In an ongoing effort to extend its reach well beyond Mountain View and neighboring cities, El Camino Hospital is aiming to spend $3.6 million on a new primary care clinic in west San Jose. The lease for the property was approved earlier this year behind closed doors as a strategic move to "secure a site in the proximity" of the hospital's Los Gatos campus.
The new clinic, located at 828 S. Winchester Blvd., will be modeled after Silicon Primary Care Clinic next door to El Camino Hospital's Mountain View campus. The floor plan includes 18 exam rooms and a procedure room within the 9,350-square-foot "retail building shell" currently on the property. The site is big enough to support between six and eight physicians, according to a staff report.
Although the real estate search for the clinic began last year, information on the hospital's negotiations and eventual lease agreement for the Winchester property didn't show up at a public meeting until March, when the hospital's finance committee reviewed a list of upcoming capital projects that included a vague reference to the clinic.
The plans for the new clinic are separate from the hospital's $23.4 million purchase of 16 acres of vacant land in South San Jose last year, which also flew under the radar and was discussed in closed-session meetings by the hospital's board of directors.
The clinic is one of several recent South Bay investments by the hospital that are intended to increase El Camino's profitability in what hospital officials repeatedly refer to as a challenging and competitive health care market. The hospital's 2017-18 budget includes an infusion center at the Los Gatos hospital campus, a new "Da Vinci Xi" surgical robot and a physician concierge service to help with patient scheduling and billing. The goal is to add hundreds of new surgeries at Los Gatos for next year and tack on an additional $3 million in revenue.
The Winchester clinic is the part of the hospital's long-term strategy for growth as an organization, and serves as an opportunity to "engage" the broader Santa Clara County population through a network of physicians, said El Camino Hospital spokeswoman Jennifer Thrift. She said independent physicians, like small independent hospitals, face plenty of challenges in today's health care environment, and both benefit from a hospital-run clinic.
"If a primary care clinic patient needs additional health care services, these physicians will have access to specialists and hospital services within a network of care that streamlines access through an integrated electronic health record and physical proximity," Thrift said.
The clinic is expected to operate with six full-time physicians and have 16,000 patient visits in its first full year of operation.
After the Voice's press deadline, El Camino spokeswoman Kelsey Martinez said the lease agreement for the San Jose property is for 15 years and three months with a total commitment of $6.7 million.
The hospital has been criticized in recent years for pouring money into communities outside the El Camino Healthcare District, which encompasses Mountain View, Los Altos, Los Altos Hills and parts of Sunnyvale, Santa Clara and Cupertino. The hospital benefits from the taxpayer-funded health care district, which financed the hospital's original Mountain View campus and continues to provide money for capital improvements and debt service.
Hospital staff say the investment is justified because all of the money poured into new facilities outside of the district boundaries are paid for out of hospital coffers rather than the district's budget, but critics argue both budgets are inextricably tied. A 2012 analysis of the hospital's finances found that El Camino received over $105 million from the district over five years, which helped the hospital "generate sufficient net assets and cash balances" to buy the Los Gatos hospital campus. The hospital also has access to tax-exempt debt financing through the district and the county as a nonprofit corporation, according to the analysis.
When the hospital bought the 16 acres of land in South San Jose, the health care district's board of directors justified the purchase by arguing that expansion beyond the district's boundaries is an essential part of staying competitive with hospitals that have no such limitations, and that serving more patients in the South Bay will eventually translate into a higher quality of service for district residents.
El Camino had previously run two outpatient dialysis centers in San Jose. But both were shuttered in 2013 and 2014 after staff found the service was losing from $4.7 million to $6.9 million each year -- in part due to low Medicare reimbursement rates that do not cover the cost of providing the service.