Through a parcel tax, Alameda taxpayers subsidize Alameda Hospital to the tune of roughly $6 million per year. Recently, in an exchange of op-ed articles in the local press, former Alameda City Councilmember Frank Matarrese suggested that we can no longer afford to support a full service hospital in Alameda, and Alameda Hospital CEO Deborah Stebbins acknowledged challenges but expressed a commitment to the community.
Action Alameda News asked Health Care District Board member Elliott Gorelick, a dissenting voice on the board, for his perspective on Alameda Hospital.
By e-mail, this is what he told us:
The salient points are the following:
1. As I see it, there has to be a value to any expenditure of public funds and I fail to see the value in the $5.7 million dollar subsidy provided to the Hospital every year by Alameda taxpayers. There is no evidence whatsoever that health outcomes are improved because the Hospital exists and much indirect evidence that outcomes are worse.
2. The state mandated seismic changes will cost $10,000,000 more or less. The monthly cash flow to support the debt coverage on this can be calculated, but call it in the ballpark of $150k. There is no indication that the District can generate that kind of positive cash flow (even with the subsidy.)
3. The Board talks about the lack of long-term debt of the District, but the District’s long-term obligations in the form of both balance sheet and significant off-balance sheet liabilities continues to grow.
4. The balance sheet of the District is a disaster. The only way that the Bank of Alameda has been able to continue to loan funds to the District is a continuous relaxation of loan covenants as the District serially breaches its commitments and the fact that, ultimately, the District is obligated to repay 100% of any liability. Government entities, like the District, can declare bankruptcy to renegotiate contracts and terms, but cannot default by law if the taxing authority exists to service the debt. This is an oversimplification, but it is the basic model.
5. The financial outlook for healthcare providers is challenging, but no more challenging than for small, independent entities not integrated into comprehensive care systems. Thus, the financial outlook for the District is likely to get worse, not better.
6. New services may or may not be profitable, but their profits are speculative and Management has incentive to be overly optimistic. Even if we take Management projections at face value, it is likely that the cash flow from these new services will fall short of the needs of the acute care hospital (again, even with the subsidy of the parcel tax). At the same time, each of these new services represents significant commitments of management time and District capital that overextends both.