Albion Monitor /News

Was the Sutter Lease Necessary?

by Stephanie Hiller, Editor Bodega Bay Navigator

"The hospital was debt-free, so how can you claim $10 million losses?"

Supporters of Measure E insist that Community's financial problems have been overstated. Glenda Canfield, a nurse and union negotiator, began attending the hospital's Board of Trustee meetings to assure that a successorship clause would be part of any deal made for the hospital. She started to wonder what was the true financial situation and obtained copies of the records.

Canfield said, "Charity care, which is repayable but uncollectable, is part of the loss. But the big clincher was, a few years ago, the hospital started counting depreciation as a loss. But the hospital was making enough to cover losses. It wasn't making as much profit, but it wasn't in debt.

"We asked the supervisors why they hadn't applied for some of the state and federal money that was available a few years ago. In Contra Costa County, the public hospital rebuilt almost its whole facility with the help of earthquake funds."

Seven other county hospitals took advantage of funds made available in 1989 under SB 1732, which also helped with the debt service for hospitals like Community which had a "disproportionate MediCal patient load." Canfield went on: "But all Ernie Carpenter had to say was, 'We chose not to go that route.'"

Greg Wonderwheel, vice president of the Service Employees International Union (SEIU) did a financial analysis. "The hospital was debt-free, so how can you claim $10 million losses?"

Wonderwheel challenged Cale's view that the hospital would go "belly up in two years." On paper, the hospital would have no value in five years, but you still have the buildings and equipment." Wonderwheel insists that the hospital's average $2 million-plus profit margin was slightly more than its $2 million rate of depreciation.

Physically, the institution was just falling apart"

Until 1995, the hospital was spending about $1,000,000 a year on equipment, and Wonderwheel does not believe the hospital's equipment was below standard. Because he is not a trained accountant, he turned the audits and the new lease agreement over to medical economist David Bradwell who substantiated his conclusions and wrote the ballot statement for the measure.

"Balderdash!" is what Supervisor Ernie Carpenter said of Wonderwheel's assessment. "Wonderwheel doesn't understand auditing.

"The hospital had lost money for five years, we were not covering depreciation and you know how important equipment is in medicine these days, [and] if you don't have it, people are going to go somewhere else. Physically, the institution was just falling apart."

Hospital director Cliff Coates also said Wonderwheel's figures are misleading. "Their charges are very disturbing," he said, referring to members of the Committee to Save Community. "They completely misrepresent the facts. They've pulled numbers from a report that has been discounted for future dollars. Their consulting economist should know better."

The hospital was not appraised before leasing

But questions remain as to whether the lease with Sutter has solved the problems of Community. "We were told that we needed a big company to come in with a broad base to bring patients into the hospital. But the patient load has dropped from 60 percent to 40 percent and sometimes as low as 35 percent since Sutter came in six months ago," said Wonderwheel. "We have contracts with everybody, Blue Cross, all the HMOs, but no patients," said another staff person who asked not to be identified. "The census is lower than ever, the Family Practice visits are down 500 patients a month."

Even the number of surgeries has dropped. Sutter is obliged to pay $12 million over the next 12 years for capital improvements, neither more nor less than the County was spending. And as for depreciation, it's not in the lease. "Depreciation has simply disappeared," said Bradwell.

In fact, the hospital was not appraised before leasing. Community was leased for $95,000. The Supes had asked for $16,000 a month or $192,000, but Sutter offered to give them a twenty-year payment in one lump sum of $1.9 million on the theory that it would earn enough interest in the bank to make up the difference.

But, according to Wonderwheel, that money is not in the bank. It's gone -- used to cover all the costs associated with the sale.

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Albion Monitor October 16, 1996 (

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