El Camino is a taxpayer-supported, community-based, nonprofit hospital. Its five directors are elected and are responsible to the citizens of the El Camino Hospital tax district. The tax district is comprised of the communities of Mountain View, Los Altos, Sunnyvale and Cupertino, not San Jose or Los Gatos.
The hospital management claims that taxpayer monies will not be used for the $45 million acquisition. That is ludicrous. The hospital does not segregate its financials, its staffing, its programs, or any other measure of operational performance by what is funded by taxes and what is not.
El Camino Hospital receives over $15 million per year in direct taxes and more than that in tax relief due to its tax-exempt status. The hospital is profitable in large part because of its tax-exempt status and the tax revenue it receives. El Camino received extremely favorable interest rates on the tax-exempt bonds that are helping fund construction of a new, earthquake-proof hospital on its Grant Road campus.
If El Camino wants to expand its footprint in order to bring in more patients for its affiliated doctors, it should focus on the new $450 million hospital under construction now — and figure out how to increase efficiency and maintain profitability there. What possible justification is there for the board to approve spending $45 million on an unprofitable hospital that could require $200 million or more to meet state-mandated earthquake retrofit guidelines by 2013?
It is incumbent on the El Camino Hospital board to disclose its pro forma financial projections for the acquisition — including the earthquake upgrade cost — and show taxpayers why the acquisition will not result in a financial albatross. It is also incumbent on the board to disclose the legal opinion that allows El Camino to expand its service area and operations beyond the El Camino tax district.
All too often the hospital board's decisions with respect to strategic planning, budgeting, capital spending and implementing improvements in healthcare delivery and cost efficiency have been discussed and decided in closed sessions. Decisions such as the Los Gatos Community Hospital acquisition are labeled as "Health care facility trade secrets" in order to keep the public in the dark regarding such discussions and decisions.
Because El Camino is a taxpayer-supported, nonprofit community hospital, the citizens in the tax district have a right to know how and why these decisions are being made and what impact they will have on the financial viability of El Camino and its ability to deliver high-quality and cost-effective health care.
The hospital board members need to stop hiding behind a veil of "trade secrets" and explain and justify their actions to the citizens in their tax district. If the board is not willing to do that, perhaps they should return all taxes to district citizens and revise their charter to become a for-profit hospital, with no taxpayer support. Then they could operate on their own, answer only to themselves, and expand into any geographic area within the U.S.