Santa Clara County Executive Jeff Smith has a difficult time understanding just what has occurred in the past two weeks. His vision of leading a dramatic expansion and improvement of a public healthcare system is suddenly on the verge of hitting a brick wall as it enters the home stretch.
California’s politically ambitious Attorney General Xavier Becerra is going to court to stop Smith from closing the deal to buy O’Connor and St. Louise hospitals. Smith is convinced this will force the two hospitals to close.
This outcome, says Smith, could occur even if Becerra’s arguments fail to convince a U.S. Bankruptcy Court judge to reconsider a December decision in favor of the pending deal. A Becerra victory or even a decision to appeal another rejection to a federal appeals court could result in a fatal delay in negotiations already hard-pressed by the mounting losses and impatient creditors of the hospitals’ owner, Verity Health System.
Smith should know what he is talking about. He is a medical doctor and a lawyer, and manages a $6 billion county government.
Becerra also should know what he is talking about. He is a lawyer and the state’s top law enforcement officer, after all.
We’ll go with Dr. Smith on this one.
Who stands to benefit from Smith’s desired outcome? South County citizens in need of a wide range of hospital-based health care services: low-income and the elderly, immigrants and the uninsured, accident victims and expectant mothers—for whom traveling dozens of miles north on 101 would be an urgent-care disaster. And the more than 2,000 nurses and other hospital workers, plus several hundred physicians who would be able to stay employed.
Who stands to gain from Becerra’s desired outcome? That’s a more difficult question to answer. Certainly not the hospitals’ current patients, nor their employees or vendors or host communities.
That leaves the attorney general himself. Becerra, appointed in 2016 after 12 years in Congress, ran unsuccessfully for Los Angeles mayor in 2001, explored a Senate run before his appointment, and was even mentioned as a possible vice presidential candidate in 2016. He is not yet past his political prime. As attorney general he has made national headlines standing up for California in the face of real and tweeted threats from the White House.
He has declined requests for interviews on his intervention in this hospital bankruptcy case, deferring to a flack in his office to say the attorney general is concerned about the commitment of Santa Clara County, which already runs a giant public hospital with related clinics and services, to provide quality health to all citizens.
In his relatively brief legal arguments, Becerra fell back on calls for strict adherence to all “53 conditions” that his predecessor, Sen. Kamala Harris, laid down to ensure that a private non-profit run by a hedge fund with no track record of healthcare service would not cannibalize or flip the six California hospitals it purchased in 2015.
What he has not said or write is that some of those 53 conditions would require any presumably private purchaser of the Verity Health hospitals to honor the employer-funded pensions and all provisions of the contracts with labor unions representing various hospital groups, plus the contracts with physicians’ groups.
Smith has correctly pointed out that the county—an arm of state government—is barred by state employment law and the state Constitution from honoring these labor obligations.
Surely the savvy Becerra knows this. But he can make powerful political points with organized labor by pressing their case right up to the last minute. That way he can say he did his best, in a cynical high-stakes gamble for political capital with more than 2,000 jobs and the health of thousands on the line.
There is time to salvage this deal, time for our attorney general to open his mind and his heart to Santa Clara County, and support the county’s hospital purchase plan.