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Published on 03/16/1998 All articles from this issue

Change for the better

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By Carol Tiegs

Town Crier Staff Writer

After years of struggle, turnaround cited in El Camino Hospital fortunes

little over a year ago it was hard to find a seat at an El Camino Hospital District board meeting. Today there are chairs for the taking.

"It's not that people don't care," said Victoria Emmons, vice president of marketing and development. "It's that they have confidence in the hospital again."

History of a conflict

The El Camino Hospital District was established in 1957. It includes all of Los Altos, Los Altos Hills and Mountain View, plus neighboring portions of Palo Alto, Cupertino and Sunnyvale. Its board is publicly elected, and it receives a portion of property taxes generated within the district.

Those times of standing-room-only board meetings and protests over hospital management began in December 1992 when the district board turned management and operations of the hospital system over to Camino Healthcare, a 501(c)(3) private corporation.

In 1994, Camino Medical Group joined Camino Healthcare to create an integrated delivery system, a system in which physicians and hospitals operate in partnership, often in joint ownership. Health care had experienced dramatic changes during the 1980s, including declining reimbursements from insurance companies and fewer, shorter patient stays. Hospital-physician partnerships were touted as a cost-effective solution to the problem.

Sunnyvale and Shoreline medical groups came together to form Camino Medical Group. That group represented approximately 25 percent of the physicians at El Camino, and were employed and paid by Camino Healthcare.

In 1995 the district board became increasingly concerned about growing financial losses, lack of financial reporting by Camino Healthcare and possible conflict of interest on the part of some Camino officials.

"The doctors were demoralized by the deterioration of the facility," said Dr. Paul Hoar, chairman of the district board and one who led the crusade to return hospital management to district control. "The concern was that the hospital would be devalued to a cashless shell. The feeling of the medical staff was that the hospital was tagged and bagged for extinction."

Because the district board in 1992 had lost control to a private entity that was not accessible to public scrutiny, its only recourse was to file a lawsuit in late 1995.

Under a settlement agreement reached in late 1996, the district board regained operational control of El Camino Hospital. On Dec. 31, 1996, members of Camino Healthcare resigned their positions, and the district board appointed new representatives. The Camino Medical Group regained its independence and divided again into the Sunnyvale and Shoreline medical groups.

The hospital today

Fifteen months after El Camino Hospital's return to public control, things are progressing "wonderfully," said Shirley Rich, hospital watchdog for the League of Women Voters. Rich has been "attending faithfully" at district board meetings since 1990.

"Before, all the (medical group) clinics were mixed in with the hospital in the (financial) figures," she said. "Now it's just the hospital alone. The financial picture has been in the black since last January."

The statement of operations for the hospital district and its affiliates for the period from June 29, 1997 to Feb. 7, 1998 shows a net income of nearly $16.8 million. District affiliates include the El Camino Surgical Center, hospital foundation, MidPeninsula Home Health Agency, and property on South Avenue occupied by the YMCA.

"The turnaround has been financial, emotional and psychological," said district board member Dr. Dominick Curatola, another who fought hard to return the hospital to district control. "That's not to say the problems have all been solved, but the focus again is on running a good hospital, not on developing a new delivery system.

It doesn't seem to matter who you talk to. Everyone speaks of a new spirit at El Camino Hospital today.

"We're smiling again," said general surgeon Dr. Saul Eisenstat.

"It's so much better. We're on a turnaround," said operating room nurse Sharon Vick.

Maggie Patch has served on the El Camino Hospital Auxiliary for 11 years. She is currently auxiliary president and also sits on the El Camino Hospital Foundation board.

"Everyone is much happier," Patch said.

Before last year, "the condition of the hospital was going downhill," she said. "No one knew who was in charge or what the future was."

Now, Patch said, there are "fewer questions. Everyone is more confident. We're seeing a slight increase in new auxiliary recruits. We can sell the hospital better now."

Where credit is due

Physicians and staff at El Camino Hospital are generous in their praise of board members Hoar, Curatola and Mark O'Connor, plus Richard Warren, chief executive officer and administrator, for their role in the turnaround.

"Something needs to be said about what these board members did and risked," said Dr. Wendell Ferguson, chief of medical staff at El Camino. "They put everything on the line and deserve the credit."

"We're very fortunate to have this level of management," Ferguson said of Warren and his administrative staff.

Curatola said the 1994 election of Mark O'Connor to the district board was key in starting the series of events that led to the return of El Camino Hospital to public control.

"He did some homework - he wanted to come prepared to meetings," Curatola said of O'Connor. "Mark's raising of practical questions gave me an opening to raise my concerns."

Warren, former administrator and chief executive officer at Washington Township Hospital District in Fremont and a professor of hospital administration at St. Mary's College in Moraga, said there was no magic in what they did. "It was just hospital administration 101."

But, he said, "It was the most difficult job I've ever had. I didn't know the community and came in under very hostile circumstances."

Hoar said the first challenges following what he describes as "the bitter battle" to return the district to public control, were "a series of negative press" and "massive nurses layoffs" by the previous administration that forced cancellation of cardiac surgery and closures of the emergency room.

Prior to January 1997, Warren and the district board were denied access to hospital financial data. Concluding that it was more important to quickly regain control of the hospital and return it to profitability rather than spend additional dollars in lawsuits, they agreed that all prior records of Camino Healthcare would be sealed.

Hoar said the board was gradually able to get facts and figures from talking with middle management after they regained control on Jan. 3, 1997. "It was as bad if not worse than we thought," he said.

Hoar credits "Warren and his capable team" with delivering a relatively seamless transfer.

New accomplishments

Warren's first move was to put together a cadre of people he knew to fill key administrative gaps. He invited everyone else to stay.

"As a goodwill gesture we gave a 2 percent bonus on base pay to everyone who stayed," Hoar said.

By May 20, 1997, the end of his first 100 days, Warren was able to accomplish the following:

Completing of amicable negotiations with PRN, the nurses labor organization. PRN had been engaged in a bitter labor dispute with Camino Healthcare and had been victorious in complaints they filed with the National Labor Relations Board.

Joining with IBM to provide an information management system to facilitate patient care.

Forming an alliance with Program Beta, a statewide district hospital insurance carrier, for a more than $100,000 savings in hospital insurance.

Beginning work to regain a Knox-Keene license to allow the hospital to develop a locally controlled health maintenance organization. The product should be complete this summer.

Re-instituting a hospital plan maintenance budget providing money for repair and improvements to buildings and grounds.

Returning the hospital to profitability, earning nearly $6 million in the first 100 days of public control after 24 consecutive monthly losses.

In February, PRN and the hospital reached agreement on a new two-year labor contract that gave El Camino's nurses their first new contract and wage increase since 1995. The agreement was reached through interest-based bargaining, a non-confrontational approach based on information sharing and exploring common interests.

PRN President Patricia Briggs, a registered nurse at El Camino, credits Warren for leading the relationship turnaround with the nurses. He, Hoar and O'Connor "have created a new and better El Camino Hospital," she said.

"If you have qualified, satisfied nursing staff, you don't need public relations," Hoar said. "We want to treat them as the professionals they are."

Briggs is among many who say facilities and grounds improvements have done much to buoy sagging spirits at El Camino.

Joe Boscacci, vice president of clinical and support services, is in charge of implementing an approximately $7 million facilities upgrade that includes painting, floor and furniture replacement. He also oversees purchases of state-of-the art clinical equipment for laboratory, radiology and operating room use.

Like a physician with his patients, Boscacci does daily rounds of the buildings and grounds to be sure everything is in good working order. To save money, he's hired a full-time painter back on staff, a position cut by Camino Healthcare.

"This is a community hospital and the community should feel proud of it," he said.

Boscacci, who joined El Camino in 1997, is impressed by the efforts of Warren and the board to bring parity to employee salaries across the board.

In February, the board approved a new benefit and compensation plan for all non-union employees. The plan restores benefits and salaries cut by the previous administration. It bases salary ranges on the area acute care hospital marketplace, not on broad job classifications, and positions benefit levels in tandem with those of hospital workers represented by unions.

What's ahead?

While pleased with results so far, Warren said the hospital is only about 20 percent along in what he would like to achieve.

"We are looking at about 20 possible projects now," he said.

All project proposals are scrutinized using an implementation grid. Grid considerations include how the project matches the hospital organization's ability, how it fits with the strategic plan, required legal and approval procedures, the hospital's financial ability to implement the project, and the short- and long-term reimbursement implications.

Future projects might include expanded educational opportunities, a wellness center and an adolescent sub-acute care unit.

There is no question that the hospital must upgrade or rebuild its facility due to seismic problems, Warren said.

Warren would like "to build for the next century."

Determining the best form of hospital governance for the long term is also on the board's agenda.

The district currently operates the hospital through the El Camino Hospital board (formerly Camino Healthcare), a private, nonprofit corporation. This structure was retained when hospital management reverted to district control in order to prevent a long, costly restructuring process and the need to fire and rehire staff. It offers several advantages, including a better compensation method for employees and the ability to undertake joint ventures.

At an Oct. 15, 1997, district board meeting Rich described as "very exemplary, a very frank, open discussion," the board and legal counsel Paul "Chip" Lion reviewed the current governance structure and possible alternatives. A subcommittee comprising Curatola and board member Dianna Adair was formed to meet with Warren and Lion to study the issue.

Adair said the subcommittee will make a preliminary report at the district board's June meeting.

"It's important to suspend where you are in time and look into the future" when considering governance options, "Adair said. "Will the population change, what will be their requirements, how will the medical field and medical organizations change?"

Adair said the subcommittee has studied options chosen by other hospitals. "The truth is (El Camino) is probably not like any other hospital," she said. "The model we create may become a model for others."

The prognosis looks good for El Camino Hospital.

"There's a noticeable lack of tension and contention," Rich said.

"It's wonderful," Boscacci said. "I've never worked in such a caring place."

But change goes on. Both Warren and Ferguson stress the need for community caring and involvement in the hospital district.

"Keeping (El Camino) a community hospital can help the hospital ride out difficult times," Ferguson said, "if the community continues to support it."

"Get involved," Warren said. "Challenge me, challenge the board. What is it you want from your district hospital?"

For more information on the structure of the El Camino Hospital District, call 940-7303 for a copy of "Understanding the El Camino Hospital District Governance Structure." For information on the hospital, call 1-800-216-5556.