The State
of California has determined that the Peninsula Medical Center
could sustain significant damage in an earthquake that would render
the hospital inoperable. In order to meet California state earthquake
safety standards, Peninsula Medical Center must be rebuilt or
close in 2013.
Mills-Peninsula
Health Services (MPHS) operates Mills Health Center and Peninsula
Medical Center. MPHS leases from the Peninsula Health Care District
(PHCD) the land on which Peninsula Medical Center is situated.
MPHS is a private, not-for-profit corporation that is a member
of the Sutter Health (Sutter) network. At the end of 2001, Sutter
had cash reserves of $258 million, and is currently in a position
to issue bonds to fund a new hospital in Burlingame.
MPHS has an
independent, self-appointed, 21 member Board of Directors that
manages the business affairs of Mills Health Center and Peninsula
Medical Center. As reported by Modern Healthcare magazine, MPHS
was named one of the top 100 hospitals in the United States for
the years 1998 and 1999.
PHCD, organized
in the 1940's, has a five-member publicly elected Board of Directors.
PHCD's mission includes acting as the lessor of Peninsula Medical
Center, responding to local health needs, and allocating resources
for programs that enhance the health of the District's residents.
Annually, PHCD contributes to the community by awarding grants
to a variety of agencies and programs.
Examples of
agencies and programs funded in fiscal year 2001-02 include: Mills-Peninsula
Senior Focus programs ($290,000); Samaritan House ($150,000);
Youth and Family Assistance ($60,000), and; the College of San
Mateo Nursing Program ($150,000).
In fiscal
year 2001, PHCD collected $2.8 million in property tax revenue.
At fiscal year end 2001, PHCD had $12 million in cash reserves,
and its property assets were estimated by PHCD to be approximately
$26 million.
PHCD owns
Peninsula Medical Center buildings and underlying property which
encompasses approximately 26 acres. In 1985, MPHS and PHCD entered
into a 30-year lease, which is subject to renewal options. Concurrent
with the lease transaction, Peninsula (Burlingame) and Mills (San
Mateo) Hospitals merged to form Mills-Peninsula Hospitals in 1985,
and subsequently divided their services in order to be more effective
in delivering health care. As a result, Mills Health Center was
re-designed to primarily serve in-patient rehabilitation and out-patient
services including minor surgery, walk-in emergency room service,
rehabilitation and diagnostics. Peninsula Medical Center was designated
as the primary site for acute-care, emergency services, and to
house MPHS management offices.
Because a
new hospital is required to be constructed, MPHS is renegotiating
all terms and conditions of the 1985 lease with PHCD. Under the
current agreement, PHCD does not have the authority to make operational
or policy decisions.
Architectural
plans for a new hospital have been developed and are currently
under review by MPHS and PHCD. The cost to rebuild the hospital
is estimated to be over $350 million. Construction should be completed
by 2010.
In August
2000, a letter of intent for a revised agreement was signed by
PHCD and MPHS outlining the following terms to be negotiated:
- Lease arrangement
- PHCD's
degree of oversight over the new hospital
- Return
of properties to PHCD that had been acquired by MPHS in the
1985 lease agreement
In June 1997,
PHCD Board of Directors filed suit against MPHS for alleged conflict
of interest in the original lease. Disposition of that suit in
favor of MPHS is probably assured by the recent decision of the
California Court of Appeals in Marin Health District vs. Sutter
Health, et al, 2002 Cal. App. Lexis 4981, which under a very similar
set of facts affirmed the trial court's determination that the
suit was barred by the statute of limitations.
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