By Elizabeth Cloutman

Photo by Monique Schoenfeld, Town Crier

Finances solid, but tough labor and earthquake questions remain

After enduring a period of financial turbulence, El Camino Hospital appears to be on the road to recovery with a new Chief Executive Officer, organizational streamlining and a solid financial performance for the fiscal year thus far.

However, challenges remain as El Camino nears its fifth decade of operation. It must attract new physicians and support staff while dealing with the high living costs of Silicon Valley. The hospital is in the process of negotiating a union contract with non-nursing employees, who have been demoralized by the difficulties that arose from El Camino’s financial losses as a private hospital between December 1992 and January 1997. Perhaps most importantly, in the coming months, the hospital’s board of directors must also make a final decision whether to retrofit or to rebuild El Camino to meet new state earthquake standards for hospitals.

To meet these challenges and revitalize the still well-respected institution, El Camino hired an experienced hospital administrator known for his ability to turn around troubled institutions, Lee Domanico. He became its CEO nearly four months ago after the retirement of Richard Warren. Domanico’s best known success was putting Tenet HealthSystem Corporation of Pennsylvania back on its feet. A its vice-president, he was able to turn around a $1.5 billion bankruptcy, the largest health-care bankruptcy in history. The system was very large with eight hospitals; a health science university, including a medical school, and 250 physicians’ practices.

Domanico also came with knowledge of El Camino’s reputation in the Bay Area, having previously served as an administrator at Stanford Medical Center, the former Alexian Brothers Hospital in San Jose and Delta Memorial Hospital in Antioch. “El Camino is a great hospital. I’ve known it for years,” Domanico said. “It’s a pleasure to run an institution that’s got so much going for it.”

Domanico has established priorities for the hospital that he would like to see accomplished and has already begun to set up programs to carry them out.

Two weeks ago, in order to streamline the organization, Domanico eliminated two top administrators, Owen Aurelio, chief operating officer, and Victoria Emmons, vice president of community and corporate health services. He said that while that both Aurelio and Emmons had been very capable administrators, he believes eliminating the positions put him “one step closer to any important issues concerning patient care.” Cardiologist Dominick Curatola, president of the hospital’s board of directors, noted that months prior to Domanico’s arrival, a consultant had recommended restructuring the administration in order to make the administration “more accessible, fluid and adaptable.”

Another goal Domanico has set high on his list of priorities is to continue to improve operating profits and cash flow in order to be able to reinvest in hospital facilities, technology and programs, and to achieve operating profit by the end of the fiscal year by “aggressive” cost management.

The financial records for the current fiscal year thus far indicate El Camino may achieve a balanced budget by July. Marla Gularte, the hospital’s chief financial officer, reported at the March 15 board meeting that, after years of financial losses, net income has met or exceeded net operating experiences for eight consecutive months. Gularte said that if this trend continues and the hospital “breaks even” this fiscal year, she believes El Camino will be financially qualified for bond status and thus be able to raise the funds necessary for retrofitting or rebuilding the hospital facility to meet new state earthquake standards.

Yet, even with its overall good reputation and a more stable financial picture, challenges remain for Domanico and the hospital board. One of Domanico’s top priorities is to enhance physician and employee recruitment and retention. “The cornerstone (of a hospital’s success) is the people who provide the care,” he said. “Our biggest challenge is being able to attract and retain high-caliber employees and medical staff because of the high cost of housing in the area.” Some of the solutions he has proposed include offering better health benefits, referral and signing bonuses, soliciting employees’ suggestions for improvement and recognizing and giving extra financial compensation to outstanding employees. He also said that if El Camino builds a new facility, perhaps it might include apartments as transitional housing for staff physicians and employees because of the high cost of living in Silicon Valley.

Currently, employee frustration over short-staffing and benefits lost during El Camino’s financial crisis remains. A two-thirds majority of its 850 non-nursing staff employees - who include LVNs, dialysis technicians, laboratory scientists, dietitians, and maintenance and nutrition services workers - recently voted to become part of the Local 715 chapter of the Service Employees International. Seventy-five of them came to the March 15 Board of Directors meeting to show their support of the union’s contract requests. Negotiations have been ongoing between union representatives and management since January. Union demands include improving the staff/patient ratio, fully paid health insurance, improved retirement benefits and agency, or closed, shop, which would mean El Camino employees would be required to pay dues to Local 715.

Joan Dyer a laboratory scientist in the hospital’s hematology lab said she felt encouraged by the board’s response to union members’ presence at last week’s meeting. “It sounds as if they were listening to us,” she said. “We want to go forward. We don’t want to be divided (as employees) … Everybody’s equally part of the team.”

The union had also requested as part of their contract that the board guarantee El Camino would remain a community hospital. At last week’s meeting, cardiologist Edward Bough, a board director, told them it was impossible to have this request as part of a contract. because of State Senate Bill 819, which prevents any future transfer of El Camino Hospital assets into the control of any private individual without approval by a two-thirds majority of voters living within the hospital district. The bill was introduced in the California State Senate by Byron Sher, D-Stanford, on behalf of the El Camino Hospital District in March 1999. the bill was subsequently passed.

“No CEO or board member can decide this. We don’t have the authority to put this in a contract,” Bough said. “(While) it may happen if the voting public decides to do so, I have very little doubt this will remain a community hospital.”

The most expensive challenge El Camino has is to meet recent hospital earthquake safety standards by 2008 by either retrofitting or rebuilding the original building, erected more than 40 years ago under less rigid standards. The requirements were enacted into law in 1994, following the Northridge earthquake in which 71 people died when several hospitals were severely damaged.

Domanico emphasized that no decision had been made whether to retrofit or rebuild, but said he hopes to take a recommendation to the hospital board by late summer or early fall. The cost of either choice is about the same, but retrofitting would cause major disruption of services, while rebuilding would mean erecting a new facility elsewhere on campus as regular daily operation could continue at the original hospital site. “It is my hope we will develop plans for a new state-of-the-art hospital,” he said.

Domanico’s vision of El Camino Hospital is that it continue to be recognized as “the hospital of the Silicon Valley.”

“In my view, that means a hospital that is innovative, cutting edge, high growth, while being a good corporate and community citizen … We’ve got a lot to do.”