FREMONT -- Without a public notice, discussion or vote, administrators at the Washington Township Health Care District have begun eliminating hundreds of employee positions to cut costs.
Officials said they had no choice but to eliminate 200 full-time positions, more than 13 percent of their workforce, following declines in patient volume and reduced reimbursement rates from state and federal health programs and private insurance. The workforce reductions -- expected to save the district $16.1 million -- included layoffs for about 68 employees, most who work at the 389-bed Washington Hospital in Fremont.
But board members of the hospital district -- which receives property tax funds through voter-approved bonds and is subject to the same public meetings laws as a city council -- discussed the layoffs only behind closed doors, without any public notice, in apparent violation of those laws. They did not vote on the reductions, and some board members interviewed last week did not seem to have a full understanding of them.
When informed that 200 positions were being eliminated, not 68, board member and local dentist Dr. Bernard Stewart, said, "Could be. I don't know what that number is." Asked if there was a discussion about the impact of the reductions, Stewart said, "Heavens yes. Those are horribly, horribly important decisions. Those are things you just don't do haphazardly."
An open government advocate said such matters can legally be discussed only in open session.
"The way the Brown Act works is everything is public unless there is a statutory exception," said Terry Francke, general counsel for the open government group Californians Aware. The act contains specific exceptions for a small number of matters where privacy is critical, including union bargaining, real estate negotiations and employee evaluations. But, said Francke, "there is no authorization for a discussion for the need to reduce staff to save money."
Other public entities, including city councils, school boards and fire districts, routinely discuss budget problems and potential layoffs in open, public sessions.
Asked if the district's handling of the reductions was legal, Paul Kozachenko, an attorney for the district, said in a letter, "Public notice was not required."
Before a Jan. 9 public meeting of the district board, a private security guard tried to stop a reporter from talking directly to board members. When reached, four board members said they were confident the district did not violate the Brown Act. Further, they said, it was not necessary for the board to approve the reductions, because they were an administrative matter delegated to CEO Nancy Farber. Dr. William Nicholson, board president, did not respond to repeated requests for comment in the last two weeks.
Michael Wallace, board member and chairman of Fremont Bank, said giving the public notice about every district financial decision is "unrealistic."
"That's not the way a business is run," Wallace said. "It is in the public's interest that we correlate the workforce with the demands of the hospital and the patient base, and the management follows those demands. We at the board aren't going to second-guess what the management's decisions are in that area."
Board member Dr. Jacob Eapen, a physician at the Alameda County Medical Center, agreed, saying board involvement would be micromanagement.
Gisela Hernandez, a Washington spokeswoman, cited competitive reasons and employee sensitivity as rationale for withholding information on which positions were eliminated. This newspaper has requested public records which outline the positions affected and has yet to receive a response.
Carlyn Foster, spokeswoman for the Service Employees International Union-United Healthcare Workers West, said 14 of the union's 449 members at Washington Township, including licensed vocational nurses and certified nursing assistants, were warned they would be laid off. Two layoffs have since been put on hold and three of those warned have found new jobs in the district.
Another of the district's unions, the California Nurses Association, questioned why the layoffs were not discussed in public by the board.
"I have seen it happen both ways," said Joe Lindsay, public sector division director for the California Nurses Association. "In our view it is not appropriate to have something of that import occur without an open discussion or vote by the board." None of CNA's 750 members employed by Washington Township has been laid off thus far, Lindsay said.
Profits at the Washington Township Health Care District -- which operates Washington Hospital in Fremont and other medical centers in the Tri-City area -- have plummeted in recent years.
On its website, the district boasts of a $36.8 million net operating income in fiscal year 2010-2011, writing it was "well above the budget." But in the first four months of the current fiscal year beginning in July, operating expenses outpaced operating revenues by $1.64 million, district records show. After the reductions are complete, the district projects a positive net operating income of $7.6 million for the 2013 fiscal year, Hernandez said.
The district's budget woes have also affected its bond ratings. Last year, credit-rating agency Moody's Investors Service downgraded millions of dollars-worth of the district's general obligation and long term revenue bonds and gave both a negative outlook. The changes may increase district costs on future bonds, including the $186 million in bonds approved by taxpayers Nov. 6 under Measure Z.
The district's publicly elected board of directors budgeted $8 million in property tax revenue this year. The public hospital district serves 320,000 residents across 124 square miles in southern Alameda County, including Fremont, Union City, Newark, Sunol and south Hayward.
The health care district has drawn attention for its financial practices in the past -- particularly the compensation of Farber, whose annual compensation in 2010 gave her one of the top government salaries in the state at $912,000. The board of directors postponed Farber's incentive pay this year, though her base salary of $650,000 leaves her in the upper echelon of public employee pay.
Peter Scheer, executive director of the nonprofit First Amendment Coalition, questioned the board's hands-off approach to the workforce reductions.
"Whatever discussion they had where they were made aware, they should have had that discussion in open session," Scheer said. "If they never had a discussion on layoffs, 'What will the impact be on health care?' then what the hell are they doing?"
Ashly McGlone covers San Leandro, San Lorenzo and the Washington Township Health Care District. Contact her at 510-293-2463. Follow her at Twitter.com/AshlyReports.