Saving Doctors Medical Center, A Team Richmond Working Paper

By Eduardo Martinez

Doctor's Medical Center remaining a full service hospital is vital to the health and economy of West Contra Costa. We must keep it open. These are our thoughts as the present time.

Doctors Medical Center can be saved. If it closes, it will happen as a result of a combined failure of poor community leadership, corporate irresponsibility, and a faulty medical system. We also cannot accept a substitute stand-alone or satellite emergency hospital--the program that is being pushed by many forces, including the Contra Costa Times.

Having a real hospital in our community is not a utopian fantasy. On the contrary, every community needs a hospital, just as it needs parks, libraries, fire and police forces, and roads. An effective emergency room needs an operating room, intensive care units, and heart and stroke care. Non-emergency hospital care in the community is also required. A part of good patient care is frequent visits by family and friends. This becomes out of reach especially for low income families when the trip to the hospital is 30 miles or more without decent public transportation.

Most urban communities do have hospitals within reasonable reach. DMC has been written off as financially unsustainable simply because it serves a community with a large low-income or indigent population.

Clearly no single measure will save DMC or raise the more than $18 million per year necessary to cover its operating deficit. The attempt to save DMC through a parcel tax alone failed, but with good leadership we can pull together the elements that will make things whole.

What are these elements?

County Administration
The county needs to take over management of DMC and merge its operations into the county health system. This would provide better management and significant administrative savings.
Area Corporations
Major corporations need to make substantial contributions. This is especially true for corporations that contribute to West County's air pollution and have dangerous operations that require nearby hospitals when accidents occur. We lost a great opportunity with the recently negotiated Community Benefits Agreement (CBA) with Chevron. Had the CBA produced significant monetary support for DMC, it is likely this would have shaken loose the leadership and other elements necessary to put the hospital on a sustainable path.
Although Richmond lost this opportunity with the Chevron CBA, public pressure on refineries, chemical plants, and other industries in West County could bring several million dollars in support.
Other Hospitals
If DMC closes, more indigent patients will end up in the emergency rooms of other area hospitals. It stands to reason that if DMC stays open, area hospitals would benefit financially, and they should contribute that cost savings to keep DMC open.
City Contributions
All West County cities benefit from having a local hospital, so each city should contribute financial support to DMC.
County Contributions
a) This issue is very complicated. Much of the funding from Contra Costa County to DMC has actually been in the form of loans, leaving the West Contra Costa Health Care District on the hook to repay the county from the parcel taxes already passed. While all property owners in West County pays taxes that support the Regional Medical Center, it is not clear whether any of those funds also support DMC, which shoulders a considerable burden of indigent care from the Regional Medical Center.
b) The county has responsibility for indigent care. Yet as the Federal Affordable Care Act (ACA) has kicked in, providing more money for indigent care, the county has diverted what it had been spending on indigent care to its General Fund for other purposes1.
c) If DMC closes, the cost of EMT services will go up dramatically due to the extra time required to transport emergency patients to distant care centers.
All these issues should entitle DMC to substantial support from the county.
State Aid and Reclassification
Assemblyperson Nancy Skinner introduced AB 392 in the state legislature, a bill that will allow DMC to be reclassified as a "Designated Public Hospital" along with the Regional Medical Center. The reclassification would have allowed DMC to recover additional costs for Medicare and Medicaid services. In addition, the bill provided an emergency $3 million in state aid to keep DMC open while other arrangements are being worked out. The emergency redesignation effort, which required a 2/3 vote, was defeated by opposition of some counties and the hospitals. The "bridge" money may still come through SB883.
Parcel Tax?
Parcel taxes are regressive taxes, but the state has left local communities with no way of taxing fairly those who should be taxed. If the measures outlined above are adopted, another parcel tax should not be necessary. However, if a parcel tax is still required, it would be more likely to pass if it were much smaller because government and corporations have contributed their fair share.

Given these possibilities, we have two main tasks.

Maintain political and social demands that institutions with money and power assist in keeping DMC open. The California Nurses Association (CNA) deserves our thanks for leadership in a campaign for getting us this far. But we must mobilize more support and keep the issue in the public eye.
We need leadership at all levels in the county, city, area hospitals and the community who are willing to go to the mat on this issue.

Background

On August 8, management at Doctors Medical Center (DMC) announced that the hospital would no longer accept patients arriving to the hospital by ambulance, cap its inpatient capacity at 50, and close its specialized cardiac care unit. As of August 12, the 22 to 24 emergency ambulance patients normally seen at DMC each day--including three to four considered to be in critical condition--have been diverted to other area hospitals.3

This is the first step in what Contra Costa County officials portray as the sad but inevitable demise of this essential institution. Eric Zell, Chairman of the Board of the West Contra Costa County Healthcare District, told the press, "I'm really sad for this community. At the end of the day, the people who will suffer the most--seniors, the disabled--are the people who need health care the most. For a lot of people, this will mean life and death."4

It appears that the closing of the DMC ER has already caused one death. An East Bay family of a man who had a heart attack blames the trip to Berkeley and 90 minute wait for care for his death.5

Closure of the hospital is, indeed, a question of life and death, but it has never been an inevitability. The hospital, and the residents of West Contra Costa County, are in danger today because of a long history of irresponsibility by political and corporate "leadership." Although time is short, alternatives to closing the hospital are still available. DMC can still be saved. Doctors Medical Center is Vital to our Community

Since its creation sixty years ago, Doctors Medical Center has been a key component of our community's medical care system. It is one of only two hospitals in a region of one-quarter million residents living in Richmond, San Pablo, Hercules, Pinole, and El Cerrito, along with smaller unincorporated communities in the West Contra Costa County region. DMC accounts for nearly 80% of the in-patient capacity in the area. The hospital provides almost 60% of the emergency department care in the region and (until recently) received 62% of the area's ambulance traffic. In 2013, DMC's emergency department served almost 42,000 patients.6

The West County area has unique medical needs. It is geographically isolated from the rest of the county by a range of mountains and from other communities in the region by San Francisco Bay and the Sacramento River. Interstate 80 is the principal traffic artery through the region; it is frequently congested. The I-80 corridor is home to major industrial, petrochemical and port facilities, including two major oil refineries. Their presence leads to surges in medical need. The 2012 Chevron Refinery fire, for example, sent 15,000 to seek medical treatment and created an influx of patients to DMC over the subsequent 18 days. In addition, the Hayward Fault runs through the area, creating the threat of major, disastrous earthquakes.7

DMC is also vital to Western Contra Costa County because of its role in meeting the medical needs of the area's low-income residents, a population that suffers disproportionately from poor health. It is a sad comment on our nation's medical care system that no good deed would seem to go unpunished: the hospital has been written off as financially "unsustainable" precisely because it serves the poor and the elderly. The Financial Challenge

DMC is financially challenged because it serves Contra Costa County's neediest residents. In 2013, nearly 80%of DMC patients were covered by Medi-Cal or Medicare. In addition 11% of its patients had no insurance at all.8 Reimbursement rates from Medi-Cal and Medicare cover significant less than the full cost of patient care. Typically hospitals make up for the losses they incur in serving patients covered by public (or no) insurance by what they can charge for services to patients covered by private insurance. But too few of DMC's patients have private insurance to support this strategy.

The hospital has faced ongoing financial difficulties since the 1990s. It has survived through a patchwork of funding sources and loans pieced together as the hospital lurched from one crisis to another, including a filing of bankruptcy in 2006 in the face of a $35 million deficit.9 The hospital needs additional sources of stable funding. But the leadership to create it has been missing. Now things are coming to a head.

A major source has been a "parcel" tax on land within the West Contra Costa Healthcare District. This tax provides nearly $11 million annually. But this proved to be far from adequate. In an effort to close what has grown to an $18 million yearly operating loss, the District Board called a special election on May 6, 2014 to authorize Measure C, which would have raised the parcel tax to 14 cents per square foot of taxable property, generating roughly $20 million annually. The increase required approval of two-thirds of the District's voters in a by-mail election, but only 52 percent of them voted in support of the measure.10 The reaction of the Board members was surrender. "The voters have spoken," Eric Zell, Chairman of the Healthcare District stated in a press release issued after the election, "it is now incumbent on hospital leadership and medical staff to prepare for an orderly closure..."11

The board chose a `stealth campaign" based on a polling data. The election was held separately from other elections and there was no outreach to the groups in the community that would be likely to mobilize support. It did not get the 2/3 because there was an active opposition led by some developers, the tax was very large, and there was increasing understanding that the parcel tax put too heavy a burden on homeowners. What Happens if the Hospital Closes?

"Orderly closure" is a euphemism for shifting costs to others. The most painful costs will be borne by county residents in medical need. In its report on the impact of the closure of DMC's emergency services, the Contra Costa County Emergency Services Agency stated that the effect of closure would be "catastrophic." It noted the longer travel times to reach hospital emergency services that will result. Alternative facilities are out of reach of readily accessible public transportation. Patients in need of ambulances will have longer wait times and longer trips to alternative facilities. The only other hospital in the West County area, Kaiser-Richmond, would be overwhelmed by additional patient volume, creating longer emergency room waiting times.12 Indeed, on August 15, only three days after DMC stopped accepting ambulances, Kaiser issued a press release stating that "Since the change in ambulance traffic, our ED is consistently full... we clearly cannot assume all of the ambulance traffic that is now being diverted from DMC while maintaining the quality care we are responsible for providing our members and our communities."13

The impact on Kaiser-Richmond identifies another group of "stakeholders" who will incur additional costs, the other healthcare providers in the area. In addition to Kaiser-Richmond, the Impact Evaluation report named Alameda County Highland Hospital, Alta Bates Summit and Berkeley Hospitals, Marin General, Sutter Solano, Kaiser Medical Center in Vallejo, and Contra Costa Regional Medical Center in Martinez as facilities with emergency departments that would be impacted by a shutdown of the DMC emergency department.14

DMC's closure will create costs for the County. The cost of maintaining fire services will rise as additional hours (and overtime pay) are required when fire department personnel accompany critical patients that are taken by ambulance to more distant hospitals. The cost of services provided by American Medical Response (for EMS services) will also rise with longer trips to emergency rooms. These are estimated to come to over $2.5 million annually.15 An additional set of costs, which are indirect, harder to quantify, but no less real, will be those associated with the loss of an important public amenity. Access to medical care has implications for an area's economic development; it attracts residents and encourages business investment.16 Leaving Money on the Table

Richmond's City Council had a unique opportunity to contribute to DMC's financial stability through its negotiations with Chevron over a Community Benefits Agreement that was made in exchange for the Council's approval of the company's reinvestment plan for its refinery, the Refinery Modernization Project. Although the City's Planning Commission had made a recommendation to the Council that it seek funding for DMC as part of the Agreement, the package of benefits failed to include funding for the hospital.

Two councilmembers, McLaughlin and Beckles, insisted that significant money for saving DMC be included. Two councilmembers. Booze and Bates, refused to demand anything from Chevron, Three councilmembers, Butt, Myrick, and Rogers raised the issue in negotiations but were unwilling to insist that it be part of the agreement when Chevron resisted giving upfront money. But when Rogers insisted that his pet project, Easy Go, required $1 million in immediate funding, Chevron agreed. Chevron spokespeople claim that it was the Councimembers who rejected using the money for DMC. Rogers even claimed it was an act of support for the hospital, Becasue taking Chevron money would discourage other funders. Later many involved in the hospital admitted that any substantial money form Chevron would have been valuable in setting up a plan to save the hospital.17

Two Council members, Bates and Booze, refused to lift a finger to press Chevron to participate. In fact their supporters were demanding that the Chevron Modernization be passed without attempting to "extort: more money from Chevron." Three Council members who represented "swing votes" on the body, Tom Butts, Jim Rodgers, and Jael Myrick did negotiate with Chevron for more money. Chevron was represented in the discussions by West County Healthcare District Chair Eric Zell, a Chevron lobbyist. There are conflicting accounts of the details of the negotiations, but it is clear that the three Council members were not willing to hold firm that Chevron needed to help save DMC with a substantial commitment. Chevron resisted giving upfront money, but when Rogers insisted that his pet project, Easy Go, required $1 million in immediate funding, Chevron agreed. The three members left the meeting without securing any new funds for the hospital.18

When the Agreement was presented to the Council, lack of funding for DMC was a major point of contention. Although it had passed a resolution urging the County to save the hospital by bringing it into the County health care system, only Mayor Gayle McLaughlin and Vice Mayor Jovanka Beckles supported a motion to require Chevron to contribute an additional $27 million to DMC as part of permit conditions.

In a hurry to push through the Chevron agreement, the Council majority voted to adopt the Community Benefits Agreement which had substantial funding for scholarships and pet projects without any discussion or chance for amendments to direct funds to help maintain DMC. Where Things Stand Now

At the time of writing two processes are unfolding that may determine DMC's future. One is the formation by the Hospital Council of Northern and Central California of a "Stakeholder Group" charged with "developing a solution to the long-term health-care issues facing West Contra Costa County." It is clear from public statements made by members of the group that maintaining DMC in anything like its current capacity is not on its agenda. At best the Group may recommend that DMC be downsized to either a much smaller hospital with 15 beds along with an emergency department or simply a free-standing emergency department affiliated with primary care facilities in the West Costa County area.19 Either option would be a serious downgrading of the medical services available to the area's residents. A stand-alone emergency department, for example, would not have access to the labs and testing equipment that are now available at DMC. Complete closure of DMC is also under consideration. The Group is expected to make its recommendations public by the end of August.

A second initiative is being spearheaded by the California Nurses Association. On August 12, the "DMC Closure Aversion Committee" composed of patients served by DMC and medical professionals who are affiliated with it, filed a complaint for injunctive relief in federal district court. Many of the plaintiffs listed in the suit are elderly African American residents of West Contra Costa County, who suffer from various chronic illnesses. Contra Costa County, each member of the County Board of Supervisors, County Health Services director Dr. William Walker, the West Contra Costa County Healthcare District and District Board chairman Eric Zell are all named as defendants in the suit.20

The plaintiffs' case is compelling. The lawsuit alleges that cutting services at DMC, West Contra Costa County's only public hospital, disproportionately affects the area's seniors and its black and Hispanic residents. The suit also alleges that reduced services and the hospital's possible closure violate the U.S. Constitution's 14th Amendment, the Civil Rights Act of 1964 and the Age Discrimination Act of 1975 as well as a number of State of California statutes. Although U.S. District Court Judge William Orrick denied a motion for a temporary restraining order to stop the diversion of emergency ambulances from DMC, he said the matter was urgent and deserved a full hearing. The hearing is set for August 27. Need for Substantial County Support

DMC cannot survive without support from Contra Costa County. The hospital needs to be brought into the County's Health Services system, which already runs one large public hospital, Contra Costa Regional Medical Center in Martinez along with a number of smaller clinics. Bringing DMC into the larger County system is not just a stopgap measure; it would contribute to the long-term viability of the facility because it would become eligible for designation as a "disproportionate share" hospital and would thereby receive a higher reimbursement rate for its publically insured patients. The higher rate would reduce the hospital's operating deficit from $18 million to about $14 million.21 The additional financial burden on the County should also be weighed in light of the additional costs it would incur if the hospital closed, such as the increasing costs of ambulance services (described above) and the increased number of indigent patients who would now use County medical facilities.

In public statements several County officials have claimed that it cannot afford to take DMC over and continue to run it at its former capacity.22 The County, however, is not as "cash starved" as these officials claim. The budget has been in structural balance over the last three fiscal years. Standard and Poors has upgraded its rating of County debt to AAA.23

One reason that some County officials are resistant to taking over DMC is that most of the financial support the County has provided to DMC over the last years has actually been loans. These loans have been secured by the parcel taxes that the Health District will collect from previous parcel taxes passed. If the Health District is dissolved then the parcel taxes are no longer collected. But this problem could be fixed by State action--see below.

That the County budget in balance and the county has excellent borrowing capacity to carry it over humps is in part due to using money from the Affordable Care Act intended to help pay for hospitalization costs for low income. As a County presentation makes clear, compared to 2012, by 2014 the Affordable Care Act allowed the County to shift $13 million per year back to the General Fund and other uses.24 Contribution by Other Hospitals

Hospital funding is very complicated. Thanks to insurance payments and wealthy patients many hospitals make far more than required to cover costs. But many like Kaiser are technically non-profit and distribute the surplus in high management salaries. Some estimate that the non-profit status is worth $1.8 billion to California hospitals in tax reductions. As a result such hospitals are supposed to contribute to community benefits plans. There have been legislative attempts to direct most of this community benefit money toward community health and underserved populations. Assembly Bill 503 would

define "community benefit" and require private, nonprofit hospitals to complete a community needs assessment and design a community benefit plan. It also would require hospitals to allocate 90 percent of the community benefit money to charity care and projects that improve community health for underserved and vulnerable populations.25

This money could be used to support hospitals like DMC that service low income populations.

This has been fought by the California Hospital Association, and individual hospitals like Kaiser, and Sutter Health.

It makes sense that other hospitals be major contributors to keeping DMC open. If DMC closes, neighboring hospitals will be required to take on the added burden of DMC indigent patients. Contribution by the State of California

Public money is required to maintain a public healthcare system that provides for all including those who cannot afford to pay. In California, the main source of such public money must be the state. In California, counties and cities are only permitted to levy regressive forms of taxes. Only the state can fairly tax the people and corporations that have benefitted from the giant shift in wealth to the top on-tenth of one percent. Unfortunately the state legislature has not taken this responsibility and has left local communities to try to finance safety net program on the backs of those who can least afford to contribute.

In the case of DMC, the state could help by changing the designation of DMC to allow it to recover larger portions of its cost for low income patients as in AB 39. But bowing to the pressure of the California Hospital Association, sufficient members of the legislature seem unwilling to do this.

1 See County of Contra Costa: Recommended Budget 2014-2015, page 379 and earlier.

2 http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201320140AB39

3 Robert Rogers, "Doctors Medical Center ends emergency ambulance service," Contra Costa Times, August 8, 2014

4 Carolyn Jones, "Tax failure bodes ill for San Pablo's Doctors Medical Center," May 8, 2014

5 http://sanfrancisco.cbslocal.com/video?autoStart=true&topVideoCatNo=default&clipId=10499494

6 Contra Costa Emergency Medical Services Agency, Impact Evaluation Report: Doctors Medical Center San Pablo Potential Closure of Emergency Services, June 13, 2014

7 Impact Evaluation Report

8 Impact Evaluation Report

9 Sam Levin, "The Death of Doctors Medical Center," East Bay Express, August 6, 2014

10 Robert Rogers, "San Pablo: Voters reject tax to fund Doctors Medical Center," Contra Costa Times, May 7, 2014

11 Doctors Medical Center, "Measure C Parcel Tax Failure Puts Doctors Medical Center on Course for Closure," May 6, 2014

12 Impact Evaluation Report

13 Robert Rogers, "Kaiser Permanente: Diversion of emergency ambulances burdens its Richmond emergency department," Contra Costa Times, August 15, 2014

14 Impact Evaluation Report

15 Impact Evaluation Report

16 Impact Evaluation Report

17 Robert Rogers, "Hospital, health care officials say money from Chevron would have benefitted Doctors Medical Center," Contra Costa Times, August 6, 2014

18 Accounts of the negotiations between Chevron and the City Council members are provided in: Sam Levin, "The Death of Doctors Medical Center;" Robert Rogers, "West Contra Costa officials trade blame for lack of hospital money in Chevron deal" Contra Costa Times August 1, 2014; Robert Rogers "Hospital, health care officials say money from Chevron would have benefitted Doctors Medical Center," Contra Costa Times, August 6, 2014.

19 Robert Rogers "Contra Costa health: Scaled down Doctors Medical Center an option," Contra Costa Times, June 15, 2014

20 Robert Rogers "Doctors Medical Center advocates sue in federal court to halt closure ambulance diversions," Contra Costa Times, August 12, 2014

21 Robert Rogers, "Kaiser Permanente: Diversion of emergency ambulances burdens its Richmond emergency department," Contra Costa Times, August 15, 2014

22 See comments by County Supervisor John Gioia and Dr. William Walker, the director of Contra Costa Health Services in "Tax failure" and "The Death of Doctors Medical Center," respectively.

23 Contra Costa County, Fiscal Year 2014-2015 Recommended Budget Presentation, April 2014

24 Power Point Presentation on Fiscal 2014-15 Recommended Budget, slide 7; See also County of Contra Costa: Recommended Budget 2014-2015, page 379 and earlier.

25 Kathy Robertson, "High stakes fight looming over nonprofit hospital community benefits," Sacramento Business Journal, August 4, 2014