The deal was criticized by some, including the League of Women Voters of South San Mateo County, for not being put before the voters for approval, and for the district's relinquishing its oversight role in behalf of the public.
Sequoia Hospital must meet a 2013 state deadline to replace or seismically retrofit its facilities. The rebuilding project is expected to cost about $240 million, and is projected to be completed just before the deadline.
The public district owned Sequoia until 1996, when, faced with an increasingly crushing debt, it entered into a partnership with CHW to create a nonprofit corporation — Sequoia Health Services (SHS) — that would own and govern the hospital. SHS's board of directors is made up of five members appointed by the health-care district and five appointed by CHW.
Under the 1996 agreement, approved by voters, CHW began operating the hospital.
Under the just-approved deal, SHS, CHW and the health-care district will each contribute $75 million to the rebuilding project, with the remaining $15 million coming from private donations. CHW will absorb SHS, becoming the sole owner of the hospital, which it will run as a non-religious facility.
The agreement prohibits CHW from selling the hospital for seven and a half years from the time of the reconstruction's completion without written approval from the district. It also creates a profit-sharing plan in which the district would receive 50 percent of Sequoia's profits once a specified threshold is met.
Dr. Michael Papalian, speaking for the hospital's professional staff group, praised the deal shortly before the board's vote, saying that most of Sequoia's physicians support it. "We've had a 10-year trial period" with CHW, he said, adding that the relationship has worked.
But another Sequoia physician, Dr. Michael Griffin, asked the board to reconsider. "This agreement abandons the successful public-private partnership that exists now," he said.
He and health-care advocate Herbert Marks said in a written statement: "As a matter of public policy there is no reason or justification to end public governance or public ownership of Sequoia Hospital without the knowledge, direct participation and approval of Sequoia district voters."
After the meeting, Dr. Griffin stressed that CHW will be free to sell the hospital by around 2020 to any buyer it chooses. "The question is, who will decide the future of the hospital," he said, adding that, in his view, the public should decide.
San Mateo County Supervisor Jerry Hill is pushing for the district to contribute millions of dollars to the county's health insurance program for uninsured adults living in the district.
Funding the program would be a way for the district to make up in part for what Mr. Hill considers a bad deal it has made with CHW. With the board agreeing to spend $75 million to rebuild a hospital it will no longer own or help govern, "what are taxpayers getting from this deal?" he said.
By helping uninsured district residents get health insurance, "those residents ... will then be able to use Sequoia Hospital, even though they couldn't otherwise afford it," he said.
Mr. Hill said board members have been generally receptive to the idea of helping to fund the program.
The district raises about $7 million annually in tax revenue.
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