It will cost El Camino Hospital about $32 million to operate Community Hospital of Los Gatos for 18 months, in addition to the previously announced $45 million purchase price for land and buildings, hospital officials said during a public forum earlier this week.
With El Camino hoping to reopen the Los Gatos facility by April 11, CEO Ken Graham and board chairman David Reeder attended a public forum on March 30 to discuss finances and goals for both hospitals. They said the latest estimate of $77 million includes costs for the building and land, legal and consulting fees, equipment, information technology, year-one capital and working capital. El Camino will also spend an estimated $22 million more by 2013 to meet new state seismic regulations, they said.
Graham and Reeder made the presentation at a discussion hosted by the League of Women Voters at the Los Altos Library. They said El Camino will shut down the new hospital for 90 days while its staff implements the initial renovations.
"When you close a facility and reopen it, it better be darn good for people to come in and try it again," Graham said.
El Camino Hospital has cash reserves of $400 million and a balance of $1.1 billion, the executives said. Graham said he expects the new hospital to pay for itself in the first five years. No taxpayer money was used to buy the new hospital, he said.
"We are holding our own in a very tough market," Graham said.
Hospital executives announced in December that they were in escrow to buy the Los Gatos hospital and make it another El Camino site, but said they were under a strict non-disclosure agreement and could only release limited information. The Monday forum came after more than 120 local residents demanded in a petition that hospital executives release more information about the finances of the purchase and how the new facility will affect services at El Camino, which is a public hospital funded partially by taxpayers and governed by an elected board.
Approximately 50 local residents attended Reeder and Graham's half hour presentation about the finances and future of the El Camino and Los Gatos hospitals. During a question-and-answer forum following the presentation, local residents said they were mostly concerned with the secrecy of the new purchase, the financing of the seismic retrofit, and the relationship between the two hospitals.
El Camino Hospital officials said they first considered the possibility of buying the Los Gatos facility in September in an effort to meet their strategic plan to grow by 2 to 3 percent each year. Under the purchase, both hospitals will be governed by the same board, report to the same administrators and share a staff, Reeder said.
The new facility will be viewed as an expansion of the Mountain View hospital. After taking over the 113-bed Los Gatos facility, El Camino will have a total of 512 beds and close to 1,300 physicians.
"We felt we had to do something big," Reeder said. "We are going to be able to make Los Gatos just like El Camino."
Services at Los Gatos are slowly starting to shut down in anticipation of the takeover. When it reopens July 11, the Los Gatos hospital will continue to offer medical and surgical beds, intensive care and OBGYN services, according to El Camino officials. The hospital also plans to expand spinal, orthopedics and urology services at Los Gatos.
As part of the plan, current Los Gatos employees will all be reevaluated.
"El Camino is a culture and cultures are hard to develop," Reeder said. "In the 90 days, we can interview staff and make sure they can do it the El Camino way."
Here is a list of El Camino's current cost estimates for the purchase and re-opening of Community Hospital of Los Gatos:
Land and building: $45 million
Legal and consulting: $2 million
Equipment: $8.8 million
Pre-opening (IT, seismic updates): $5.3 million
Working capital: $5.9 million
Year one capital: $10 million
Total: $77 million