Healthcare district CEO to resign post in June Healthcare district CEO to resign post in June (March 10, 2004)

** Hiring a replacement depends on the district's future.

By David Boyce
Almanac Staff Writer

The Sequoia Healthcare District, which governs Sequoia Hospital in Redwood City, is likely to be without a chief executive officer come July, and may remain leaderless for some time to come.

CEO Frank Gibson is resigning effective June 30, a decision he said he had delayed for 14 months at the request of members of the district's governing board.

Board members Malcolm MacNaughton and Art Faro confirmed that they had indeed asked Mr. Gibson to stay and were sorry to see him go. Mr. MacNaughton announced the news of the resignation at the board's March 3 meeting.

In an interview, Mr. Gibson said he had informed the board of his intention to retire in January 2003, but agreed to their request to stay on and help the district work through the difficult decision of whether to retrofit 54-year-old Sequoia Hospital for seismic safety or rebuild on another site. State law requires all hospitals to be seismically safe by 2013.

After 22 years in healthcare services, most of it in San Mateo County, Mr. Gibson said he is looking forward to some relaxation. "I'd like to be fishing, come July 1," he said, adding that he and his wife recently bought a house in Bend, Oregon.

Accomplishments during his eight-year tenure as CEO include a community grants program, the Samaritan House medical clinic in Redwood City and a baccalaureate nursing program in coordination with the hospital, San Francisco State University and Canada College, according to a statement from Mr. Faro's office.

The assets of the district -- which serves southern San Mateo County, including Atherton, Woodside Menlo Park and Portola Valley -- grew from $40 million to about $70 million while Mr. Gibson was CEO, Mr. Faro said.

"Fourteen months ago, we talked him into staying," said Mr. MacNaughton of Mr. Gibson. "Our arguments this time around didn't hold enough water."

"He's done a great job. I'm going to miss him," Mr. Faro said. "I'm hoping we'll get everything to bed before he leaves."

Uncertain future

The Sequoia district governs the hospital together with Catholic Healthcare West (CHW) as partners in a nonprofit corporation called Sequoia Health Services. Each partner contributes five members to the corporation's 10-member board. The district's members are publicly elected.

In response to the seismic safety mandate, early last year the corporation opted to rebuild the hospital and had picked out a site on Broadway in Redwood City.

Then in May, the Palo Alto Medical Foundation revealed its own well-formed plans to build a privately funded hospital nearby in San Carlos. To make matters worse, Sequoia's cardiovascular physicians have decided to join the new hospital, perhaps as early as 2007, taking with them 60 percent to 70 percent of Sequoia's income.

Sequoia's medical director has characterized the foundation's move as a "hostile takeover." Observers in the healthcare community have questioned whether the area can support two full-service hospitals.

Last month, CHW changed course, opting to retrofit Sequoia rather than rebuild. Cost estimates show a minimal seismic retrofit of the 420-bed hospital costing about $30 million, while a new 100-plus-bed hospital would probably run more than $175 million.

The district has $55 million in liquid assets and several buildings, Mr. Gibson said.

Position unfilled?

Whether a CEO will be found to replace Mr. Gibson will depend in part on what role the healthcare district takes in the future, board members said. If CHW were to buy out the district's seats on the hospital board and the district evolves into an agency that simply collects tax revenues and issues grants, it won't need a CEO, said Mr. Faro.

Mr. MacNaughton described the competitive situation between a retrofitted Sequoia Hospital and a new hospital operated by the medical foundation as a free-market marathon.

One competitor could fall out of the race, he said, leaving the other weak in some areas of practice and in need of funding assistance from the healthcare district.

"We will marshal our assets to be supportive, if it's requested," Mr. MacNaughton said. "Our focus is to get the best healthcare that we can for our district."

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