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Eden Township Healthcare District owned San Leandro Hospital until it lost a court case last spring.

CASTRO VALLEY -- Eden Township Healthcare District has a problem: The majority of its residents don't know it exists, much less what it does.

The district was created in the 1940s to build a hospital, Eden Hospital, for a suburban community with a booming population. The district no longer owns a hospital, and now awards grants from money it receives from investments and rental property to nonprofit agencies.

"We are supporting the existing safety net in the community," board Chairwoman Carole Rogers said.

The Eden Township board will meet Wednesday to consider how best to continue to provide health care to the community in the next five years and increase the district's visibility.

More than half of residents surveyed by a consultant last year had not heard of the district, which covers Hayward, San Leandro, San Lorenzo, Castro Valley, Ashland, Cherryland and Fairview.

County Supervisor Wilma Chan said the district needs to take a hard look at its reason for existence.

"I'm kind of (of) the opinion that if a district isn't running a hospital or doesn't have a very clear health care mission, it should dissolve," she said. "It shouldn't just rent buildings to others who provide health care services, but actually provide health care to the community."

Eden Township owns three medical office buildings, which it rents out.

Supervisor Richard Valle said that voters empowered the district board to operate a hospital. "If they're not, they need to create an exit strategy," he said.

County supervisors throughout the state are eyeing special districts as possible sources of funds, especially after redevelopment agencies were eliminated, said Dev. Mahadevan, Eden Township CEO.

"The legal question is murky as to whether supervisors have the right to dissolve a health care district without a vote of the people," he said. "That's a question that's never been tested. The district board may not have the authority to turn over its assets; we don't know that."

There are 78 active health care districts in the state, according to Tom Petersen of the Association of California Healthcare Districts. Of those, 33 no longer run hospitals, he said.

At one time, the district owned Eden Hospital, now called Eden Medical Center in Castro Valley. In 1998, the district sold the hospital to Sutter Health, which rebuilt it to meet state seismic safety standards. The $320 million hospital opened in December.

Eden Township also owned San Leandro Hospital until it lost a court case last spring.

Sutter had operated the hospital with an option to purchase it, which it exercised in 2009. Meanwhile, Alameda County Medical Center announced that it had reached an agreement with Sutter to run San Leandro Hospital not as a full-fledged hospital with an emergency room, but as a physical rehab and urgent care facility.

ACMC wanted to use the hospital to replace its Fairmont campus, which does not meet seismic standards. In an attempt to keep the hospital and its emergency room open, the Eden Township district board voted not to approve the sale to Sutter.

Sutter sued the district, and Eden Township countersued. The case went all the way to the state Supreme Court, which last spring let an earlier ruling in Sutter's favor stand.

The lawsuit against Sutter Health has cost Eden Township about $2.6 million in legal and consulting fees, Mahadevan said. The two sides are in arbitration on costs and damages.

Sutter has not said what its plans are for the hospital. "We are still considering all our options and are in ongoing discussions to determine how best to meet the needs of the community," said Sutter Health spokeswoman Stacey Wells.

"I'm hoping there will be a deal to keep San Leandro Hospital open," Chan said. If that happens, "all the assets of Eden should go to that effort."

Rogers said she would support keeping the hospital open if that happens. "Right now, Sutter's running it and hasn't asked for our help," she said.

Since 1988, Eden Township has issued $8.6 million in grants to agencies such as Davis Street Family Resource Center's clinic, which provides health care, dental care and physical therapy to 1,000 families annually.

"With Obamacare coming, we're going to need a lot more primary care providers," Rogers said. "I see our role in expanding existing nonprofits' ability to provide primary care as a big priority."

Contact Rebecca Parr at 510-293-2473 or follow her at Twitter.com/rdparr1.

Eden Township Healthcare District
The directors will discuss the district's strategic plan.
When: 5:30 p.m. April 17
Where: 20400 Lake Chabot Road, Suite 104, Castro Valley