Officials grapple with the future for Seton

Because Verity Health has yet to announce final decisions with regard to specific strategies it might take, Dave Pine, president of the San Mateo County Board of Supervisors, acknowledged officials will have to wait until more is known about whether gaps in medical services could emerge and how they might affect county residents. Pine noted the health care provider’s exploration of its finances in the coming weeks is further complicated by service obligations set by then-attorney general Kamala Harris in 2015 when the hedge fund struck a deal to purchase six hospitals — which also include O’Connor Hospital in San Jose and St. Louise Regional Hospital in Gilroy, as well as St. Francis Medical Center in Lynwood and St. Vincent Medical Center in Los Angeles.

When Patrick Soon-Shiong, a surgeon, professor, scientist, entrepreneur, businessman and philanthropist who purchased the Los Angeles Times this year, stepped in as a majority stake owner in Integrity Healthcare, Verity Health's management company, in 2017, BlueMountain Capital contributed additional funding to continue Verity’s revitalization initiatives, according to a press release. 

Aimed at ensuring the safety-net hospitals continue offering services for at least 10 years, the transaction was considered by some to be the largest and most complex nonprofit hospital transaction in California’s history.

“It’s a very dynamic and unpredictable situation,” said Pine. “So how this all unwinds or how this all transpires is anybody’s guess.”

But Pine said that what is clear is the critical nature of the services provided at both the facilities, especially the skilled nursing and long-term care.

In addition to an emergency room serving some 27,000 patients a year, the Daly City facility offers more than 350 licensed beds as well as cardiovascular services, oncology and outpatient care including clinical lab, diagnostic and imaging services. A skilled nursing facility, the 116-bed coastside hospital also offers the only standby emergency department along the 55-mile coastal stretch between Daly City and Santa Cruz, according to Verity Health.

Pine also expressed concerns about the possibility of losing the ventilators and specialized outpatient services provided at the facilities should they be shuttered or sold, pegging them among the services officials will be monitoring as Verity Health evaluates its options.

“I think the county would be willing to look at any financially viable approach to maintain those services,” he said.

David Canepa, who represents north county’s District 5 on the Board of Supervisors, said he has been in talks to prepare for all possible scenarios with Supervisor Don Horsley and leaders of the San Mateo County Health System and the Health Plan of San Mateo, an independent, quasi-government agency which functions as a health maintenance organization and offers a comprehensive network of health care providers.

The group has considered several possible outcomes coming out of Verity Health’s financial assessment, Canepa said. That includes the operators’ closure of the facilities, he added. He said he is focused on ensuring there are no changes on the conditions put in place by Harris in 2015, which mandate the facilities continue to operate until 2025.

County’s financial contribution

Canepa noted the county has already dedicated some $40 million to the facilities since they were acquired by Verity Health. Included among the county’s contributions is $15 million dedicated to a $65 million seismic upgrade project for Seton Medical Center, one of the agreements laid out when BlueMountain Capital struck a deal with its former operator, the nonprofit Daughters of Charity, according to a previous county staff report.

In weighing the county’s ability to purchase the facilities or commit even more funds to their operations, Canepa couldn’t rule out the possibilities. But he said it’s the owner’s responsibility to live up to the conditions it agreed to and noted any entity contemplating purchasing the facilities will have to consider those terms, as well as the high cost of offering health services.

“The county … has given them millions and millions of dollars and now is the time for them to follow their commitment that they made when they acquired the hospital,” he said. “I want to make sure that the operator continues to operate in our city, but I also have a fiduciary responsibility to make sure that the county’s budget isn’t decimated.”

Horsley, whose District 3 includes the coast and Seton Coastside, was not keen on the county stepping up its financial obligations with regard to the two facilities, emphasizing that the owner knew what it was getting into when it committed to the sale terms.

Two counties, two situations

Horsley has heard officials in Santa Clara County may have reasons to be interested in purchasing the two Santa Clara County facilities Verity Health owns to make way for expanded county-operated health care services. Santa Clara County officials contemplating a purchase of the O’Connor Hospital in San Jose and St. Louise Regional Hospital in Gilroy may not be facing the expensive retrofit project required for the Seton Medical Center, Horsley added.

Though he acknowledged Seton Medical Center provides a valuable service to the Daly City community and officials are interested in seeing it continue to operate, he was less sure about committing much more than what officials have already contributed.

“We’re not going to buy it and we’re not going to do a heavy subsidy,” he said. “We believe that there’s a commitment on their part to keep that facility going with all lines of service.”

Horsley said coastside residents in need of a trauma center are generally taken to emergency departments at other hospitals — including Seton Medical Center, San Mateo Medical Center or Sequoia Hospital — before they are taken to the standby emergency room at Seton Coastside. He added the county-operated Coastside Clinic in Half Moon Bay, which the county secured when it purchased the property last year, also provides health care for those on Medi-Cal or with no insurance.

Wait and see

For Supervisor Carole Groom, proximity to residents for whom the San Mateo Medical Center is a burden to reach weighed heavily. As did the coastside facility’s provision of dozens of long-term care beds, which she said have been in increasing demand as the county’s population ages.

Groom was joined by Supervisor Warren Slocum in noting the critical nature of the services for their communities and a desire for them to continue operating. But they also acknowledged they would have to wait until more is known about Verity’s Health’s position before taking a firm position. If supervisors are faced with weighing a purchase of the facilities, Groom said a trend toward fewer operators in the health care market, as well as how the services county residents currently access at each one could be found at nearby hospitals, would be top of mind.

“I think we have a lot of work cut out for us,” she said. “We’d have to really look at those numbers and do a lot of number crunching and see how that looked.”

anna@smdailyjournal.com

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