OAKDALE: Oak Valley Hospital Nearing Deal With St. Joseph’s
After the Oak Valley Hospital's board of directors "inched closer to affiliating with" St. Joseph's Regional Health System of Stockton, Oakdale residents "are still figuring out what the deal means" for the hospital, the Modesto Bee reports. Supporters of the plan say the affiliation will help keep Oak Valley solvent, while detractors are concerned that the hospital "will lose its community-oriented focus." Oakdale resident Paul Westberg said, "A lot of people feel they won't have a say in their community hospital. That can happen when you bring someone else in to run your hospital." However, board member Sandy McKeon said, "Our goal is to maintain our acute care facility. It's a win-win situation."
The terms of the agreement with St. Joseph's were presented Wednesday evening. The affiliation, set to take effect May 1, would last 15 years, but could be terminated "with one year's notice after nine years," and would be renewed automatically for an additional five years" if not terminated. St. Joseph's would provide management services to Oak Valley and "pay the hospital $6 million up front to expand health care services and purchase equipment." In return, Oak Valley would pay St. Joseph's a management fee equalling "25% of the hospital's net income in excess of $1.5 million, plus 1.25% of the hospital's net operating revenue."
Criticism And Defense
Critics are questioning the timing of the move, since Oak Valley "finished the 1996-97 fiscal year with a $2.1 million surplus." McKeon responded to these concerns by saying, "You don't go out and find a partner to affiliate with when you're in bankruptcy. We had to go with this while we can still make our best negotiation." Supporters also said that there are "financial safeguards" in the deal (Birch, 3/6).