And the hospital has come under criticism for its lack of transparency, first from a Santa Clara County Civil Grand Jury report last year, and more seriously, from the Local Agency Formation Commission (LAFCo) which theoretically could terminate the hospital district, taking away $16 million a year in taxes paid by residents of Mountain View, Los Altos and several other communities. The tax power is important to El Camino, which uses part of the revenue to pay off debt and support a group of local nonprofit agencies like Rotacare, which provide health care services for low income residents.
With annual revenues of more than $600 million, El Camino's finances are more complicated than most, given that it is a creature of a public hospital district, but operates not only a hospital in Mountain View but also one outside district borders in Los Gatos, where two years ago it spend nearly $100 million to purchase the Los Gatos Hospital. To oversee this conglomerate, the hospital has two boards of directors, one to serve the district, which has little power, and the other to make the actual business decisions, hiring and firing top executives and approving union contracts, among other things. Traditionally, the same elected members served on both boards.
But despite its best intentions, the hospital ran afoul of a LAFCo audit released late last month, which found that the board structure was lacking in transparency, unaccountable to its constituents and in need of serious reform. One example cited by the auditors involved the way the hospital accounts for roughly $16 million a year in taxpayer funds received every year and which the hospital moves into its private corporation. "These are public funds," an auditor said. "The public has a right to know how these funds are being used."
Transparency issues were also a problem identified in the grand jury report. But while the grand jury can do little more than suggest reform, LAFCo could make life difficult for the hospital by moving to dissolve the hospital district, taking away its taxing power, which would be an extraordinary move and one that the hospital strongly opposes.
Neither report should come as a surprise to the CEO and members of the two boards of directors that oversee El Camino. A layman attending a board budget discussion would find it very difficult to follow the documents, which are distributed to the public just a few hours before the meeting. Current practices work against giving the public a clear understanding of hospital management. This is especially the case during the budgeting process.
Kary Lynch, a psychiatric technician at the hospital who also serves as a steward for an El Camino workers' union, told the auditors, "It's real hard to make any sense of the budget when they go over it in public meetings." He said that when the budget is presented, the board often breezes through the process quickly so members of the public are only given a few minutes to speak.
Hospital officials say they are already working on ways to enhance financial reporting and increase outreach and education about the district. That is good news, and we hope it will soon begin to make a difference in how the district operates in this era when more and more people are seeking to understand how their institutions are managed.
It remains to be seen how much impact another move, to enlarge the hospital board by three members, will have on overall transparency. The additional seats are expected to be filled by experts in fields that the hospital is lacking now. The public may also be invited to apply for a seat on a few advisory committees to the board, which could help sway the auditors to the hospital's side.
We hope practices can be put in place that will bring the public into the budgeting process and other hospital activities. As the auditors say, the hospital has changed dramatically since it was founded in 1956, and is not operating as the founders intended. Now is the time for this important institution to get back on track and open itself to public scrutiny.
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