Press Release

Bill to Protect Taxpayer-Backed District Hospital Assets Advances in State Senate

For Immediate Release
April 7, 2010

A bill to assist communities struggling to protect district hospital services in the face of the erosion of care by corporate hospital chains like Sutter Health advanced in the California Senate today.

SB1240, introduced by Senator Ellen Corbett and sponsored by the California Nurses Association, passed the Senate Local Government Committee on a 3-2 vote. It now heads to the Senate Health Committee.

Corbett introduced SB1240 in direct response to Sutter’s conduct with Marin General Hospital and Eden and San Leandro Hospitals in Alameda County. “Health care districts are formed when citizens take the extraordinary step to assess themselves in order to create a community hospital,” said Corbett. “I have seen firsthand how hard a community will fight to save its hospital and how difficult that fight can be.”

SB1240 will protect taxpayer investment in critically-needed safety net healthcare resources by prohibiting private corporations that lease district hospitals from transferring assets out of the district or crediting operating losses of the district hospital against any purchase price. SB1240 would also require annual, independent, publicly-available financial audits of any district hospital leased to a private company.

Assemblyman Jared Huffman, whose district includes Marin General, commended Senator Corbett “for introducing this legislation to protect the public assets at district hospitals. In Marin, we have seen a private entity, Sutter Health, drain hundreds of millions of dollars in funds from our district hospital with no guarantee that the money will be invested back into the local community.”

In 2007 Sutter extracted modifications to its Memorandum of Understanding with the Eden Healthcare District to allow Sutter first right to buy San Leandro Hospital. The MOU also provided that Sutter could count operating losses against the purchase price, which Sutter has sought to do in order to close San Leandro Hospital.

CNA/NNOC Co-President Malinda Markowitz, RN praised Senator Corbett’s efforts on SB1240, saying, “Sutter’s leases of district hospitals have put our safety net services at risk and force taxpayer bailouts of district hospitals. These agreements gave Sutter a perverse financial incentive to run San Leandro into the ground in order to get a free hospital, and to use Marin General assets to fund competition against Marin General itself. Our public assets cannot serve as an ATM for profit-seeking hospital chains like Sutter.”