Management Is Blamed for Medical Center’s Ills

Poor management and a lack of oversight by public officials have left the embattled Alameda County Medical Center in disarray, a grand jury report has found.

The center, which operates three public hospitals and three clinics, has had severe financial problems for more than a year.

The public hospital system, which serves 125,000 mostly poor and uninsured patients a year, fired staff and closed two clinics last year. The consulting firm now running the medical center is recommending cutting another 350 positions this year to make up a $62-million deficit.

The civil grand jury, which issued its report last week, blamed “lax executive management and insufficient attention” from the Board of Supervisors and its appointed Board of Trustees, which oversees the $420-million-a-year operation, for allowing a culture of wasteful spending to develop.

The grand jury also concluded that the Board of Trustees didn’t make good choices in selecting its permanent and interim chief executive officers -- both of whom are now gone.

Last fall, the relationship between the Board of Supervisors and the trustees soured, with each blaming the other for the fiscal problems. The trustees fired Chief Executive Ken Cohen, saying he was no longer able to work effectively with the supervisors. A week later, five of the 11 trustees resigned.

In February, the Board of Trustees hired Cambio Health Solutions of Tennessee, a turnaround consultant, to get the hospital system on sound footing. The firm, which put its own managers in place, is being paid $3.2 million over 18 months.

The grand jury recommended that the Board of Trustees closely monitor any Cambio recommendations, but implement only those that “improve financial efficiency without sacrificing medical care.”

It further recommended that the board carefully examine any fee increases to Cambio, calling the $3.2-million contract “extremely expensive.” The grand jury said the board should work to eliminate wasteful spending and that the governance structure should remain as it is without interference from the Board of Supervisors.

Five years ago, the Board of Supervisors sought special legislation to form a new governing body -- the only one like it in the state -- to oversee the medical center. Supervisors were following a 1995 grand jury recommendation to set up a separate board because of years of financial and administrative problems at the center.

County Supervisor Gail Steele said she agreed with the report’s recommendations. But she said she’d like the supervisors to develop a better relationship with the hospital board and suggested that the two boards meet quarterly.

She acknowledged it would be difficult to quickly turn around the situation. “You can’t come into a 30-year culture and change it overnight,” Steele said. “It’s a very embedded culture.”

The grand jury found that the staff was so careless about money that it would buy a new computer rather than repair it, among other things. Ilene Weinreb, former president of the Board of Trustees, said she supported the grand jury’s recommendations. She said Cambio found that staff performance wasn’t up to par, middle managers weren’t training employees properly, and upper managers were not holding middle managers accountable.

Weinreb, who resigned as board president three weeks ago and hasn’t been replaced, said a committee of physicians is working on increasing revenue, a director of nursing was promoted internally, and delays in receiving outstanding bills have been cut in half.

The grand jury confirmed Cambio’s findings about billing deficiencies, including the conclusion that almost half of billed accounts were more than 180 days past due and that 36% of accounts receivable, or about $10 million, had not been billed at all.

Bradley Cleveland of Service Employees International Union Local 616, which represents 1,500 of the medical center’s 2,400 employees, agrees with the grand jury recommendation that the Board of Trustees carefully consider Cambio’s proposals to ensure that medical care isn’t affected.

He disagrees with Cambio’s plan to cut jobs, saying “you cannot eliminate 350 positions and not affect quality of care.”

Cleveland said Cambio had “squandered the goodwill of the community, staff and physicians” who worked hard to get voters to pass a sales tax increase in March. The half-cent increase is expected to generate about $70 million a year for the medical center.

“We fully understand the desire not to reduce any jobs,” said Jim Braley, vice president of Cambio. But he said that if inefficiencies in the operation were not addressed, the tax would not be enough -- a conclusion also reached by the grand jury.