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Hospital board torn on community benefit spending

El Camino Hospital could crank up spending on free and charitable services

El Camino Hospital has been thriving in recent years, bringing in millions of dollars more in profits than expected and budgeting for large-scale construction projects that will change the face of its Mountain View campus.

But amid that success, some members of the hospital's board of directors are arguing that the nonprofit ought give more money back to the community, proposing to dedicate additional tens of millions of dollars for grants to hospital and community organizations.

El Camino Hospital reported putting about $53 million into its "Community Benefit Program" for the 2013-14 fiscal year, funding a broad array of health initiatives and subsidizing health services. More than one-third of that money, $19 million, is for "un-reimbursed Medi-Cal" -- the amount the hospital loses each year providing services for patients whose coverage doesn't cover El Camino's costs.

Despite the losses, the hospital still ended the fiscal year with record-breaking profits, and whether the hospital has been doing enough to reinvest that money back into the community proved a difficult question for board members. Looking at a side-by-side comparison to other local hospitals, El Camino appears to be falling short.

A hospital staff report last month found most other Bay Area hospitals, including Marin General, John Muir, O'Connor and Lucile Packard, spend a bigger percentage of their yearly revenue on community benefits than El Camino Hospital. Lucile Packard Children's Hospital in Palo Alto, for example, brings in roughly 50 percent more in patient revenue than El Camino each year, but spends four times as much on community benefits.

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Board member John Zoglin told the board at the Sept. 9 meeting that despite his inclination to stay fiscally conservative and look long-term, El Camino Hospital is well below comparable hospitals and should be spending much more on grants.

"To me, if we want to go (by) benchmarks, it seems to me we're at the very bottom of the range," Zoglin said.

Board member Dennis Chiu agreed that the hospital needs to start spending more on community benefits -- something closer to 10 percent of the hospital's annual expenses -- particularly since Congress has been considering legislation that could force nonprofit hospitals making "exorbitant revenues" to start paying more into community benefits.

There was hardly a consensus, however. Some board members said there wasn't enough information to make a good decision at the meeting, while others argued $53 million is enough. Board member David Reeder said most hospitals in the country are spending between 5 and 7.5 percent of their budget on community benefits, which puts El Camino Hospital's 7.4 percent on the higher end. Reeder said that he wasn't too worried about repercussions from Congress.

"Congress's concern is, 'Are tax-exempt community hospitals doing enough to give back to the community?'" Reeder said. "We're giving back $50 million dollars, and that's pretty substantial."

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One philosophy discussed at the meeting was that El Camino Hospital should allocate community benefits money equal to the amount of taxes it would have paid had it not been a nonprofit corporation. The hospital's chief financial officer, Iftikhar Hussain, said he was uneasy with the notion that 10 percent of expenses would be diverted to the program. That number would add up to roughly $75 million, he said, which is the same amount the hospital put away as profit for the 2014-15 fiscal year.

"That's a 100 percent tax rate on our income," Hussain said. "Maybe we should go back and think through this, because no corporation pays 100 percent of its income in taxes."

The vote to increase community benefit funding failed 2-5, with board member Chiu and Zoglin voted for the motion and Reeder, Neal Cohen, Julia Miller, Jeff Davis, Lanhee Chen and hospital CEO Tomi Ryba voting against it. The board is expected to revisit the proposed increase in funding at a later date.

As a small consolation, the board did decide to set aside $10 million as an endowment, which could provide an extra $500,000 for community benefits in future years. Hussain said relying on an endowment for consistent spending, rather than ratcheting up the budget of the community benefit program, would be a much more sustainable way of contributing to the community during strong years without committing too much.

"In (fiscal year 2014-15) we had an outstanding year. We had our best year ever," Hussain said. "The question that was raised is, 'What do you do for the community when you have the best year ever?' And my answer was, 'Well, we may not have another year like this,'" Hussain said.

Bumping up community benefit funding by tens of millions of dollars could significantly change the way the hospital gives back to the community. Right now almost all of the community benefit money is spent offsetting Medi-Cal losses and offering financial assistance for patients who couldn't afford hospital services, a total of about 90 percent.

Because the cost of many of these hospital benefits are largely fixed, additional funds injected into community benefits would instead go towards paying for grants throughout the community, including funding for school programs and nonprofit organizations in Santa Clara County.

In the 2013-14 fiscal year, the hospital spent $1.4 million on community benefit grants, which went to pay for health initiatives, school nurses, homeless housing programs and mental health services. If the hospital board agrees to commit 10 percent of hospital expenses to community benefits, that pool of grant money could see a tremendous increase.

Effort to increase transparency fall flat

During the lengthy, multifaceted discussion on community benefits, some hospital board members pushed unsuccessfully to turn the Community Benefit Advisory Council, the staff committee that determines the community benefit grants for the year, into a more transparent board committee with meetings open to the public and subject to the Brown Act.

Chiu argued at the Sept. 9 meeting that deciding how to fund health initiatives, particularly community-based organizations separate from the hospital, ought to be done in public meetings and could really use the extra level of transparency for the otherwise closed-door discussions and grant application process.

"It would allow that discussion to happen in a more open setting, and to all of us," Chiu said.

Chiu's stance was in stark contrast to a hospital staff report that cited a litany of reasons why it would be a terrible idea. It claimed grant applications filled with proprietary information would become public, and that board members could end up being "lobbied by prospective grantees" if they participate in the committee, politicizing the whole grant process.

Board member Dr. Peter Fung agreed with Chiu, and said turning the Community Benefit Advisory Council into a board committee would be an important step toward increased transparency, particularly after the Local Agency Formation Commission (LAFCo) admonished the hospital district for its lack of transparency several years ago.

"This is one of our most important duties for the community," Fung said.

Zoglin questioned why the board was even considering turning the staff advisory committee into a board committee when they voted 5-2 in August to have it remain a staff committee.

"When we take a vote, we've got to move on. We can't come back and re-visit them every time," Zoglin said. "I thought this was part of our best practices, we accept votes and we move forward."

The vote to turn it into a board committee failed 3-6, with Fung, Chiu and Miller voting in favor, and Reeder, Cohen, Zoglin, Chen, Davis and Ryba voting against.

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Hospital board torn on community benefit spending

El Camino Hospital could crank up spending on free and charitable services

by / Mountain View Voice

Uploaded: Fri, Oct 2, 2015, 11:59 am

El Camino Hospital has been thriving in recent years, bringing in millions of dollars more in profits than expected and budgeting for large-scale construction projects that will change the face of its Mountain View campus.

But amid that success, some members of the hospital's board of directors are arguing that the nonprofit ought give more money back to the community, proposing to dedicate additional tens of millions of dollars for grants to hospital and community organizations.

El Camino Hospital reported putting about $53 million into its "Community Benefit Program" for the 2013-14 fiscal year, funding a broad array of health initiatives and subsidizing health services. More than one-third of that money, $19 million, is for "un-reimbursed Medi-Cal" -- the amount the hospital loses each year providing services for patients whose coverage doesn't cover El Camino's costs.

Despite the losses, the hospital still ended the fiscal year with record-breaking profits, and whether the hospital has been doing enough to reinvest that money back into the community proved a difficult question for board members. Looking at a side-by-side comparison to other local hospitals, El Camino appears to be falling short.

A hospital staff report last month found most other Bay Area hospitals, including Marin General, John Muir, O'Connor and Lucile Packard, spend a bigger percentage of their yearly revenue on community benefits than El Camino Hospital. Lucile Packard Children's Hospital in Palo Alto, for example, brings in roughly 50 percent more in patient revenue than El Camino each year, but spends four times as much on community benefits.

Board member John Zoglin told the board at the Sept. 9 meeting that despite his inclination to stay fiscally conservative and look long-term, El Camino Hospital is well below comparable hospitals and should be spending much more on grants.

"To me, if we want to go (by) benchmarks, it seems to me we're at the very bottom of the range," Zoglin said.

Board member Dennis Chiu agreed that the hospital needs to start spending more on community benefits -- something closer to 10 percent of the hospital's annual expenses -- particularly since Congress has been considering legislation that could force nonprofit hospitals making "exorbitant revenues" to start paying more into community benefits.

There was hardly a consensus, however. Some board members said there wasn't enough information to make a good decision at the meeting, while others argued $53 million is enough. Board member David Reeder said most hospitals in the country are spending between 5 and 7.5 percent of their budget on community benefits, which puts El Camino Hospital's 7.4 percent on the higher end. Reeder said that he wasn't too worried about repercussions from Congress.

"Congress's concern is, 'Are tax-exempt community hospitals doing enough to give back to the community?'" Reeder said. "We're giving back $50 million dollars, and that's pretty substantial."

One philosophy discussed at the meeting was that El Camino Hospital should allocate community benefits money equal to the amount of taxes it would have paid had it not been a nonprofit corporation. The hospital's chief financial officer, Iftikhar Hussain, said he was uneasy with the notion that 10 percent of expenses would be diverted to the program. That number would add up to roughly $75 million, he said, which is the same amount the hospital put away as profit for the 2014-15 fiscal year.

"That's a 100 percent tax rate on our income," Hussain said. "Maybe we should go back and think through this, because no corporation pays 100 percent of its income in taxes."

The vote to increase community benefit funding failed 2-5, with board member Chiu and Zoglin voted for the motion and Reeder, Neal Cohen, Julia Miller, Jeff Davis, Lanhee Chen and hospital CEO Tomi Ryba voting against it. The board is expected to revisit the proposed increase in funding at a later date.

As a small consolation, the board did decide to set aside $10 million as an endowment, which could provide an extra $500,000 for community benefits in future years. Hussain said relying on an endowment for consistent spending, rather than ratcheting up the budget of the community benefit program, would be a much more sustainable way of contributing to the community during strong years without committing too much.

"In (fiscal year 2014-15) we had an outstanding year. We had our best year ever," Hussain said. "The question that was raised is, 'What do you do for the community when you have the best year ever?' And my answer was, 'Well, we may not have another year like this,'" Hussain said.

Bumping up community benefit funding by tens of millions of dollars could significantly change the way the hospital gives back to the community. Right now almost all of the community benefit money is spent offsetting Medi-Cal losses and offering financial assistance for patients who couldn't afford hospital services, a total of about 90 percent.

Because the cost of many of these hospital benefits are largely fixed, additional funds injected into community benefits would instead go towards paying for grants throughout the community, including funding for school programs and nonprofit organizations in Santa Clara County.

In the 2013-14 fiscal year, the hospital spent $1.4 million on community benefit grants, which went to pay for health initiatives, school nurses, homeless housing programs and mental health services. If the hospital board agrees to commit 10 percent of hospital expenses to community benefits, that pool of grant money could see a tremendous increase.

Effort to increase transparency fall flat

During the lengthy, multifaceted discussion on community benefits, some hospital board members pushed unsuccessfully to turn the Community Benefit Advisory Council, the staff committee that determines the community benefit grants for the year, into a more transparent board committee with meetings open to the public and subject to the Brown Act.

Chiu argued at the Sept. 9 meeting that deciding how to fund health initiatives, particularly community-based organizations separate from the hospital, ought to be done in public meetings and could really use the extra level of transparency for the otherwise closed-door discussions and grant application process.

"It would allow that discussion to happen in a more open setting, and to all of us," Chiu said.

Chiu's stance was in stark contrast to a hospital staff report that cited a litany of reasons why it would be a terrible idea. It claimed grant applications filled with proprietary information would become public, and that board members could end up being "lobbied by prospective grantees" if they participate in the committee, politicizing the whole grant process.

Board member Dr. Peter Fung agreed with Chiu, and said turning the Community Benefit Advisory Council into a board committee would be an important step toward increased transparency, particularly after the Local Agency Formation Commission (LAFCo) admonished the hospital district for its lack of transparency several years ago.

"This is one of our most important duties for the community," Fung said.

Zoglin questioned why the board was even considering turning the staff advisory committee into a board committee when they voted 5-2 in August to have it remain a staff committee.

"When we take a vote, we've got to move on. We can't come back and re-visit them every time," Zoglin said. "I thought this was part of our best practices, we accept votes and we move forward."

The vote to turn it into a board committee failed 3-6, with Fung, Chiu and Miller voting in favor, and Reeder, Cohen, Zoglin, Chen, Davis and Ryba voting against.

Comments

Transparency
Old Mountain View
on Oct 2, 2015 at 12:33 pm
Transparency, Old Mountain View
on Oct 2, 2015 at 12:33 pm

How about decoupling the El Camino Healthcare District from El Camino Hospital? Why pump taxpayer money from ECHD into ECH and then have ECH give grants? Just have ECHD stop giving money to ECH, have ECH break even, and have ECHD give grants directly to the community.


Jason
Gemello
on Oct 2, 2015 at 1:08 pm
Jason, Gemello
on Oct 2, 2015 at 1:08 pm

They like to buy hospitals outside the area. Should have bought O'Connor and St. Louise.


Hospitals should not be for profit
Monta Loma
on Oct 2, 2015 at 2:19 pm
Hospitals should not be for profit, Monta Loma
on Oct 2, 2015 at 2:19 pm

Hospitals should not be for profit, that money has to come from someone.

It comes from over charging their customers.

All hospital are doing it, even Kaiser has built huge buildings, yet they can't seem to upgrade their equipment, such as their MRI imaging system are still working with CDs.


SP Phil
Shoreline West
on Oct 2, 2015 at 2:34 pm
SP Phil, Shoreline West
on Oct 2, 2015 at 2:34 pm

Expand support for the Rotacare Clinic, which already is affiliated with and across the driveway from El Camino Hospital. This evening clinic serves our neighbors with unmet medical needs who can't get Medi-Cal.


Kathy
Sylvan Park
on Oct 2, 2015 at 4:28 pm
Kathy , Sylvan Park
on Oct 2, 2015 at 4:28 pm

If they are making that much money how about they reduce their prices? An X-Ray, CT Scan, MRI etc is much more expensive at El Camino than stand alone facilities, not to mention the daily ratea as an in-patient, the fact that they are making millions and charging the fees that they do is obscene.


Robyn
another community
on Oct 5, 2015 at 2:56 pm
Robyn, another community
on Oct 5, 2015 at 2:56 pm

Return the money to the property owners who are forced to pay for the hospital bonds.
Also, why did they forgive a $700,000 loan to a doctor and pay full healthcare insurance for their employees? This is in the annual report. Meanwhile, insurance premiums skyrocket due to the exorbitant overbilling.
Stop gauging patients.


Sunnyvale Patient
another community
on Oct 5, 2015 at 9:43 pm
Sunnyvale Patient, another community
on Oct 5, 2015 at 9:43 pm

I can vouch for the high prices at El Camino Hospital, my child went to the ER on a Sunday evening with an asthma flare up in 2014. I was billed $1076 by the hospital and $311 by the CA Emergency Physicians Group.


Sunnyvale Patient
another community
on Oct 5, 2015 at 11:00 pm
Sunnyvale Patient, another community
on Oct 5, 2015 at 11:00 pm

The Affordable Care Act, passed in 2010, embraces the idea of reducing costly hospital visits by keeping people healthy with checkups and inexpensive preventive treatments. Hospitals, according to this approach, should not be the centerpiece of a medical system, but rather the
solution of last resort. Across the country, many hospital systems have been opening neighborhood urgent care centers or acquiring physician groups in the community.
The Kaweah Delta Healthcare District in Visalia, California has adapted to the new healthcare landscape. In addition to a 400 bed hospital with emergency services, the Kaweah Delta Healthcare District provides an urgent care clinic and two Sequoia Prompt Care walkin clinics.

According to the Office of Statewide Health Planning and Development
(http://report.oshpd.ca.gov), emergency department visits at El Camino Hospital have increasedby 34% from 2009-2014


Sarah1000
another community
on Oct 6, 2015 at 9:10 pm
Sarah1000, another community
on Oct 6, 2015 at 9:10 pm

There is not one hospital bed in Santa Clara County for any youth with a mental health issue. Given the high rate of youth suicide in our county, it would be wonderful if El Camino would offer some beds for suicidal teens rather than sending them out-of-county when they go to El Camino's ER for help.


Sarah1000
another community
on Oct 7, 2015 at 10:19 pm
Sarah1000, another community
on Oct 7, 2015 at 10:19 pm

My son went to the ER at El Camino Hospital when he was suicidal at 17 and, then, was sent out-of-county for treatment. We need in-county mental health services for our youth so they have somewhere to go other than the train tracks. Orange County just announced that it is building a youth behavioral health center. See Web Link


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