Various officials have asked the Eden Township Healthcare District to provide financial support for the San Leandro Hospital of up to $20 million between 2014 and 2015. This article is designed to clarify for the public the district's assets and the restrictions that are on them.
The district purchased the hospital and related assets in July 2004 and leased those assets to Eden Medical Center to operate as is. The district's investment in the hospital in 2004 was more than $25 million. The lease obligation of EMC was to operate the hospital until July 1, 2007. Lease changes in 2008 extended this to July 1, 2009. In September 2012, the district transferred title of the hospital, a $17 million value, to Sutter Health.
On Sept. 28, 2012, the district's transfer of the hospital's title was a $25 million investment in meeting its mission of providing health care services to the citizens of San Leandro and the neighboring community. It had done so for eight years with the help and support of Sutter, who also absorbed some operating losses incurred of the hospital.
In March and April, the district further committed 50 percent of its available cash to AHS and Sutter, subject to existing loan covenants. This was to support the hospital for three years, and to support it as an acute general hospital with emergency services.
On May 29, the board further committed to pursue vigorously every option to meet additional needs identified by Alex Briscoe, director of the Alameda County Health Care Services Agency, in keeping the hospital open.
The Bay Area News Group accurately reported that Briscoe understood the difficult choices facing the district.
The district has three real property assets and just over $11.5 million in the bank as of April 30. However, loan covenants restrict that $8 million be held in reserve. The three properties are medical buildings in San Leandro, Castro Valley and Dublin. They were collectively appraised at about $56 million in November 2012 and used to secure a loan of $45 million.
The district's unencumbered assets as of April 30, were worth about $12.5 million if everything could be liquidated. If the loan were to be paid off in a sale, the district would have net cash remaining at the end of such liquidation of $20.5 million.
The district serves all of its residents and provides grants as well as supporting services, including Eden Medical Center and St. Rose Hospital. The district has committed $8.6 million to such projects since 1998 and funded more than 60 nonprofit agencies serving thousands of patients.
The board members are considering whether it is right to one-third of the district residents to liquidate the assets of the district.
There is considerable doubt that any liquidation of property can be done without a vote of the residents of the district, which includes Hayward, Castro Valley and San Leandro (along with Ashland and Cherryland). What the voters will think of such an investment is not for me to speculate on.
The future of the district looks bright: the buildings are rented and the revenues are increasing. We can make more contributions in the future and asset values will increase. To get there, the board needs to control the district's assets.
The district, if it continues to exist, can continue working to support the diverse needs of the area.
Dev Mahadevan is chief executive of Eden Township Healthcare District.