The owner of Seton Medical Center declared bankruptcy in 2018.

County officials: Daly City hospital could shut down as soon as next week

Loss of Seton Medical Center would create health care desert in northern San Mateo County

The bankrupt owners of Daly City’s Seton Medical Center are expected to shutter the safety net hospital bordering San Francisco as soon as next week, according to people familiar with the matter.

San Mateo County Supervisor David Canepa said he and other officials would announce the news Wednesday evening at a special Board of Supervisors meeting at Daly City Hall. He added that Verity Health System is expected to begin the process of closing Seton Medical Center in bankruptcy court on Monday, leading to a 72-hour countdown to closure.

The decision was relayed to Seton’s Board of Directors Tuesday evening, according to Canepa and Seton board member Dr. Robert Perez.

Barring an 11th-hour intervention, the closure is expected to lead to a medical desert that could strain San Francisco’s urgent care facilities. About 27,000 people in southern San Francisco and northern San Mateo County use Seton’s emergency services each year and about 80 percent of its patients use MediCal and Medicare.

“What’s a bit disturbing and distressing is that rather than selling to a buyer, [Verity] plans on closing it down,” said Canepa, who represents Daly City. “It’s going to stress the system.”

The situation for Seton had looked increasingly dire in recent months but staff and officials still anticipated having a few more months of operating funds. In August 2018, Verity declared bankruptcy for its then-six hospitals, including Seton Coastside in Moss Beach. The company spent much of 2019 working through a sale agreement with Strategic Global Management, also referred to its affiliate KPC Group, through federal bankruptcy court that appeared to ensure Seton’s future operations.

However, the sale wasn’t finalized by the December deadline, sending Verity into “Plan B” mode with details sealed in bankruptcy court except for a notice of intent to abandon certain property at Seton Coastside. Verity’s sudden January closure of another hospital in Los Angeles, St. Vincent Medical Center, sent Seton staff and patients into a panic that the same could happen to their facility.

“We’re very frustrated about Verity’s lack of transparency,” said Shane Ward, a nurse at Seton, at a rally to save the hospital last month. “We would just be devastated if this hospital were to close.”

Verity did not return a request for comment but Samuel Maizel, an attorney representing Verity in bankruptcy proceedings appeard at the meeting. When asked by Canepa to comment on Verity informing the Seton board of intent to close, Maizel invoked attorney-client privilege to intense boos.

“The problem is this county nor the board nor other have the money to sustain the [operating] losses here,” Maizel said Wednesday before the crowd. “That’s an indictment of how we deliver health care in America. Verity can’t fix it, the bankruptcy court can’t fix it…Someone has to pay the losses.”

The threatened closure is Seton’s second financial crisis since 2015 when Verity took over ownership from Daughters of Charity.

SGM, which stands to lose a $30 million non-refundable deposit, remains a bidder, while Apollo Holdings also threw its hat into the ring earlier this year. Canepa, a frequent critic of Dr. Patrick Soon-Shiong, part-owner of Verity and owner of the Los Angeles Times, indicated the company sought more money for the deal.

“The cone of silence that’s wrapped around Seton Medical Center, I suspect is going to end soon,” said John Avalos, an organizer with National Union of Healthcare Workers and former San Francisco supervisor running once again for his District 11 seat. “This is a really critical week this week. If there’s a medical desert created in north [San Mateo] County, there needs to be a countywide response.”

Canepa previously urged the county to buy the hospital and at least hopes to negotiate financial assistance to push a deal through. Otherwise, long-standing fears of a land grab to develop lucrative housing or offices on the large hill overlooking Interstate 280 where the hospital is located could come to fruition. The 32-acre site is zoned solely for hospital use, which Daly City Council reaffirmed in a 2018 solution, but some fear that could change under political pressure to activate the space.

“We have no idea where this is taking us,” Canepa said. “Now it’s time to throw the spaghetti against the wall and see what sticks. Desperate times call for desperate action.”

Perez is confident that negotiations with Apollo Holdings, which occurred earlier in the day, will bring a satisfying deal soon while Verity and SGM are embroiled in litigation. Like state Sen. Scott Wiener and several others who spoke before the board, Perez is also concerned about the timing of closing a hospital with novel coronavirus cases in the Bay Area.

“We are making a lot of good progress,” Perez told the crowd. “We are going to make this happen.”

Wiener and Assemblymembers Phil Ting, Jerry Hill, and Kevin Mullin issued a joint statement against the closure, demanding that Verity at least give a mandated 90-day notice before shuttering the emergency room. The representatives also expressed concern about the lack of timely care from increased travel time and overcrowding of nearby facilities should Seton close.

“Verity Health System’s decision to close two facilities will have a terrible impact to our communities in the southern portion of San Francisco and northern San Mateo County,” the statement read. “Now is not the time to close down a hospital, and we ask Verity to reverse this decision.”

This story has been updated with additional information.

imojadad@sfexaminer.com

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