The El Camino Hospital Board voted unanimously Wednesday night to buy nearly 16 acres of land in South San Jose, with the goal of building a third hospital facility.
At the Jan. 13 board meeting, hospital staff announced the plans to buy up two undeveloped parcels of land in South San Jose on Santa Teresa Boulevard between San Ignacio Avenue and Great Oaks Boulevard. The hospital will acquire the land at a cost not to exceed $24.1 million, according to a staff report.
Ken King, the hospitals' chief administrative services officer, said it's been an "exhaustive" search to find new land for the hospital to expand, and that there are few options left for undeveloped land in the Bay Area. Between the Mountain View and Los Gatos campuses, King said a third location will allow El Camino Hospital to serve a greater number of patients who reside far from the existing facilities.
Expansion into San Jose is an important step in handling a growing demand for the hospital's services, King told the board. Population growth estimates show San Jose's population is expected to explode over the next thirty years, increasing by 41 percent by 2040, and many patients who come to El Camino Hospital already travel long distances from the southern region of the county.
"With the growth that's projected in the county, which is largely going to increase in the South Bay, there's opportunities in the future where we can provide services in the broader region," King said.
Maintaining the financial health of the small community hospital like El Camino Hospital requires attracting as many patients as possible to stay solvent, according to Iftikhar Hussain, the hospital's chief financial officer. Hussain said the hospital's financial outlook depends on patients who live outside of the El Camino Healthcare District, which is roughly bounded by Mountain View, Sunnyvale, Los Altos and Los Altos Hills. The Los Gatos hospital has proved profitable so far and has helped El Camino Hospital's bottom line. Expanding deep into the South Bay is expected to do the same, he said.
The decision marks El Camino's second major expansion, following the acquisition of a hospital facility in Los Gatos in 2009. At the time, some residents voiced opposition as the nonprofit hospital spent $45 million to expand outside of the boundaries of the taxpayer-funded El Camino Healthcare District.
Board members were largely supportive of the expansion plans and the land acquisition brokered between the hospital and the private land owner, who has opted to keep roughly half of the 33 acres of undeveloped land for future development.
Hospital CEO Tomi Ryba said the hospital was moving in the right direction with the addition of a new hospital campus, and that the founders of the El Camino Healthcare District never intended to restrict the hospital's services to residents within the district boundaries. She said increasing the scale of the hospital's operations around the Bay Area will also help to improve services in Mountain View, and draw the "right kind of talent" that patients deserve.
Board member David Reeder said the the hospital acted within state law when it first expanded back in 2009, and that the quality of care and the financial stability of El Camino Hospital has only improved since then.
"The facility in Los Gatos has been a very positive influence, both in the financial (health) and the quality that we've provided to residents in the district," Reeder said. "We'll continue to influence in a positive way both our financial performance, but more important, the quality of care that we provide to our patients."
Reeder stressed that the hospital will not be using any taxpayer funds from the El Camino Healthcare District for the purchase of the property, nor will the funds ever be used to pay for operations at the San Jose campus.
Board member Dennis Chiu said it may be counter-intuitive to think that increasing patient volume several miles south of Mountain View will equate to better quality of care here. But having a greater patient base will allow the hospital to provide more specialties and a broader range of services that would otherwise not be financial feasible, he said.
"Hospital after hospital, study after study, has proven that," Chiu said.