Grand Jury Report Criticizes Medical Center Operation

Friday July 09, 2004

The Alameda County Medical Center—the only option in specialized medicine for Berkeley’s roughly 10,000 uninsured residents—has been driven to the brink of financial collapse by poor management and lax county oversight, according to a report released Tuesday by the Alameda County Civil Grand Jury. 

“The [Alameda County] Board of Supervisors and later the [medical center] board of trustees allowed top managers over the years to ignore efficiency and responsibility,” wrote members of the civil grand jury, a 19-person board nominated by Superior Court judges to investigate public institutions in Alameda County.  

The medical center comprises Oakland’s Highland Hospital—which serves the majority of Berkeley trauma and emergency patients—as well as San Leandro’s Fairmont Hospital, John George Psychiatric Pavilion, and three county outpatient clinics.  

Mike Brown, a medical center spokesperson, said the report was on the mark and that new management was making progress at addressing critical problems. 

After years of poor financial returns, the medical center, which as a public hospital facility is required to care for the uninsured, hit bottom last year. With the ranks of uninsured patients swelling and employee benefits and drugs costs rising, the center’s budget deficit soared above $70 million.  

In response, under heavy pressure from the Alameda County Board of Supervisors that appoints it, the 11-member board of trustees cut $23 million from its budget, closed two of its five clinics, and fired the center’s CEO last summer. Immediately after the vote, five trustees quit in protest.  

In February a new board of trustees installed Tennessee-based turnaround specialist Cambio Health Solutions to analyze the center’s finances at a cost of $3.2 million over 18 months.  

Earlier this year Cambio released a report finding that among other failings the center has lost roughly $10 million by failing to bill 36 percent of its accounts receivable. Cambio has calculated the center’s current fiscal year budget shortfall at $62 million.  

Cambio has since come under union attack for its plan to cut an estimated 340 jobs as part of a $23 million budget reduction.  

In May, the board of trustees agreed to expand Cambio’s duties and payout after the consultant group dismissed the interim management team hired shortly before its arrival. Cambio was granted slightly more than $1 million to hire four new interim managers. 

The grand jury cautioned the board against recklessly agreeing to any fee increases for Cambio or approving recommendations that could hinder patient care, but said neither of the center’s last two CEOs was “competent to deal with the financial crisis of the medical center.” 

In all the medical center has had nine CEOs in the past 11 years, including three in one week last May. According to the report, “as a result of turnover in the CEO position, the administration is in shambles. ... Entire departments of employees have not received sufficient training or supervision to be able to adequately perform their duties.” 

Without strong management, the grand jury concluded that the center, while improving patient care, developed a culture of wastefulness.  

When computers broke down, for instance, instead of repairing them, the medical center replaced them with the high-end models while running outdated software. 

In November, Alameda County voters approved Measure A, a half-penny sales tax increase to generate $70 for the medical center. Although the measure should assure the center a stable revenue base, the grand jury warned that if the medical center did not improve its business practices, it would squander the new money and “rapidly deteriorate into a far worse crisis.” 

Brad Cleveland of the Service Employees International Union Local 616 charged that by seeking so many staff cuts, consultant group Cambio was risking patient care and violating the spirit of Measure A. 

“The people of Alameda county clearly want to preserve access to medical care,” he said. “Why Cambio and the board have all chosen to ignore that is baffling.”m