Belated look at questionable deal

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In a side-by-side examination of the hospital rebuilding agreements at Sequoia Healthcare District in Redwood City and the Peninsula Health Care District in Burlingame, it is hard to escape suspicion that something odd is happening. Taxpayers appear to have a much better deal from one not-for-profit partnership than from the other.

On Friday the Sequoia Healthcare District board voted unanimously to give Catholic Healthcare West full ownership of Sequoia Hospital while also paying $75 million of district money as one-third of the $240 million cost for a state-ordered seismic upgrade of the 57-year-old facility.

By contrast, 92 percent of Peninsula Health Care District voters in 2006 approved a deal where the Sutter Health chain not only builds a new $488 million hospital, but will also pay the district $1.5 million yearly rent on a 50-year lease, after which the district can choose to buy back the hospital.

To The Examiner, this major discrepancy between fiscal outcomes demonstrates the disturbing problems that are possible when one of the Bay Area’s many autonomous special districts makes arbitrary and secretive decisions.

Sequoia District has not actually run its own hospital since 1996, when it was in deep financial trouble and turned over management to Catholic Healthcare. Now the district board’s main business is collecting a $6 million annual allocation from district property taxes and distributing it among local health-related nonprofits. As might be imagined, this arrangement has long become a contentious issue.

After moving comparatively quietly to Sequoia board adoption, the Catholic Healthcare West deal is now questioned by San Mateo County Supervisor Jerry Hill, who wants the district to turn over its annual taxes each year to underwrite medical coverage for the 6,000 uninsured adults residing in the district. Hill has been pushing for all the county’s not-for-profit hospitals to contribute more cash or services toward treating uninsured and indigent residents, citing these hospitals’ lucrative local tax benefits.

The supervisor argues that because the Sequoia Hospital deal will not benefit the public as much as the Peninsula Medical Center deal does — and has not been directly endorsed by voters — the district should compensate its taxpayers by enabling more district residents with lower incomes to afford using the hospital. He suggested that otherwise the Catholic Healthcare contract could be challenged by county attorneys.

Despite this newspaper’s uneasiness about the way Sequoia prepared and structured its disadvantageous Catholic Healthcare contract, the hospital is undoubtedly well-run and the district does good work with its charitable disbursements. Also, the new hospital will be modernized and enlarged from the current 1950 structure.

However, if the Sequoia Healthcare District board truly has any reason to continue in existence for collecting taxes, we join Supervisor Hill in insisting that the revenues must benefit local residents in ways as close as possible to what they actually voted to create their district for.

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