Keep Saint Louise and O’Connor hospital beds open
It’s imperative that San Jose’s O’Connor Hospital and Gilroy’s Saint Louise Regional Hospital remain open to serve Santa Clara County’s growing population.
The county already has a shortage of hospital beds. Losing O’Connor’s 358 beds and Saint Louise’s 93 beds would exacerbate the problem for a county anticipating its population to grow from 1.75 million today to 2.3 million by the year 2030.
The hospitals’ owner, Verity Health System of California, said Tuesday that it has asked a bankruptcy court to approve an auction in December. The county’s $235 million bid for the two hospitals will be considered along with any others that might come forward.
Verity operates O’Connor and Saint Louise in Santa Clara County, Seton Medical Center and Seton Coastside in San Mateo County and two hospitals in Southern California. It’s unfortunate that San Mateo County officials haven’t proposed a plan to keep the two hospitals in their county open.
The challenge for Santa Clara County officials is to show the public in detail how they can buy and operate O’Connor and Saint Louise without damaging other existing county programs.
County Executive Jeff Smith said Wednesday that the county would issue lease revenue bonds to pay for the hospitals. The revenue generated from the hospitals would then be used to pay off the bonds, negating the need to dip into the county’s general fund.
The hospitals’ previous owners, Verity and, before that, the Catholic Daughters of Charity, have been losing millions of dollars every year for the past decade trying to make O’Connor and Saint Louise’s financing work. Verity’s owners said they lost $55.8 million in the nine months ending March 31. Daughters of Charity officials said they were losing between $140 million and $150 million a year prior to selling the six hospitals in 2015.
The primary driver for the losses was that the hospitals’ payer mix, which consists of a high percentage of Medi-Cal and Medicare patients, virtually guaranteed that the hospitals would operate at a loss. But Smith insists that the county’s more favorable reimbursement rates for Medi-Cal and Medicare patients would generate enough additional money to cover the lease revenue bond payments.
There’s another consideration: If O’Connor and Saint Louise close, that would put enormous pressure on the county’s Valley Medical Center to carry the burden, crowding its emergency room and creating a need for the county to build additional hospital beds. The estimated cost of constructing new facilities is double that of purchasing O’Connor and Saint Louise hospitals.
Location is also a consideration: County officials expect the greatest population growth in the next decade to be in the southern part of the county, where more land is available for development. The projections make it even more important that Saint Louise remain open to serve Gilroy and Morgan Hill residents. Imagine the problems if Gilroy and Morgan Hill residents with emergency medical conditions try to make it to San Jose during the daily rush hour traffic nightmare on Highway 101.
County officials need to be fully transparent about how they would finance and operate the two hospitals without doing significant damage to other county programs. But there should be no question about the need to keep O’Connor and Saint Louise hospitals open for county residents.