2235
January 30 , 1995
Gayle Bishop, Chair
Contra Costa County Board of Supervisors
651 Pine Street
Martinez , CA 94553
Dear Supervisor Bishop, Members of the Board:
The Diablo Valley League of Women Voters supports the
rebuilding of Merrithew Memorial Hospital . The League ' s
Health Care Committee has followed the debate on whether or
not to rebuild the hospital since 1992 . We supported the
construction of Merrithew in 1992 and we have chosen not to
update that position until now. Our initial support was
based on the belief that the medically indigent and Medi-Cal
patients require special services that can best be served by
a hospital focused on their needs . Also, at that time and
until today we have not seen a proposal from the three
district hospitals that would assure the citizens of Contra
Costa County that an equitable agreement could be reached
between them and the Health and Human Services Department .
We had the opportunity to review and discuss the report done
by Dr. Zaretsky on this issue and we agree with him that
given the information we have at this time the rebuilding of
the hospital should go forward as planned.
While we believe that a Joint Powers Agreement ( J . P.A. ) is
potentially a solution, we believe that a good resolution to
administrative, personnel and facilities management is a very
remote possibility - given the reluctance to serve the poor
that the three hospitals have portrayed in the last three
years .
We agree with the report on the issues. of down side risks
both to rebuilding the hospital and a J . P.A. but with the
current financial information we believe that the risk to
contracting with two financially troubled institutions is
greater than the risk involved with state and federal
financing of a new facility.
We agree that contracting with hospitals in West and East
County should be continued and perhaps expanded in addition
to the new facility so that the needs of the citizens in
those communities will be better served.
In the last year the League of Women Voters has worked on the
national and state levels for health insurance for the
uninsured working poor, those between jobs and those with
pre-existing conditions . In the absence of any national or
state legislation to insure this population, Contra Costa
County' s Basic Adult Care program offers the residents of
Contra Costa County a very valuable service in addition to
its service to the medically indigent . We believe that a
core county hospital is the most cost effective way to serve
this population.
If you decide not to rebuild, certainly long term contracts
with the hospitals are a .must and we agree that all fifteen
of Dr . Zaretsky ' s conditions must be agreed upon.
We understand that this is not an easy decision for the Board
of Supervisors but we urge you to accept Dr . Zaretsky ' s
recommendation and rebuild Merrithew.
Sierely,
Joan Ward, Member of the
Executive Committee
L .W.V. D.V
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