Hospital managers get tentative okay to start seismic equipment fixes
Managers at Alameda Hospital secured provisional approval for the hospital’s board Monday to move forward with seismic retrofit projects they said they need to complete by the end of 2012 in order to win an extension on the state’s 2013 deadline to complete pricier retrofit work and keep the hospital’s doors open.
The Alameda Health Care District Board tentatively okayed $286,000 to plan for upgrades needed to comply with rules from a trio of regulatory agencies, with approval contingent on passage of a budget for the fiscal year that started on Sunday. The penalties for failing to complete the upgrades on time could include the loss of Medicare and Medicaid funding – which make up the bulk of the hospital’s revenues – and revocation of the hospital’s license, which would effectively shutter the hospital “completely and indefinitely.”
“If we do not get in compliance with that, we are at risk of having the Department of Public Health not renew, or revoke, our license. That’s the ultimate penalty,” Brian Jung, the hospital’s newly hired chief business development officer, told the board on Monday night.
Every hospital in the state is required to meet certain seismic safety standards by January 1, 2013, including Alameda Hospital. But managers at the financially troubled hospital have been unable to secure the funding they need to make seismic fixes that they are now estimating at $14 million to $15 million.
A recently passed state law offered hospitals the opportunity to apply for a seven-year extension on the January 1 deadline, something Alameda Hospital’s managers have done. They said officials with the state agency handling the applications told them some long-overdue non-structural fixes need to be made by January 1 in order for the hospital’s application to be considered.
The list includes replacement of the hospital’s bulk oxygen tank – a job hospital managers said they won’t be able to complete by the January 1 deadline – along with building and securing an emergency communications array, anchoring its nitrous oxide canister supply and also the hospital’s emergency lighting – a job that was supposed to be done by January 1, 2002.
Board member Elliott Gorelick, who has questioned hospital management in the past about the hospital’s failure to comply with state’s deadlines for retrofitting and replacing the equipment, asked why the fixes needed to be done now. Chief Financial Officer Kerry Easthope said state officials said they’d need to be made in order for the hospital to qualify for the extension.
“It’s hospital management’s position that we will work toward those deadlines because they are deadlines. The history of whether or not they’ve been enforced, I think, is irrelevant,” Jung said.
Jung said the hospital’s managers believe the state won’t move to revoke the hospital’s license if projects that aren’t done by the January 1 deadline are at least underway, though it was not clear Monday if the hospital’s managers had had any conversations with state public health officials about their predicament. He said the hospital hasn’t received any guarantees from the state’s Office of Statewide Health Planning and Development, the department responsible for reviewing the hospital’s seismic retrofit extension application, that they will consider the application even if the projects discussed Monday were undertaken.
In addition to meeting the state’s upgrade requirements, the hospital must meet a federal August 13, 2013 deadline to install sprinklers in its subacute unit – or face the suspension of Medicare and Medicaid funding – and another from the Bay Area Air Quality Management District to replace its boilers.
All told, the hospital is facing a $930,700 bill to make the required fixes, a cost its managers said they will cover using positive cash flow. As of May, the hospital had lost an estimated $1.6 million, a finance and management committee report showed, though hospital managers believe a trio of new programs slated to come online this year will put it back into the black.
Board member Stewart Chen said that while he understood the importance of moving forward with the upgrade projects, he was uncomfortable starting the hospital’s new fiscal year by spending nearly $1 million.
Board President Jordan Battani said she had reservations about okaying the spending without a budget in place; the board unanimously signed off on her suggestion that they offer conditional approval based on passage of a budget.
“I’m confident you will not have spent all this money in the next three weeks, and that we can revisit this decision when we see this budget from staff,” Battani said.
The board is holding a special meeting at 7:30 a.m. July 25 in order to approve a budget for the new fiscal year, a decision members delayed in order to gain a clearer picture of the hospital’s finances. Hospital managers project that their planned takeover of the Waters Edge nursing home and new wound care and orthopedic programs will turn the struggling hospital’s finances around, but the programs have been plagued by delays and none has opened for business yet.
Hospital managers are now saying their new wound care center will be inspected for its state license on July 16; an open house is scheduled for August 7. The orthopedic program is expected to open for business in October. They said they are awaiting federal certification of Waters Edge; one of the hospital’s budget scenarios envisions Waters Edge coming online in October, while another shows what its budget would look like without the facility.