Clock ticking on new lease for health district board

Mark Twain Health Care District owns Mark Twain Medical Center, which the district leases to Dignity Health. Dignity’s lease expires at the end of 2019.

The Mark Twain Health Care District Board of Directors on Friday took another step toward a possible divorce with Dignity Health by approving a policy that allows two members of the board to have confidential conversations with other organizations that might operate Mark Twain Medical Center in San Andreas.

The clock is ticking for the district, which owns the hospital, to come up with a way to operate it after a 30-year lease to Dignity Health expires at the end of 2019. Voters must approve any new lease agreement.

On Friday, the board voted unanimously to allow Ad-Hoc Lease Review Committee members Lin Reed and Dr. Randy Smart to enter into non-disclosure agreements with “any health care entity interested in” possibly running the hospital. That authorization expires at the end of June.

That means that for the next six months, Reed and Smart can get on the phone and call up representatives for Sutter Health or Adventist Health, for example, and discuss whether those organizations might have the interest and resources to operate the hospital here. The non-disclosure agreement would allow representatives of the district and the organizations to share financial information and other data that they would not want made public, particularly during competitive negotiations.

Reed did not give a list of organizations she and Smart might contact. However, when asked specifically about Sutter Health, which operates a hospital in Jackson, and Adventist Health, which operates a medical center in Sonora, she said, “Obviously, we would want to talk with them.”

The ability of the hospitals in the adjoining counties to lure customers from Calaveras County has contributed to the financial woes at Mark Twain Medical Center. The hospital lost about $5.6 million in 2015. That’s a problem for the health care district, because the district has a 50-percent stake in the operation. The 2015 loss took a $2.8 million bite out of the funds that the district will receive in the future if and when Dignity and the district part ways.

The hospital has not yet reported whether it lost money again in 2016. Interim reports during the year indicated that the losses had slowed significantly. Reed, who also sits on the hospital’s corporate board, said in November that the hospital had lost $239,000 to that point in the year.

A large cash balance would be particularly useful if the health care district board decides to run the hospital independently. Any such transition would likely have substantial initial costs. Reed said that a report by Quorum Health on the viability of operating the hospital independently is now almost complete but likely won’t be done in time for the district board’s next regular meeting on Jan. 25. But she said it “for sure” will be done in time for the district board’s February meeting.

Neither health district nor Dignity representatives have specified why, exactly, the two entities have been unable to come up with an agreement for a new lease they were willing to take to voters. A year ago, the parties had hoped to have a proposed deal ready by June of 2016 so that it could be on the ballot for the General Election in November. That deadline passed.

Mark Twain Medical Center President Bob Diehl said that Dignity does still want to negotiate a new lease. “Yeah, absolutely there is interest in continuing these conversations,” said Diehl. “ … and being the lease partner for years to come.”

Reed said that the district board has not approved any of the proposals made so far for a lease with Dignity because, “We didn’t get far enough in the process.”

Reed also acknowledged that at the moment there are no additional dates scheduled for district representatives to negotiate with Dignity representatives, although she assumes there will be another meeting at some point before the end of March.

Smart, the other member of the Ad-Hoc Lease Review Committee, said he intends to talk to many different potential hospital operators. “What we need to do is explore every option and bring that back to the public responsibly,” he said.

In other business Friday, the board elected officers for the coming two years. Reed was elected unanimously to another term as board president. Smart was unanimously elected secretary. Board member Ann Radford was unanimously elected treasurer.

The board also selected member Susan Atkinson to serve a 3-year term as one of the district board’s representatives on the corporate board. The vote was unanimous. Reed remains as the other district board representative on the corporate board.


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