Hospital’s New System in Financial Trouble

The Alameda Health System (AHS) board of directors asked Alameda County supervisors at a meeting last month if it can restructure its debt payments to the county as a result of serious financial problems the group is facing.

The conglomerate currently owes the county $198.7 million. It wants to change the debt payment to pay off some of the system’s increasing bills. The proposed restructure would delay the end date of payments by 20 years.

"The public has been in the dark about the financial system until now," said Alameda County Supervisor Richard Valle at the Sept. 22 meeting. "The trust between AHS and Alameda County has been broken."

The loan amount was supposed to be reduced to $110 million by June and to $30 million by June 2018, according to reports.

"The Alameda Health System has proven to be inept at managing their finances," said Valle at the meeting.

Board members attributed the rising debt factors to the recent take over of San Leandro and Alameda hospitals not going as smoothly as hoped, delayed reimbursements from the federal government and a $77 million investment in a Siemens Health IT health records system that has caused trouble with billing and other information since it was put in place in July 2013. The Siemens Health Soarian system shares patient records and processes medical bills. Health executives at AHS said the system has caused errors that make it difficult to bill a claim. The errors have caused up to $50 million in lost operating income, according to AHS Chief Financial Officer David Cox in an interview with the Contra Costa Times. Cox went on to say some of that money could have gone to paying off the county debt.

County supervisors at the September hearing suggested that AHS might need a change in leadership. Valle said he would like to see a "major change at the executive level." That major change is going to happen, but not as a result of Valle’s request. AHS Chief Executive Officer Wright Lassister announced on Sept. 29 he would be stepping down from his position at AHS to take on the same job, he will be the CEO after a two-year succession plan, at Detroit’s Henry Ford Health System. Lassiter will leave AHS on Dec. 15.

AHS is in the midst of several executive shakeups. Along with Cox, who was hired in July, the board introduced four new members (James D. Falaschi, María G. Hernández, James Potter and Patricia Scates). Tracy Jensen was named city of Alameda AHS board representative in September. The group will be tasked with how to minimize AHS’ debt in the future.

AHS operates nine hospitals and wellness centers in Alameda County.

Contact Ekene Ikeme at eikeme@alamedasun.com.