Based on a 2-pronged asset disposition proposal, the Doctors Medical Center (DMC) is now up for sale, according to a board decision announced on May 12, 2015, Tuesday.
The decision was made by the West Contra Costa Healthcare District board, after several meetings. Different would-be hospital turnaround operators had complained, saying that the board had turned deaf towards their rescue proposals.
On April 21, the hospital closed, following the claims of officials of years-long, intractable annual deficit, amounting to 18 million dollars most recently. The officials blamed the deficit largely on the DMC’s payer mix. This includes nearly 80% of the hospital’s patients who were covered by Medicare or Medi-Cal, plus another 10% of uninsured patients.
Through a separate disposition plan, a health care consultant will seek a partner or buyer so as to operate the hospital. Previously, the district worked with the same health care consultant in 2012, but on the attempt was an unsuccessful marketing move.
In a parallel attempt, a commercial real estate brokerage company will attempt to sell the remaining 8.3 acres of the hospital campus, but as a commercial real estate prospect. Recently, the West Contra Costa board agreed to put on sale a 2.5-acre-piece of the DMC campus to San Pablo. The 2.5-acre slice of land had been used for parking by the Lytton Rancheria for a 20-year easement. According to sources, San Pablo can take the first refusal on the campus’ main portion.
Moreover, the board members said that DMC is likely to get a higher offer if it is marketed as real estate ready for development over a plain hospital. Different would-be buyers had complained that they remained prepared to buy the hospital for months and stood ready to operate it, however, the district refused negotiations.
On Tuesday, however, some of the would-be buyers urged the West Contra Costa board for negotiations as early as possible, instead of listing the hospital for sale with brokers.
Eric Zell, board chair, said they would not consider a single-source transaction, saying that different offers need to be vetted thoroughly. He added that this plan will protect DMC against buyers that might acquire it cheaply, eventually.
The majority of the board pledged to operate DMC as it is, only to pull the plug after months, selling it to a developer at a certain profit. Deborah Campbell, a board member blasted the rest of the West Contra Costa board, specifically Zell, regretting of not negotiating with an entrepreneur who had already raised 13 million dollars and made several proposals already.
Rick Norris, district counsel became furious and Campbell’s view prompted an angry exchange of words amongst the members. Norris said the entrepreneur might have walked away, following the district’s commitment of allotting more money in order to keep DMC afloat trying to transact with him.
After the meeting, Norris and Zell said that the board will prioritize a more sustainable and feasible offer as they want the hospital’s operations continue, rather than opting for a lucrative real estate sale of the campus.