For the time being, the El Camino Hospital District is not in danger of being dissolved by the county agency charged with regulating the health care municipality.

The board of the Santa Clara County Local Agency Formation Commission voted Aug. 1 to accept the final draft of a critical independent audit of the hospital and to formally request that El Camino officials take action to improve governing practices and increase transparency, while simultaneously acknowledging that the health care organization is well on its way to making those improvements.

Members of the LAFCO board chose their words carefully during the Wednesday afternoon meeting, noting that while the county agency was "accepting" the critical report the board had no intention of moving forward with the most extreme sanction in their power -- dissolving the hospital district -- at least not any time soon.

"My feeling was that, well, they're trying -- they've made progress -- let's keep working to continue on that path," said Margaret Abe-Koga, one of the LAFCO board's five members, in an interview with the Voice the day after the Aug. 1 meeting. "We don't need to discuss dissolution."

For the past year or more, according to El Camino officials, the hospital administration and district board members have been working to make it easier for the public to understand the health care organization's inner workings, finances and to draw a sharper line between the hospital corporation and the hospital district. Abe-Koga and other members of the LAFCO board said these efforts have not gone unnoticed.

"They did come out looking like they did a very good job," Abe-Koga said.

"We're very pleased," ECH spokeswoman Chris Ernst said immediately following the vote. "It's reaffirming of all of the great work that we do."

Indeed, the chairman of the LAFCO board, Pete Constant, said he has no doubt that El Camino Hospital offers high quality care to its patients. In fact, Constant noted, he had recently been treated at the hospital and was very impressed with his experience.

The quality of care delivered by El Camino Hospital was never in question. Rather, it was the hospital's governing and financial practices, which have come under fire. First, a June 2011 report from the Santa Clara County Civil Grand Jury critiqued the El Camino for not drawing a clear enough distinction between the money it collects as a private corporation versus the money it collects from taxpayers through the hospital district. That report prompted LAFCO to commission an independent audit from the public sector management consulting firm Harvey M. Rose Associates, LLC.

The first draft of the Rose audit, delivered to LAFCO on May 23, came to similar conclusions as the civil grand jury report and made a series of recommendations for LAFCO to consider, including pushing for greater transparency in governance and accounting. If the hospital did not make those changes, the audit recommended that LAFCO use its powers as a regulating agency and take measures to force the hospital district's hand. The most extreme of such measures, the report noted, would be to dissolve the district.

However, beginning last year, in the wake of the civil grand jury report, the hospital has made a concerted effort to make many of the changes the audit recommended. After the vote, Ernst noted that El Camino has created a new and separate website for the district, with its own URL address; hospital corporation and hospital district meetings are no longer held on the same night; and the hospital has changed the way it presents its budget in public board meetings to make it easier to understand. All these things, and more, Ernst said, have been done in an effort to make the hospital more transparent.

"Sure, there are areas to improve in terms of good governance, but they seem to be making an effort to do that," Abe-Koga said.

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