The board in control of San Leandro Hospital has agreed to enter into a confidentiality agreement with Hayward's St. Rose Hospital, in what may be the first step toward St. Rose taking over the beleaguered hospital and possibly keeping its emergency room open.

The Eden Township Healthcare District's board of directors approved entering into the agreement Wednesday, allowing the district and St. Rose to disclose details about their business operations. The letter does not explicitly state anything about San Leandro Hospital, but talks about a "potential business relationship" between St. Rose and the district.

Eden Township's Chief Executive Dev Mahadevon, however, confirmed the agreement is the initial step in talks concerning St. Rose operating San Leandro Hospital -- and possibly keeping open its emergency room.

St. Rose officials declined to comment concerning San Leandro Hospital other than to say they support a collaborative approach to ensuring access to health care services for the community.

The agreement is the latest development in the long, winding story of San Leandro Hospital.

The district and Sutter Health are in a legal dispute over whether Sutter can buy San Leandro Hospital from the district and, in turn, sell it to Alameda County Medical Center.

The center then would shut down the emergency room and acute care facility and turn the facility into a rehabilitation center, which Sutter and county officials consider more economically viable.

That sale was part of a deal drafted in 2008, but last year the district refused to sell the hospital, asserting that Sutter did not fulfill certain conditions of the agreement.

Sutter then took the district to court, and Eden Township filed a countersuit arguing that the whole deal is null because of conflicts of interest involving Eden Medical Center Chief Executive George Bischalaney and then-Eden Township board member Francisco Rico.

The complaint asserted that Bischalaney and Rico had vested financial interests in Sutter because Bischalaney was the chief executive and Rico's medical practice included services performed at Eden Medical Center.

However, last November Alameda County Superior Court Judge Marshall Whitley ruled with Sutter, issuing a decision that it was not established that Bischalaney took part in the decision-making process that led to the agreement, nor was there recognizable financial gain to be had by either party as a consequence of the deal.

The district's board currently is appealing that ruling.

Contact Chris Metinko at 510-293-2479.