Gilroy switches stance, supports sale of St. Louise

As local officials, non-profits, unions, patients and staff this month piled on in a blitz to pressure California Attorney General Xavier Becerra to drop his efforts to block the sale of O’Connor and St. Louise hospitals to Santa Clara County, one entity was conspicuously absent—the City of Gilroy.

Mayor Roland Velasco and his City Council were silent in December and January—and no shows at widely covered Jan. 24 press conference in San Jose—as it became clear that Becerra’s efforts to scuttle the sale would result in the closing of the hospitals. St. Louise is located within the Gilroy City limits, and is one of the city’s biggest employers.

In fact, the only statement by the city on the record in the issue was a Sept.24 letter that voiced objections to a county purchase.

When asked about the letter this week, Velasco said he would ask the council Monday night, Jan. 28, to voice its strong support for the county acquisition and for keeping St. Louise Regional Hospital open. At the meeting, Velasco told the council that because the situation had changed since September, he would be sending a letter to the Attorney General on behalf of the city, endorsing the county’s purchase of Saint Louise and objecting to Becerra’s attempts to block the sale; there were no objections from council members.

Becerra and Verity Health Systems were to face off in U.S. Bankruptcy Court in Los Angeles on Wednesday, Jan. 30.

Velasco said the city’s position last fall was based on information available at the time. He didn’t say why the city waited until it was contacted by the Dispatch to change its position on the sale of its local hospital.

“In September 2018, following the formal bankruptcy filing of parent company Verity, Inc., the City of Gilroy officials were told by Verity representatives that our local hospital, St Louise, would likely be put up for auction by the bankruptcy court,” he wrote in an email response to the Dispatch.

“We were told that St. Louise Hospital was one of Verity’s profitable and financially viable assets and as such, would be highly sought after at auction from many would-be purchasers. In light of this expectation, the City of Gilroy was encouraged by Verity officials to write a letter to Santa Clara County, Verity, Inc. and the bankruptcy court judge to voice our local preference for ownership of St. Louise Hospital.”

In the Sept. 24 letter, the City of Gilroy voiced a preference for a privately operated healthcare facility vs. a government-run healthcare facility.

“Today we know that contrary to the expectations of officials at Verity, the County of Santa Clara was the only bidder and was awarded the sale of the hospital to the county by the bankruptcy court,” Velasco wrote.

“Our goal is and always has been to ensure continued operations of the one hospital South County residents utilize for healthcare services,” he said. “To that end, this evening I’ll ask the City Council to fully support the decision of the bankruptcy court to award St. Louise to the county so that residents of South County don’t lose access to healthcare and authorize me to send a letter stating our position to our state representatives.”    

In the Sept. 24 letter to the Board of Supervisors, Velasco wrote, “On behalf of the City of Gilroy, we sincerely appreciate the County of Santa Clara’s sustained interest in providing high-quality healthcare services for the South County, including the City of Gilroy.

“We regret to inform you that we cannot support the county’s bid for the hospital.”

“The St. Louise Regional Hospital has been a critical component of the local community, providing much needed healthcare services since it opened nearly 20 years ago,” the letter continued.

“For the health and wellbeing of the citizens of Gilroy, it is of paramount importance that the high-quality levels of services offered by the St. Louise Regional Hospital are, at the very least, adequately maintained by the next owner-operator,” Velasco wrote. “Since the opening of the Valley Health Center in 2008, there has been a persistent perception that the facility requires additional municipal resources, specifically homeless, police and emergency services to the detriment of tax-paying citizens.”

He said the city was concerned that the county’s acquisition of a much larger healthcare facility would only exacerbate this problem.

“In the event that the county is awarded the sale, I would like to personally discuss with you your plans to meet the healthcare needs of our community and overcome the objections that were previously stated,” the mayor wrote. Velasco didn’t say this week whether that meeting ever occurred.