County leaders talk about use of eminent domain option

A potentially costly legal maneuver was proposed as one action the Del Norte County Board of Supervisors could take to prevent Sutter Coast Hospital's move to Critical Access Hospital status.

Three residents encouraged Del Norte supervisors on Tuesday to use eminent domain to "take the hospital back for we the people." Supervisor Roger Gitlin asked his colleagues to direct county counsel Gretchen Stuhr to research the cost and legality of using eminent domain with regards to the hospital.

Some who spoke at Tuesday's meeting worried that Sutter Coast Hospital's status as a Critical Access facility would mean more patients will be transferred to other facilities. Others were concerned that Critical Access would hurt efforts to recruit physicians.

One resident worried about how a hospital with 25 inpatient beds would stand up to a major natural disaster like an earthquake.

"We live in an area with three major disasters waiting to happen," said resident Gay McWhirter, referring to Del Norte's risk from earthquake, tsunami and a potential riot at Pelican Bay State Prison. "A major earthquake can damage the airport, it can damage roads, and damage the tunnel. There would be no way out of here. The only medical care would be Sutter Coast Hospital."

'We're on your side'

Following public comment, Board Chairman David Finigan said he would ask supervisors Gerry Hemmingsen and Mike Sullivan to work with the Crescent City Council and Del Norte Healthcare District and their attorneys to "develop strategies that may or may not include more resolutions, eminent domain, the formation of political subdivisions or whatever."

"Rest assured," he said. "The battle lines are drawn and we're on your side."

Sutter Coast's application for Critical Access Hospital designation has been reviewed by the state's Licensing and Certification agency and is currently being reviewed by Centers for Medicare and Medicaid Services, according to the hospital's March 5 newsletter. The application will then come back to the state for final approval, hospital CEO Linda Horn said.

Critical Access designation is a federal program that allows rural hospitals to receive cost-based reimbursements for Medicare patients. The designation is expected to significantly boost revenue at Sutter Coast, where more than half of its patients are insured by Medicare.

Trying to prevent the hospital from downsizing by using eminent domain could be done, said County Counsel Gretchen Stuhr, but it would be an expensive court process.

"The county would have to initiate action against Sutter," Stuhr said. "It's a long drawn-out process."

Crescent City's attorney, Bob Black, brought up the use of eminent domain in February 2013. He said the county could solicit a buyer and flip the hospital to a private owner.

Seeking to take control of the hospital through eminent domain would be a big legal battle, Black said Wednesday. The public agency would need to pass a resolution of necessity and would have to appraise the property. The county would also need to offer to purchase the property from Sutter Coast, Black said. If the proposal was not accepted, the county could take Sutter Coast to court, he said.

"I don't think there is anything wildly out of the ordinary," Black said, adding that the Del Norte Health Care District ran the area's hospital before selling it to Sutter Coast. "I say that because historically public agencies have been in the hospital business in California. There's a whole tradition of county hospitals."

Even so, Black acknowledged that Finigan's idea of getting everyone together to develop solutions to the problem is probably the best.

"Let's get some policy makers together and put their heads together and see what they can come up with," he said.

Option called divisive

Horn said the eminent domain strategy would be a mistake.

"Our focus is on keeping our hospital the best little hospital it can be," Horn said. "Eminent domain would cause more division and distraction."

She said that last February, 206 fewer patients visited Sutter Coast Hospital than in February 2013. The hospital has been maintaining empty beds for years, she said.

Horn added that the hospital's actual budget for 2013 had a deficit of about $7 million. Most of that debt is underwritten by Sutter Health, she said.

Over the past few months, Horn has spoken before the Crescent City Council and other governing bodies, telling them that despite fewer inpatient beds, Sutter Coast will still be a full-service hospital.

"The services are going to be the same," she said. "The panic is that the hospital will look and act very different, but that's not the case. The services will be the same."

Once Sutter Coast's Critical Access designation takes effect, the hospital must have no more than 25 inpatient acute care beds. Right now it has 49, but those other 24 could be brought back into use within 24 hours if necessary, Horn said.

The hospital will have additional beds in its labor and delivery department, as well as eight to 10 observation beds, Horn said. Sutter Coast also plans to implement a swing bed program that will allow beds to be used for either acute care or skilled nursing care.

"Swing beds could allow a patient to remain in the same bed after discharge from the acute care setting for a few days if necessary while waiting for a bed in a long-term care facility," she said. "We anticipate this type of bed being used to a small degree. The swing bed program is administered and regulated by the Centers for Medicare and Medicaid Services."

In the case of a major natural disaster such as an earthquake, the federal government can grant an exception to Sutter Coast's bed limit, Horn said.

Recruitment continues

Sutter Coast will also continue its effort to recruit physicians. Dr. Nikki Schwartz, the hospital's chief of staff, said the area's remote location is the biggest challenge. But, she said, the controversy and "perceived turmoil" regarding hospital regionalization and Critical Access has become another obstacle.

"They are hesitating to come to a community in turmoil," Schwartz said. "They like the area and are interested, but they'll say they'll call us back in a year. They're concerned about all the things they read on the Internet about us."

Sutter Coast's Board of Directors in December voted to pursue Critical Access Hospital designation while still maintaining a local governing Board. However, the continuation of a local Board could be temporary.

The hospital Board came to its decision after commissioning a $170,000 "strategic options study" by its consultant, the Camden Group.

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