Two groups race to buy land for hospitals Two groups race to buy land for hospitals (January 14, 2004)

** Sequoia, medical foundation trying to edge each other out.

By Renee Batti

Almanac News Editor

The chances are remote to nonexistent that both of the planned state-of-the-art hospitals that would compete for Midpeninsula patients within miles of each other will be built, local medical professionals and officials are now acknowledging.

Instead, the competition between Sequoia Hospital and the Palo Alto Medical Foundation is heating up as a race between the two organizations to secure land and turn the first shovel for construction.

Representatives of both medical facilities announced last week that they have options to buy land in Redwood City, near the Bayshore Freeway and across the street from each other -- announcements that produced shock waves at a January 7 public meeting held to discuss the two plans.

Officials at Sequoia Hospital, a 53-year-old community-based facility in Redwood City, launched an effort early last year to find and buy land on which to relocate the hospital, which is nationally recognized for its cardiovascular program and has won honors for programs including women's health services and obstetrics.

But the effort stalled, in part because of internal obstacles that appeared to create a rift between the two groups of partners who own and operate the hospital. And in May, the Palo Alto Medical Foundation (PAMF) stunned the Sequoia medical community when it announced plans to build a medical complex -- complete with a 100-bed hospital -- in San Carlos, only a short distance north of land Sequoia was trying to buy at 405 and 425 Broadway.

The announcement caused Sequoia Hospital and health-care district officials to reassess their plans for relocating, with many publicly questioning whether the area can support two new hospitals in such close proximity.

At last week's meeting, convened by the Sequoia Healthcare District board, PAMF President and CEO David Druker said that in addition to the San Carlos property, his group also has an option on the former Excite@Home property, across Broadway from the property Sequoia is hoping to buy.

Dr. Druker said PAMF, which is affiliated with the nonprofit Sutter Health, plans to decide by late March on which of the two sites it will buy to build its "integrated medical care" facility. It plans to have much of its new facility operational by 2007, with the remaining opening the following year.

The health-care district invited PAMF and Catholic Healthcare West (CHW), which operates Sequoia Hospital, to last week's meeting to shed light on their intentions regarding construction of new hospitals.

Sequoia Hospital must either seismically retrofit or rebuild its facilities by 2013 to meet a state mandate. The hospital, which until 1996 was publicly owned and run by a voter-elected board, is now owned by a nonprofit entity administered jointly by the public Sequoia Healthcare District, whose board is elected, and the private CHW.

Funding for a new Sequoia Hospital is uncertain. The project is estimated to cost about $300 million, including land purchase, and CHW has committed to paying half of that. The health-care district, which collects taxes from property owners in Menlo Park, Portola Valley, Woodside, Atherton, Redwood City, San Carlos and Belmont, is likely to help pay for the new hospital should it be built.
Strained relations

After the Sequoia Healthcare District board President Arthur Faro invited the two health groups to the informational meeting, Michael Erne, CHW's chief operating officer, wrote a letter calling the meeting inappropriate.

He cited the long-term operational agreement between the district and CHW, and noted that "it is inconsistent for the district to sponsor a forum on hospital services where your contractual partner is invited to make presentations to you on the same terms that you invite a competitor who is actively seeking to strip one of Sequoia Hospital's most important services."

He was referring to the noted cardiovascular program, made up of about 14 doctors who recently signed a letter of intent to move to the PAMF facility should it be built.

But Mr. Faro stated that the meeting had not been called "to solicit or consider proposals from providers." Instead, he said, the board had asked the groups to talk about their intentions because "it is important that this information be made available to the public now."

Part of the tension between the district and CHW stems from a missed opportunity to secure the 13.6 acres on Broadway that Sequoia eyed for its new facility. The land comprises three parcels, and the district was in exclusive negotiations with the owners of the parcels at one time, according to Glenna Vaskelis, president of Sequoia Hospital.

CHW has been publicly blamed for refusing to make a down payment on one of the parcels when the owner wanted to close the deal, but Ms. Vaskelis said CHW is being unfairly blamed.

The owner, she said, placed a 72-hour deadline on the deal, and the district turned to CHW for $250,000 to secure the land. "But CHW didn't have board approval to put down $250,000 in 72 hours," she said.

"It's unfortunate, because CHW is now being accused of not being committed" to the hospital project, she said.

The four-acre parcel was soon sold to another buyer, limiting the amount of land available to build a new hospital on.

Meanwhile, CHW executive Bernita McTernan said at last week's meeting that CHW was in escrow on another four-acre parcel in Redwood City. She said she couldn't say where the parcel is. CHW had not announced the location by the Almanac's press time.

E-mail a friend a link to this story.