Hospitals: a public past, a private future. (hospitals shed their public status)(includes related articles)

'The small, independent community hospital can't survive on its own'

The brilliant red, blue and yellow signs dotting light poles and sign posts throughout Castro Valley make a simple plea: Yes on A: Save Eden Hospital.

But the reality is far from simple.

At first glance, Eden needs no saving. It has posted profits of roughly $25 million over the last three years and has cash reserves of $51 million. However, supporters of the hospital board's proposed merger into giant Sutter Health reply that the future looks bleak even for healthy local institutions like Eden. In an era where survival rests on the scramble for large managed-care contracts, they say there is no longer a place for small independent hospitals.

When Eden Township's 163,000 voters cast their ballots by the end of the month, their decision will influence far more than whose name sits above the door of a 42-year-old hospital perched on a hilltop in the East Bay suburbs.

Eden is just one in a flood of Bay Ares public hospitals that are giving up their independence, choosing instead to join the emerging matrix of an industry dominated by a few giant hospital conglomerates.

From small institutions like Eden to giant taxpayer-supported facilities like UCSF, which wants to merge its medical center with Stanford's into a new private entity, hospitals are shedding their public status. The implications - for health care, the hospital industry and the public - are huge.

By the end of this year in the Bay Area alone, close to $1 billion in public assets will have flowed into a small coterie of privately controlled hospital corporations, nearly half of it from the UCSF-Stanford merger. What have been public institutions are being placed largely beyond public scrutiny.

Takeovers or giveaways?

Critics, who include unions fearing massive job losses and activists decrying the loss of local control, charge that the takeovers represent nothing less than the giveaway of public assets to giant healthcare systems like Sutter Health and Columbia/HCA Healthcare Corp.

Since late September, three more public district hospitals in the region have been swallowed up by larger systems. Sequoia Hospital in Redwood City joined San Francisco's $2.7 billion Catholic Healthcare West. Mt. Diablo Medical Center merged with nearby John Muir Medical Center in Walnut Creek. Brookside Hospital in San Pablo, just weeks away from financial collapse, made a last-minute deal in January with giant Santa Barbara-based Tenet Healthcare Corp. that allowed it to stay afloat at the cost of its independence.

Hospital boards and executives acknowledge the thicket of questions, from operational to financial to ethical, that surround the transfers. Each said the decision to surrender decades of independence hasn't been a matter of choice but of necessity.

"The small, independent community hospital can't survive on its own into the next century," said Gary Sloan, who is now CEO of beth Brookside Hospital in San Pablo and Pinole's Doctors Hospital following for-profit Tenet's acquisition of Brookside.

Like so much else in health care, everything has changed in just a few short years.

California's network of public district hospitals grew up in the 1940s and '50s to serve growing post-war suburban and rural populations. Having a hospital was as much a matter of civic pride as of medical necessity, and as long as employers and insurers were undaunted about rising health costs, the institutions thrived.

Now, in a market increasingly controlled by managed care, mega-HMOs and purchasing cooperatives such as San Francisco's Pacific Business Group on Health and the California Public Employees …