Will Landlord Kill Hospital Over Money? 

West County residents just might vote to save their public hospital. But it won't matter if a landlord forces the county to shut it anyway.

The doctors and nurses in West Contra Costa County's hospitals just can't seem to get a break. Ever since January 28, when the Tenet Healthcare Corporation announced it was abandoning the management of San Pablo's Doctors Medical Center, a team of county leaders and officials with the West Contra Costa Healthcare District have scrambled to put together enough money to save the hospital. They have placed a parcel tax to finance the hospital on the June 8 ballot. It seemed a bleak picture at first, but campaign organizers now claim that advance polling indicates that West County voters will actually pass the tax and save one of the county's cornerstones of public health.

But just as county leaders were beginning to indulge in a little hope, a little-known West County property management firm may cripple their dreams of accessible health care after all. Doctors Medical Center consists of two campuses, the main complex in San Pablo and a smaller, but still important, facility in Pinole. The West Contra Costa Healthcare District owns the San Pablo property, but the Pinole facility is owned by Appian Associates, which still has seventeen years left on its lease with Tenet. According to two sources close to the negotiations, Appian executives have refused to let the district take over the lease. If the district cannot assume control of the Pinole campus by July 31, the facility will almost assuredly close forever. West County leaders may pull off the most unlikely electoral victory in recent history, only to watch a landlord destroy a critical piece of public health infrastructure -- out of pure avarice.

Although none of Pinole's beds are currently operational, the facility nonetheless offers a wide variety of critical health-care services, including urgent care, postoperative therapy for patients with heart disease, lifestyle counseling for people with diabetes, and an outpatient surgery service that performs two hundred operations a month.

All that began to change in 2002, when Tenet, which was once seen as the country's healthiest hospital chain, endured a series of scandals involving unnecessary heart surgery and alleged Medicare overbilling. In January, the company announced that it was abandoning the management of nineteen hospitals in California, selling off every one except Doctors Medical Center, which it agreed to hand back to the health-care district. But Tenet officials insisted that they would do everything they could to ensure the hospitals' survival, and Doctors Medical Center would be no exception. "We have a commitment to maintaining these hospitals, and have limited our bidding only to those who have experience in administering hospitals," says Tenet spokesman David Langness. "We have tried very hard not to take these assets out of their communities."

In keeping with this promise, Tenet officials have negotiated with Appian Associates to turn tenancy of the Pinole campus over to the health-care district; Tenet has even contributed substantially to the campaign to pass the parcel tax. Appian, however, has not been as public-spirited. As an organizer for the hospital workers' union SEIU Local 250, Dana Simon has closely monitored negotiations between Appian, Tenet, and the health-care district. According to Simon, Appian has steadfastly refused pleas to turn the Pinole campus over to the district. Why? Tenet still has seventeen years on its lease, and as a vast conglomerate dripping with cash, the hospital chain can easily eat the rent for the duration of the lease. On the other hand, the district has only $4 million in reserves and needs the new parcel tax to pass if it is to run Doctors Medical Center. Simon claims that Appian managing partner Jeff Higgins decided he would rather keep Tenet on the hook, even if it means the Pinole campus would be extinguished.

"It's just an unconscionable level of greed," Simon says. "Here you have the district saying, 'Let us assume all the obligations to make payments to you.' And he's saying, 'You know, the margin of difference in the security I have, I prefer not to take any risk. Let the hospital close, because I'm not sure I want the hospital to have the lease.'"

Jim Beaver, the executive director of the West Contra Costa Healthcare District, confirms that Appian has so far refused to allow Tenet to give its lease to the district. "They would like to get out as cleanly as possible without any liability, so they would like to sign over the lease," he says. "But the ownership group is discouraging that, because they have a relationship with Tenet, and they seem to feel that they would like Tenet to be ultimately responsible."

Beaver has big dreams for the Pinole campus. But if he doesn't get control of Pinole by July 31, the district may never be able to run it as a hospital, even if Appian relents a few years down the line. Currently, the Doctors Medical Center state license applies to both San Pablo and Pinole campuses. The district will be able to grandfather the license into the San Pablo facility, but if it doesn't control the campus by July 31 -- the presumptive date that Tenet pulls out -- the license for Pinole will expire. Beaver claims that even if the district later got control of Pinole, it won't ever have the cash it would take to modernize the facility to meet current licensing standards. Pinole, he says, may never be a hospital again. "If the license expired for any reason, then I do not know if we would have the wherewithal to start it up again," he says.

In short, both labor and management agree that Appian may prefer to collect rent on an empty building rather than partner with the health-care district. If the company has a different view of its negotiating position, it isn't interested in sharing it with the public. When reached for comment, managing partner Jeff Higgins refused to discuss any element of its relationship with Tenet or the district. That's how committed Appian is to West Contra Costa County.

On the other hand, Chuck Idelson, a spokesman for the California Nurses Association, believes that Tenet shouldn't be given a pass for its own conduct. "Obviously, the property association is out for its own economic interest, but when Tenet came into the community, it made several representations to the community about the maintenance of urgent care services in West Contra Costa County," he says. "We believe Tenet should honor that commitment." However, Idelson added, "That doesn't mean we believe Appian should be off the hook."

West Contra Costa County is one of the most illness-prone regions in Northern California. Refineries such as Chevron periodically spew toxic gases into the residential neighborhoods that hug its border, and the area is host to a dozen different heavy industries. Poverty is abundant in cities such as Richmond, San Pablo, and Pinole, leading to high rates of asthma, obesity-related diabetes, and heart disease. If the polls are any indication, this community is apparently on the verge of voting to keep its hospital around to treat these disorders. Unfortunately, the backroom decision of a small group of anonymous landlords could seriously cripple that plan.


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