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UPDATED Kaiser declines renewal of Alameda Hospital contract

Submitted by on 1, November 12, 2009 – 5:50 am6 Comments

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Updated at 12:57 p.m. Thursday, November 12

Kaiser Permanente has opted not to renew its surgical services contract with Alameda Hospital. The current contract expires on March 31, 2010.

Kaiser members will receive surgical services at Kaiser’s own facilities as of that date, but they still may use Alameda Hospital for emergency and inpatient care.

Kaiser had contracted with the hospital while it expanded its own facilities in the East Bay, both Kaiser and Alameda Hospital said in prepared releases. It has since completed three new operating rooms in its Richmond facilities and a new medical office building in Oakland where some minor surgical work may also be done.

“We have had an excellent working relationship with Alameda Hospital and its medical staff over these last five years, providing high quality care since 2004. We will work closely with Alameda Hospital to transition our surgical services over a period of time,” Nathaniel L. Oubre, senior vice president and area manager for Kaiser in the East Bay, said in a prepared statement.

Alameda Hospital Chief Executive Officer Deborah Stebbins said that while the news does present significant challenges, the hospital is better positioned than ever to respond to it. Stebbins said the Kaiser outpatient surgeries make up more than 60 percent of the outpatient surgeries done at the hospital, generating a net margin of close to $2 million a year.

Stebbins said the hospital finished last year with a $500,000 surplus after years of losses due to ongoing efforts that include new program development, physician recruitment and renegotiation of third party contracts – things she said were totally unrelated to the Kaiser contract.

“The Executive Team is working diligently over the next few weeks to prepare a preliminary action plan to be reviewed with medical leadership and the Board of Directors in mid-December. Details of the plan will be disclosed as they are approved,” Stebbins said in response to follow-up questions posed by a reporter.

“While this is a very challenging turn of events at the hospital, we have every confidence that the lost revenue and contribution margin can be made up through a combination of interventions, including recruitment of new physicians and surgeons, examination of our staffing and wages, and development of new revenue
producing programs,” Stebbins said.

The hospital had been working actively to renew the contract, a staff report issued in June said.

6 Comments »

  • Neal_J says:

    "It was not clear how much the contract was worth to the hospital."

    Why was this not clear?

    I should think this would be both readily-availale and highly significant to the hospital's bottom line.

  • Neal_J says:

    Gracias. That's a big hit to absorb.

  • Dave Kirwin says:

    Perhaps the hospital is no longer sustainable.

    It is my understanding that the hospital was supposed to have submitted a plan years ago to upgrade the seismic safety of the building but has failed to meet every deadline. Aside from the predicted operating loss returning with the departure of Kaiser, the Building is likely to be closed by the State because it does not meet seismic standards for hospitals and there is no money for such a facility upgrade.

    Could it be sold for infill senior housing and the money used to build a smaller more efficient emergency care center to serve the community? If not, maybe the community needs to decide what is more important – local funding of schools, or an over-sized hospital operating at a loss until it is closed by the State.

  • H. Ewert says:

    The hospital has not been sustainable–the supplemental property tax is still in effect, even now with this "surplus" is the surplus including the money received from the supplemental property taxes–if so then after all these years the hospital falls short.

  • Jan says:

    It is highly unlikely the state would close a hospital because of this seismic problem. There are hundreds of small (and some big) hospitals around California struggling with this, and the deadlines have been extended and other changes made to the program to accommodate them. The seismic issue is actually relatively minor compared with the issue of Alameda Hospital's ability to operate in the black on a day-to-day basis. They were starting to do OK this last year, but that was in part because of Kaiser's use of their facilities. They'll have to get very competitive very quickly to make up for that. In other words, Alamedans need to be using Alameda Hospital.

    As for closing the hospital, Alameda voters decided when they approved the parcel tax that a majority wanted to have a hospital on this side of the bridges and tunnels in case of an emergency. You can't really have an emergency room without a hospital attached to it…otherwise it's just a doctor's office with extra equipment, like an urgent care center. Do you want to be able to do operations on people who need them right away, or to put them on a ventilator if their flu turns serious? Traumas already go elsewhere, so that's not an issue. Heart attacks can be evaluated at Alameda Hospital and if the person needs angiography or angioplasty (sophisticated imaging or clearing arteries) they go elsewhere.

    It's a tough call…quick access to high-quality medical care costs money. Either we want Alameda Hospital to be a top-notch place where we'd all be willing to go, or we're willing to go over the water. (maybe it would be cheaper to fill in the estuary the way it was before 1900, and move the Coast Guard to Alameda Point…just kidding, don't get all excited, blogosphere)

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