CASTRO VALLEY -- Eden Township Healthcare District directors have delayed making a decision on whether to pay a $20 million subsidy to keep San Leandro Hospital open, leaving the facility's future in limbo.

The board took no action at its meeting Wednesday on a request by Alex Briscoe, director of the Alameda County Health Care Services Agency, for the additional funds to keep the hospital and its emergency room open for three years and to complete a deal between Alameda Health Systems and Sutter Health.

Sutter Health currently owns the 93-bed hospital, but earlier this month signed a letter of intent to transfer it to Alameda Health Systems, a public health network that runs Highland Hospital in Oakland and other county medical facilities.

The $20 million would keep the hospital open during the transition. Sutter also has agreed to contribute $22 million to cover operating expenses of the money-losing hospital.

Briscoe told the board that if the $20 million was not assured by July 1, he expected Sutter Health to give notice to shut down the hospital, which is losing millions each year.

Briscoe laid out three scenarios for the district to come up with the money: liquidate more than 50 percent of the district's assets, use income that will be coming in from the district's properties or borrow against the three medical office buildings.

He recommended borrowing. Liquidating more than 50 percent of the assets would require a vote of the district's residents, and the county does not want the district to dissolve, Briscoe said.


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The healthcare district board took no action in closed session. "The district is vigorously evaluating what it can do to respond to Alex Briscoe's request," hospital district board chairwoman Carole Rogers read from a prepared statement afterward. "We're exploring our options."

The healthcare district does not have anywhere near $20 million in cash reserves.

The district owns three medical office buildings that generate rental income: Dublin Gateway Center, San Leandro Medical Arts Building and Eden Medical Building in Castro Valley. But it has a $45 million loan against the three buildings.

Eden Township director Lester Friedman said $20 million was about 50 percent of the district's assets. "That will basically wipe us out," he said.

The properties currently do not generate enough income to cover the $20 million immediately.

"The district consists of a lot more than San Leandro Hospital," Friedman told Briscoe. St. Rose Hospital in Hayward, which also is losing money, is asking for more funds, and the district provides grants to other health care providers. "What we would be telling them is, sorry, there's no money left," he said.

"I won't minimize the pain," Briscoe responded.

Friedman also said this is the second deal brokered to keep San Leandro Hospital open in which Eden Township was not a party to the talks but was expected to come up with a subsidy.

Eden Township owned San Leandro Hospital until it lost control to Sutter last year after a legal battle. The two sides are in arbitration on costs and damages.

As part of the letter of intent to transfer title to Alameda Health Systems, Sutter would release Eden Township from any damages as long as the district provides funds to keep San Leandro Hospital open.

Eden Township directors' next regularly scheduled meeting is June 19.