A few months ago, Kathleen Sullivan was at work when she got a phone call: Her husband had been shot in the shoulder outside of their Richmond home in a random drive-by. The ambulance had taken him to the emergency room at Kaiser Permanente Richmond Medical Center. Sullivan drove there immediately.
When she arrived, her husband was lying on a gurney. The paramedics were hovering over his wound, going through gauze after gauze after gauze. “He was bleeding out over everything they were putting on him,” Sullivan recalled. When she asked the paramedics what their plan was, they told her that Kaiser Richmond didn’t have the resources to deal with that kind of trauma. They were just trying to stop the bleeding so they could take him to a bigger hospital, John Muir Medical Center in Walnut Creek, about 25 miles away.
Sullivan was angry. It was ridiculous to her that they were sitting in a hospital that was unable to treat her husband. They were sitting in a hospital waiting to go to another hospital.
It was 4 p.m. when they started moving him to John Muir. Traveling down Interstate 80, they were sure to hit bumper-to-bumper traffic. “It’s a death trap if it’s the certain time of the day and it’s a certain thing that’s gone wrong,” Sullivan said. She didn’t feel steady enough to drive herself, so she got a friend to take her. Instead of going down the interstate, they took a shortcut through the Berkeley hills.
Seven hours later, Sullivan’s husband was out of surgery and stable. The surgeon told her that if the bullet had hit him even a quarter of an inch to the right, he wouldn’t have made it. It wasn’t so much the wound that would’ve killed him, it was all those minutes that went by. “If he could have been treated at Kaiser, he could have been saved,” she said.
Richmond is deep in what’s often referred to as a “hospital desert.” This desert stretches along the densely populated Interstate 80 corridor from Vallejo to Berkeley, with a population of about 250,000 residents. Besides the 50-bed Kaiser hospital in Richmond, there are only a handful of clinics and urgent care facilities. But there is no fully functioning emergency room in West Contra Costa County, especially not one that could handle a gunshot wound. This puts Richmond residents — who live downwind from a major oil refinery — in a precarious position.
In medical emergencies, Richmond residents rely on Kaiser Richmond, Contra Costa Regional Medical Center in Martinez, and Alta Bates Summit Medical Center in Berkeley. Of these options, only the 300-bed Alta Bates has a fully functioning emergency room. Unlike a clinic or an urgent care facility — which can treat non-emergency illnesses — a fully equipped emergency room can deal with major injuries, heart attacks, strokes, and more. But now, Sutter Health, the owner of Alta Bates, has begun to move in-patient services to its facilities in Oakland. Eventually, the not-for-profit health system plans on relocating emergency services to Oakland as well. The effects of this move will likely ripple throughout the East Bay, but the impacts will be most felt in West Contra Costa County, which is already suffering from the loss of Doctors Medical Center in San Pablo in 2015.
Sutter Health has publicly stated that it is not closing Alta Bates but merely moving in-patient and emergency services to Summit Medical Center in Oakland. According to a press release, Sutter Health is looking into ways to repurpose the Alta Bates campus “for medical services and/or support staff office space.” It said the consolidation comes after the passage of Senate Bill 1953, which requires that all California hospitals either retrofit their buildings to meet stricter earthquake safety standards or cease to operate acute care services in those facilities by 2030.
Although Sutter Health argues that the consolidation will be better for patients, many worry about the effects this could have on East Bay residents. Specifically, critics of the move are concerned about travel times along I-80 in an emergency situation.
Thorild Urdal, a longtime nurse in the labor and delivery unit at Alta Bates, has seen how crucial every minute can be in an emergency situation. Driving the 11 or so miles from Richmond to Oakland can take an hour in rush-hour traffic. If someone has a major heart attack, she said, that hour can be fatal. “There’s certain emergencies — if they’re true emergencies — every minute can count,” she said.
Berkeley Mayor Jesse Arreguín said this issue goes beyond Berkeley and puts the lives of every resident in the East Bay at risk. “Where are you going to go if you have a heart attack? What would happen if there’s a fire or an earthquake?” he said. “It’s going to leave our community without basic health-care services.”
Located on Ashby Avenue in Berkeley, Alta Bates has served the East Bay community since its founding in 1905 by a nurse named Alta Alice Miner Bates. Over the years, the tiny hospital grew into a valuable maternity center and provided care to the community through several catastrophic events, including the Loma Prieta earthquake in 1989 and the Oakland firestorm of 1991.
In 1996, the hospital became part of Sutter Health when the Sacramento-based hospital network merged with Bay Area-based California Healthcare System. Two years later, there was a proposal to merge Alta Bates with Summit Medical Center in Oakland — the East Bay’s two largest hospitals, located just 2.5 miles apart.
At the time, hospitals in California were beginning to merge and consolidate, part of a nationwide trend. According to a study by Alan Sager of Boston University’s School of Public Health, the U.S. had 781 hospitals in 52 major cities at its peak in 1970. In 2010, that number fell by 46 percent, to 426.
Daniel Arnold, director of research at the Nicholas C. Petris Center on Health Care Markets and Consumer Welfare, said in the 1990s, insurance companies in California began a network-based model in which patients could only go to certain pre-approved doctors. Previously, patients were able to choose where and whom they got their care from. Arnold said this “managed care revolution,” as it’s often referred to, led to the merging of many health-care systems and hospitals.
The model also gave insurance companies more leverage. If a hospital’s prices weren’t favorable to the insurance companies, the insurer wouldn’t include that hospital in its network. In order to combat this, hospitals began to merge to reduce competition. And that led to higher prices, Arnold said.
Hospitals, however, have argued that consolidations haven’t solely been profit-driven; they also make hospitals more efficient by reducing administrative and other overhead costs. Dwindling Medicare and Medicaid reimbursement rates have also been cited for being responsible for hospitals’ financial woes.
According to a 2008 Federal Trade Commission report examining the Sutter-Summit merger, a major reason for Summit’s financial problems was the Balanced Budget Act of 1997, which significantly reduced the hospital’s reimbursement for Medi-Cal patients. Financial problems were cited as the reason for the proposed merger with Alta Bates.
But California Attorney General Bill Lockyer worried about what the Sutter-Summit merger would mean for East Bay residents. In 1999, he filed an antitrust suit to block the merger, arguing that it would give the Sutter-Summit hospitals a combined 48 percent share of the East Bay hospital market, thus reducing market competition in the region and allowing Sutter to raise prices. The merger, Lockyer said, would hurt consumers. He was also concerned that it would affect access to certain services in the region.
“When mergers occur, there’s divisions of responsibility, and certain services would be split between campuses,” he said in a recent phone interview. “There was the question of what services would be available at the different hospitals.”
Summit attorney Maureen McGuirl, however, said the hospital was in dire financial conditions and would be forced to lay off 200 workers, or 9 percent of its staff, without the merger, according to a report by the San Francisco Chronicle.
A major point of contention surrounding the merger was geographic market definition, because at the time there were more than 20 hospitals located either in San Francisco or the East Bay, many of them providing similar services as Alta Bates and Summit. In his suit, Lockyer defined the market as the “Inner East Bay,” citing commute times across the San Francisco Bay Area.
But in her ruling, U.S. District Court Judge Maxine Chesney stated that the market was actually much larger than that; an East Bay resident could just go to Stanford Medical Center for treatment, she said.
Despite the antitrust concerns, the merger was completed at the end of 1999. In the ensuing years, Sutter Health began to slowly move or close departments at the Alta Bates and Summit campuses. Urdal remembers how the moves started. She says the labor and delivery department at Summit Hospital in Oakland closed 15 years ago, followed by the cardiac catheterization lab at Alta Bates in 2010. It didn’t surprise Urdal that Sutter began to quietly shut down services. “They don’t want the public to know what’s going on so we don’t put out heads together and fight the closure,” she said.
Even more concerning, perhaps, is that many of Lockyer’s fears have come to fruition.
The 2008 Federal Trade Commission report noted that Summit’s prices increased 28 to 44 percent after the merger. “Summit’s price increase was among the largest of any comparable hospital in California, indicating this transaction may have been anticompetitive,” the report stated. It also noted that although both Summit and Alta Bates are nonprofit hospitals, which some researchers argued would make them less likely to increase prices after a merger, the results indicate that nonprofit hospitals “may still raise price quite substantially after they merge.”
Sutter Health’s increased prices also appeared to have the effect of raising prices at other hospitals in the region. A 2016 study by Glenn Melnick and Katya Fonkych of USC found that while hospital prices in California grew 76 percent between 2004 and 2013, they rose 113 percent at hospitals within the Sutter Health and Dignity Health systems. “These guys set an umbrella price, and everyone else floats up,” Melnick told the Los Angeles Times.
In March, a study released by UC Berkeley’s Nicholas C. Petris Center on Health Care Markets and Consumer Welfare found that prices for an inpatient procedure — those that require an overnight stay at a hospital — are 70 percent higher in Northern California than in Southern California, while ACA premiums north of the state were 35 percent higher in 2016.
Now, California is alleging that Sutter Health’s price increases may not be legal. In March, California Attorney General Xavier Becerra filed a lawsuit against Sutter Health, accusing it of using its market force to engage in “illegal, anticompetitive pricing that hurts California families.” Among the allegations are that Sutter Health increased its power to control prices and exclude competition, and imposed prices for health-care services and ancillary products that “far exceed the prices it would have been able to charge in an unconstrained, competitive market.”
Becerra also alleges that Sutter Health — which now includes 25 acute-care hospitals, 31 ambulatory surgery centers, nine cancer centers, and six specialty care centers — used its profits from illegal pricing practices for acquisitions, “extreme levels of executive compensation,” and financing its own insurance arm.
No one from Sutter Health was available to comment on this story. The CEO of Alta Bates, Chuck Prosper, announced his resignation in February, and the hospital is currently in the process of finding his replacement. No comment has been made on whether his resignation is related to the pending closure of the Berkeley hospital.
In a press release sent by Sutter Health Communications Manager Clayton Warren, Sutter stated that Alta Bates “cannot be retrofitted to meet the new standards for inpatient, hospital care.” Instead, Sutter Health is relocating Alta Bates services and building a “medical village” at its campus in Oakland, according to its press release. Though no clear reason is given as to why the current facilities cannot be retrofitted, the statement from Sutter mentions that the change is “based on how patients access hospital care today.” According to Sutter, more patients are receiving care in lower-cost outpatient facilities like urgent care centers and doctor’s offices.
In Berkeley, there are currently two Sutter Health facilities: Alta Bates, which houses behavioral health services, a birth center, and oncology and cardiovascular services, and Herrick, an outpatient facility focused on rehabilitation and behavioral health services. All the inpatient services in Alta Bates would move to the Summit campus, leaving the Berkeley campuses as outpatient centers with an urgent care clinic, a cancer center, and mental health services.
In a 2016 letter to the Berkeley City Council, Prosper said the move is also intended to cut costs. “Operating two full service hospitals less than 3 miles apart is inefficient and inhibits our ability to be most affordable to patients,” he wrote.
Brian Potts, an emergency medicine physician and the director of the emergency department at Alta Bates in Berkeley, understands that residents are worried about the move but said that nothing is going to happen overnight. Although it’s still unclear when Sutter Health will begin to relocate remaining services from Berkeley to Oakland, he said the process is expected to take almost 10 years, which is meant to minimize the impact on the surrounding community. “Sutter does not want to impair the community health-care-wise,” he said. “That’s the last thing we want to do.”
Potts said there are already more patients going to the ER facilities in Oakland and that the consolidation will create the largest emergency department in the East Bay. “It would serve about 100,000 people a year, which is actually more than our current campuses combined are seeing,” Potts said. Currently, Alta Bates’ ER sees 45,000 patients a year, while Summit sees 49,000.
But Marty Lynch, executive director of LifeLong Medical Care, a nonprofit that provides health, dental, and chronic disease care to underserved populations, said this line of thinking is not tackling the real problem in health-care. “The lack of emergency services is a bigger issue than hospital beds. Really the issue is how these low-income communities can get the emergency care that they need,” Lynch said, referring to West Contra Costa County residents who will now be farther away from a fully functioning emergency room.
One of the most vocal opponents of the Alta Bates closure has been Rochelle Pardue-Okimoto, a nurse in the neonatal intensive care unit at Alta Bates and the mayor pro tem of El Cerrito. Pardue-Okimoto said that, as a nonprofit, Sutter Health has an obligation to keep the Berkeley hospital open and should use its funds to do so. “We would like to see more of that money put back into the community so that the hospitals are actually taking care of folks — not consolidating and trying to maximize profits,” she said, referring to some of its executives’ multimillion-dollar salaries. (In 2015, Sutter Health Patrick Fry CEO received $7.5 million in pay and benefits before retiring in early 2016.)
In order to be compliant with the state’s new seismic rules, hospitals can retrofit existing buildings, demolish seismically unfit buildings, or remove all general acute care hospital services from the unsafe buildings, said Doug Nelson, director of facilities development and construction at the UCSF Benioff Children’s Hospital Oakland. The pediatric hospital launched a plan to rebuild the areas of the hospital that currently house general acute care services — a process that will take more than 10 years and cost more than $400 million, according to Melinda Krigel, communications director of UCSF Benioff Children’s Hospital Oakland.
Jan Emerson-Shea, a spokesperson for the California Hospital Association, said no state or federal money has ever been made available for hospitals to help them meet the state’s seismic safety requirements. “It’s the largest unfunded mandate in the history of the state of California,” she said, adding that the total cost of compliance is estimated to be $110 billion statewide — and twice that amount when considering financing costs.
While large hospitals can borrow money on Wall Street, smaller, independent hospitals have been forced to affiliate with larger systems in order to gain access to capital, Emerson-Shea said. She noted that county hospitals can propose bond measures and district hospitals can opt for a parcel tax, but “if you’re a not-for-profit organization, usually you have to go borrow the money,” she said, noting that some nonprofit hospitals have used tax-exempt bonds called private activity bonds. “And to be credit-worthy, you have to be making a decent margin,” which she said might be around 5 percent. (While Sutter Health’s profits have decreased in recent years, last year it recorded $326 million in net income from operations, according to its 2017 financial statement.)
Part of the challenge for hospitals borrowing money, Emerson-Shea said, is that seismic retrofitting doesn’t create a new revenue stream. Still, she said that more than 90 percent of California hospitals have been seismically retrofitted to meet the 2020 deadline to ensure buildings don’t collapse. They must meet stricter standards to ensure buildings can remain operational by 2030.
The East Bay has seen several hospital closures in recent years. In 2014, Kaiser’s South Hayward hospital closed (but was replaced by San Leandro Medical Center facility), and in 2015, Doctors Medical Center in San Pablo also closed. Herrick Medical Center in Berkeley was once a full-service acute care hospital but now offers only behavioral health, rehabilitation, radiology, and radiation oncology services. San Leandro Hospital was at risk of closing in 2013 but is now undergoing a $26.8 million renovation as rehabilitation services will be relocated there from nearby Fairmont Hospital.
The closure of Doctors Medical Center has been perhaps the most significant hospital loss in recent years — especially to Richmond and San Pablo residents. Originally known as Brookside Hospital, DMC began experiencing substantial financial losses in 2004. That year, Tenet Health Systems returned the hospital to the West Contra Costa County Healthcare District. For the next few years, DMC continued to lose money, closing several departments along the way. In 2006, it closed its burn unit and obstetrics department, as well as its entire campus in Pinole.
For the next two years, the hospital tried to find outside funding. In April 2008, Kaiser Permanente and John Muir Health Systems each announced it was awarding a $12 million and $3 million grant, respectively, to help DMC emerge from bankruptcy. The hospital’s financial problems stemmed from its patient base: Serving mainly Medi-Cal and uninsured patients, DMC had an average per patient per day reimbursement rate that was 57 percent lower than average compared to other East Bay hospitals in 2013, according to Contra Costa Health Services.
After the Affordable Care Act (ACA) passed in 2014, it was even more difficult for DMC to make a profit. According to data supplied by the hospital, the ACA resulted in a $2.8 million per year decrease in revenue. Eventually, after countless efforts and proposals, DMC announced that it was permanently closing its doors in April 2015.
Throughout its existence, DMC was a trusted place for patients who were enrolled in Medi-Cal or were uninsured. In March 2018, more than 180,000 people were enrolled in Medi-Cal in West Contra Costa County.
Marty Lynch of LifeLong Medical Care was part of the discussions and efforts to try to keep DMC open. What surprised him most when looking at the patient data of DMC was how many of those patients were coming into the emergency room for non-emergency reasons. In 2013, just 18 percent of the patients who came to the emergency room at DMC met the criteria for severe or critical conditions, according to a 2016 study by Contra Costa County. Lynch saw two problems emerge during the closure of DMC: One was the loss of viable emergency care for strokes, heart attacks, and other true emergencies. The other was the lack of primary-care options for people who are uninsured or on public health insurance.
Like DMC, Alta Bates is the only full-service hospital in the city in which it operates, and losing it could mean longer travel times for residents along the I-80 corridor. According to Berkeley Fire Chief David Brannigan, losing Alta Bates’ emergency room and traveling to Summit’s instead adds about 12 minutes of work per call.
For Berkeley residents, traveling an extra 12 minutes may not seem like a huge deal. But a regional disaster — specifically, a catastrophic earthquake — could change that scenario. The Hayward Fault runs through the East Bay from Richmond to Fremont. A simulation conducted by the U.S. Geological Survey shows that the fault line is among the most dangerous in the country. Because this region is so densely populated, it will suffer the most damage both physically and economically. Published this year, “The HayWired Scenario” report shows that a hypothetical 7.0-magnitude earthquake, along with utility outages and fires, would displace about 411,000 people. Estimates of casualties in the San Francisco Bay region include 800 deaths and 18,000 nonfatal injuries from building and structural damage. More than 2,500 people could require rescue from collapsed buildings.
Aside from an earthquake, the East Bay is also vulnerable to wildfires. Reports and studies have shown that climate change is fueling larger, more frequent, and more destructive fires in the state than ever before.
Brannigan said full-service hospitals are crucial when disasters like wildfires strike.
“When you have a disaster, you still need respirators, you still need advanced care and places to tell people,” Brannigan said at a community forum in February. “That is our full-service hospitals, which include Alta Bates.”
The federal government designates regions with fewer than one physician per 3,500 residents as “health professional shortage areas.” Contra Costa and Alameda counties are both designated as such.
According to the study by Alan Sager of Boston University’s School of Public Health, hospitals and doctors are in a symbiotic relationship. “Physicians who had depended on a closed hospital to care for their patients might choose to retire or relocate their practices after their hospital closed,” he wrote in the report. This, he argues, happens most often among low-income residents and communities of color. When hospitals start moving out of cities, doctors also move out, leading to not just a hospital desert but a health-care desert.
Jeff Collins, senior vice president for Kaiser Permanente East Bay Area, said the closure of DMC put added pressure on the Kaiser hospital in Richmond: The number of emergency department visits increased by 50 percent since the closure, while hospital admission rates roughly tripled since 2014, he said. Kaiser contributed $3 million to the development of LifeLong Medical Care in Richmond, which opened its urgent care facility directly across the street from DMC the same week it closed its doors. But Collins worries it isn’t enough. “We remain concerned about the limitations of the overall capacity in the community,” he wrote in an email.
Often, the solution to hospital closures is community-based clinics and urgent-care centers. LifeLong opened its urgent-care facility in Richmond as a place where people could go for regular, non-emergency care — “the colds, the flus, or the earaches,” Lynch said. After DMC folded, the number of patients at its urgent-care facility doubled. But Lynch said LifeLong isn’t meeting demand. “We could not take the place of a hospital or a full-fledged emergency room,” he said. “We found what we could do and we did that.” LifeLong Medical Care also has clinics in Alameda, Marin, and Contra Costa counties.
Lawmakers have begun to take action against hospital closures and consolidations. Assemblymember Tony Thurmond authored AB 2874, which would have required hospitals or health systems to obtain written consent from the Attorney General before closing or eliminating services. But the bill failed in May.
Berkeley Mayor Jesse Arreguín also created a regional task force to look into possible legal action surrounding Sutter Health’s nonprofit status. “They’re supposed to provide health care and charity care to the community that they serve,” Arreguín said. “How can they close a hospital, leaving an entire community without basic health care?” Arreguín said the task force is “leaving no stone unturned” in its fight against Sutter Health.
Richmond resident Kathleen Sullivan said living in a hospital desert affects more than just the people living in West Contra Costa County. “It’s just not fair,” she said. “It was a political decision that was made, just writing off the lives of people.”
Additional reporting by Bo Kovitz
Editor’s note: We got wrong Clayton Warren’s title; he is communication manager with Sutter Health, not its communications director. This version has been corrected.