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Alameda Hospital Director Speaks Out on Financial Condition

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.

7 comments to Alameda Hospital Director Speaks Out on Financial Condition

  • KZ

    None of this matters to me. I want a hospital in Alameda. I don’t want to live in a city without a hospital.

  • Barbara

    From Bonta’s web site:

    “Prior to being elected to the City Council, Rob was an elected member of the Alameda Health Care District Board of Directors, where he played a key role in stabilizing the finances of Alameda Hospital.”

    Really? Is Alameda better off? Hmm…

  • cg

    Seems Bonta has learned the first rule of politics: LIE about your own record!

  • Suzy

    I owned a home in Alameda from 1999 to 2011. We finally moved out of town last year because the school system just really sucks that bad and we were done with a town that won’t support it’s children. Every year I would read our property tax bill and see that we were paying nearly as much for the hospital as we were for the schools.

    My 2 kids went to school 5 days a week. During our 12 years in Alameda I went to the ER for a broken rib after a fall from a ladder and my husband went once after cutting his finger and needing a couple of stitches. The AUSD is BROKEN! The teachers are demoralized. The PTAs are demoralized. The students are demoralized. Only the most deluded, in-denial co-dependents believe that things are going well in Alameda schools.

    In the past decade most of our friends moved out of town to go to more school-friendly communities. We finally asked ourselves, “why are we still here?” And then we moved. Now our kids go to school in a town with only 2 large elementary schools. All of the funds are channeled into those 2 schools and everyone is invested in them. Our kids are finally thriving!

    Now tell me, is the hospital REALLY so vital that it deserves so much money out of our pockets compared to the starving Alameda schools? Alameda is experiencing a massive “nice families” drain – regular working- and middle-class families like my own who are regretfully relocating to more child-friendly communities. What sorts of people will be filling that gap?

  • Barbara

    Suzy,
    You said “we were done with a town that won’t support it’s children”, what are you talking about?
    People like you demoralized schools, teachers and system by supporting taxes in the name of “better schools”; people like you and families like yours, those “nice families”, which believe in more taxes for hospitals, police and schools. Same message over and over again. More taxes, more taxes, more taxes…
    There you have it.
    Is it better? How is this working for Alameda?
    We pay the highest property taxes in the State of California for schools.
    We do not need some of the schools we support. The choice for parents is not there, and yet families are demanding more taxes, more taxes, more taxes…
    Yet, I believe that there are people in Alameda who can make a difference, and are ready to wake-up…

  • cg

    “I want a hospital in Alameda”. Not all hospitals are equivalent. If a hospital doesn’t offer the services you need or doesn’t consistently meet the standard of care, do you still want it? At what upper limit of cost to you? This statement makes as much sense as saying Police/Fire are entitled to an unlimited amount of funds, no matter what else goes broke in the meantime. This is not logical thinking! Police/Fire have already demonstrated there is no upper limit to what they will ask for if they can get it. Unfortunately, the hospital & schools are demonstrating the same disregard for the citizens they serve.

  • Barbara

    cg,
    well put!
    Thanks.

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