Despite public opposition, the El Camino Healthcare District's board of directors agreed Monday night to expand the nonprofit hospital's governance board from nine members to 11 members. The decision would add health care experts to guide the hospital's major decisions and $800 million annual budget, but dilutes the influence local residents have over the hospital's operations by having five appointees and five elected board members.
Last month, the El Camino Healthcare District -- a special tax district encompassing Mountain View and several neighboring cities -- announced it was considering a governance shake-up for El Camino Hospital. The argument, according to hospital staff, is that the hospital is struggling to survive as an independent community hospital in a changing health care environment. Not only is competition fierce in the South Bay and the Peninsula, but changes in health care laws could threaten how much money El Camino Hospital receives from insurance companies and the federal government for services.
The remedy, according to hospital staff and the firm Nygren Consulting, is to add more people to the hospital's board of directors who have a strong background in health care -- whether it be the insurance industry, finance or clinical experience -- who can guide the hospital through uncertain times.
Though the hospital paints a bleak picture of its economic future, financial reports show the hospital's operating income through early 2017 was $33.5 million more than budgeted, and budgets going back to 2014 show the hospital has been able to stow away tens of millions of dollars in profits each year.
The El Camino Healthcare District is a separate entity from El Camino Hospital, and was created in the 1950s to finance the hospital's construction. Voters elect five members to the district's board of directors, who continue to wield significant sway over the hospital's operations because they also serve as members of the El Camino Hospital board.
The health care district's board wields the power to decide the hospital's board structure, and oversees the district, which owns the land under the hospital's Mountain View campus and leases it to the hospital.
Since the board was expanded in 2012, the hospital has been run by nine board members. All five of the El Camino Healthcare District board members serve on the hospital's governance board, as well as three appointed members and El Camino Hospital's CEO. One proposal Monday night suggested simply appointing two more health care experts to the hospital board, while another suggested leaving the board at nine members but swapping out two district board members for appointed directors.
The majority of the public speakers, and most of the 115 public comments received over the last month, opposed stripping away voter-elected membership from the hospital's board, seeing it as a loss of public control over a community hospital that district residents helped finance with their taxes over the last 60 years. Changing the composition of the board to allow subject-area experts to overrule elected members as a voting bloc amounts to a "slow-motion giveaway" of the hospital, argued Los Altos resident Bill James, who previously ran for a seat on the health care district's board.
"This hospital and everything about it is owned by the people, and that's what's wonderful about it," James said. "In both these (proposed) models, the (hospital) board could override a unanimous vote from the district board."
Some speakers compared the proposed changes to a decision by the El Camino Healthcare District in 1992 that separated the district from the hospital entirely, ceding complete control of El Camino to another nonprofit entity. Sometimes referred to as the "privatization experiment," the district board voted three years later to file a lawsuit in order to claw back control of El Camino Hospital. The health care district regained oversight of the hospital in 1997.
Los Altos Hills resident Jim Abraham said the suggested changes to the board stink of an attempt to steal the hospital away from the people who continue to pay taxes to support it.
"The idea that you can pack the board with people who don't live in the area and are not elected just absolutely blows me away. It's just so wrong," Abraham said. "Take this turkey, bury it and don't come back to it. We've been here before -- let's not do it again."
Kary Lynch, a 40-year hospital employee working in the behavioral health department, wondered whether appointed health care experts would make decisions in the best interest of the public or the best interest from the perspective of the hospital's financial health. The existing board agreed to invest in a new behavioral health building, but plenty of private hospitals have sought to slash money-losing services in the name of economic solvency.
Failure to communicate?
Despite the public's pleas to leave the hospital board alone, three of the five board members remained unfazed. Board member David Reeder said his work in the local tech industry pales in comparison to the complex, challenging world of the health care market. To depend on five democratically elected board members to manage the hospital with so many changes and challenges on the horizon, he argued, would not bode well for the hospital's future. That's why so few independent local hospitals are left in the Bay Area.
"The board of directors that are elected by the people aren't always qualified to operate the hospital," Reeder said.
Board member John Zoglin, who voted against retaining the status quo, said residents shouldn't be alarmed over the prospect that appointed members will take over the hospital's operations, if only because he couldn't recall a single vote that pitted all five district board members against the three appointed members. What's more, the El Camino Healthcare District reserves the right to remove any appointed member from the board, giving the district ultimate power over what happens at the hospital.
Board member Dennis Chiu and Julia Miller voted in favor of leaving the hospital's board as-is, but the vote failed 2-3 with board members Peter Fung, Zoglin and Reeder opposed. Reeder then made a motion for "Option C," which called for swapping out district board members for appointed members, but it also went down in a 2-3 vote. Miller said she was "disappointed" that her colleagues were even considering Option C, given the public support to retain the power of elected officials over the hospital.
Reeder, responding to Miller's comments, said that he has to represent the entire community and not just those who weighed in through public comment. One public speaker questioned why the health care district asked for public comment, if board members were going to disregard it as a narrow band of broader public opinion.
Fung said that the opposition may stem from a misunderstanding, and that the public failed to understand that the El Camino Healthcare District board still maintains its power to appoint and remove hospital directors.
"Have we not done a good enough job?" Fung asked. "I think we did the best we could to explain to the public, both in the PowerPoint and the publication, that the district board still has reserved powers."
Board members eventually gave a reluctant but unanimous vote on a compromise that would add two appointed directors to the hospital's board but retain all five district board members, expanding the board to a total of 11 members. In an amendment proposed by Miller, district board members also agreed to strip the voting power of the CEO, leaving 10 voting board members. The amendment ensured that non-elected members would not have a majority vote over hospital decisions.
The de facto tie-breaking vote was Zoglin, who voted against both Option C and the existing board structure, and prompted the vote for the board expansion. He explained that he was proud of the existing governance structure and what it's accomplished so far, but acknowledged that the hospital was going to need more experienced leadership in order to remain a "jewel of an institution" and avoid "selling out to change" like Sutter Health.
"It's not, 'If it's working now, don't fix it,' but what do we need to do to make sure it's fixed in five years," he said.