Supervisors Give $8 Million Bailout to Medical Center, Avert Layoffs

By J. Douglas Allen-Taylor
Tuesday June 27, 2006

Representatives of the hospital workers union which successfully lobbied county supervisors to provide an $8 million budget bailout for the Alameda County Medical Center say they will continue to monitor the situation to make sure that the center incurs no new round of layoffs. 

With ACMC projecting a $4.8 million budget shortfall for the upcoming fiscal year, the county board of supervisors voted this week to support Board of Supervisors President Keith Carson’s plan to shift $4.4 million from the county capital projects fund and $3.6 million in surplus fund to the medical center for use over the next two years. 

In a memorandum to the Board of Supervisors, Carson said the money was intended for “short term operational and/or capital needs.” 

Carson wrote that while ACMC CEO Wright Lassiter “anticipates closing his remaining $4.8 million funding gap … I propose that we establish an $8 million designation to help ensure that the ACMC budget remains balanced.”  

Patricia Van Hook, legislative analyst for the medical center, said in a telephone interview that Lassiter’s budget to be submitted to trustees today (Tuesday) will continue to include the projected $4.8 million deficit, and will not include the $8 million county bailout money. 

Van Hook said that Lassiter will continue to seek internal ways to close the budget gap, without further staff reductions than the ones already anticipated and announced.  

Earlier this month, at CEO Lassiter’s direction, ACMC trustees approved $23 million in budget reductions for the upcoming fiscal year, mostly from efficiency savings. 

Center officials were anticipating that the reductions would only result in the loss of between 68 and 84 full-time equivalent employees out of a total workforce of more than 2,000. 

“There will not be any more layoffs other than those already announced,” Van Hook said. 

ACMC Trustees will vote on the center’s budget today. The medical center operates several public medical facilities in Alameda County, including Highland Hospital in Oakland, Fairmont Hospital and John George Psychiatric Pavilion in San Leandro, and several clinics. 

Service Employees International Union Local 616, which represents 1,300 registered nurses, hospital clerical staff, and allied health care professionals at the medical center, conducted an intensive fax and online petition lobbying campaign in support of the bailout last week, targeting Carson and Board of Supervisors Vice President Scott Haggerty. Supervisor Nate Miley joined Carson and Haggerty in supporting the $8 million transfer. 

Local 616 representative Brad Cleveland said that Carson and Haggerty were specifically targeted because “they have worked most closely with the center, and they have the most intimate knowledge of Wright Lassiter.” 

Cleveland added that “the fact that they approved this money shows the level of confidence they have in the new management at the center.” 

Lassiter was hired last September to replace Tennessee-based management consultants Cambio Health Solutions. Cambio was hired by the medical center in early 2004 to analyze ACMC’s finances, but has been criticized by trustee board, staff, and union representatives for leaving the district in a budgetary shambles.  

With rumors circulating throughout the medical center that the $4.8 million deficit would lead to larger layoffs, representatives of SEIU and the Vote Health organization had urged supervisors to come up with the money. 

The SEIU’s Cleveland said that even with the $8 million influx, the medical center is not out of the fiscal woods yet. 

“The $23 million in savings from the margin audit process is not money in the bank,” Cleveland said. “All of that money won’t just materialize on July 1 and even in the best of all worlds, they won’t be able to realize all of the anticipated savings through the end of the next fiscal year.” 

In addition, Cleveland said that the new county money will not be simply transferred into the medical center’s account. “They are going to have to request it for specific needs,” he said. 

Cleveland said that the $8 million bailout should be considered a “cushion” that can help the center bridge any delays in the implementation of the margin audit process savings. 

Under Carson’s budget amendment, any of the $8 million not used by the center by the end of the ‘07-’08 fiscal year will revert to the capital fund.