Hospital Districts Without Hospitals - What Keeps Them Alive?

Hospital Districts Without Hospitals - What keeps them alive?

Two San Mateo County hospital districts have fulfilled their mission, “morphed” into Healthcare Districts, and taken on a life of their own. These Hospital Districts, now calling themselves Healthcare Districts, are supported by property taxes from 58% of the county. They should be dissolved.  They continue to collect taxes originally assessed to support hospitals they no longer own. Don't look for it on your property tax bill, it's buried in the 1% ad valorem tax. Essentially, these districts siphon off a percentage of taxes which would otherwise go to the county, school districts, fire districts, etc, as they do in other parts of the county. 

Assets and revenue

The two districts have combined assets totaling more than $100,000,000. That includes a profit sharing agreement with Sequoia Hospital (EBIDA) which the Sequoia Healthcare District chooses not to include as an asset in it’s financial statement. I estimate the value of that agreement to be at least $20,000,000. The Districts receive more than $12,700,000/year in property taxes. Current income from their assets total $5,500,000/year.  

District Boundaries

Boundaries were drawn based on communities existing in 1946/7.  Sequoia Healthcare District includes Portola Valley, Woodside, Atherton, Redwood City, San Carlos, portions of Menlo Park, Foster City and a small portion of San Mateo. Peninsula Healthcare District includes Hillsborough, Burlingame, Millbrae, most of San Mateo, portions of San Bruno, South San Francisco  and Foster City.   Excluded areas of East Menlo Park and East Palo Alto are home to 43,852 residents with a CNI (Community Need Index) score of 4.0.  They are the neediest, and collaterally receive considerable benefit from Sequoia Programs funded by District taxpayers.

District Grants “buy constituencies” 

Both districts have been engaging in charitable giving not intended by voters when the districts were established. They act like a taxpayer funded United Way. Recipients of their Grants run the gamut from organizations previously funded solely by voluntary contributions, such as St. Anthony de Padua Dining Room, to the San Mateo County Medical Center with countywide responsibilities and funding. Other recipients include Society of St. Vincent de Paul, Catholic Charities, El Centro de Libertad, St. Francis Center, Planned Parenthood, Sequoia YMCA, Jewish Family and Children’s Services, Latino Commission, Senior Focus, etc.  See: Do we need an elected Board of Directors to make our charitable contributions?

The sheer number of beneficiaries involved establishes a formidable support group which perpetuates the Districts. The Districts are dues-paying members of the Association of California Healthcare Districts (ACHD) which engages in Grassroot organizational activities for political purposes. 

Other District activities

Both Districts contribute $1.35 Million/year to the countywide Children’s Health Initiative, a countywide program. No substantive effort is made to show direct benefit to District residents for the contribution made.
Peninsula is branching out to the real estate market to generate rental income.   
Sequoia continues it’s Million$/year subsidy for a Nurses Baccalaureate Program with no guarantee that graduate nurses will benefit District residents. It’s Heartsafe Program distributes Automated Defibrillator Devices (AEDs), a function more appropriate for San Mateo County’s EMS division. See: smchealth.org/EMS/AED  Sequoia’s Healthy Schools Initiative is a front for solving school district budget problems. Schools would receive more if the District were dissolved.

The solution?  Expansion, Consolidation or Dissolution 

In 2007, San Mateo County Local Agency Formation Commission  (LAFCo) adopted a resolution, which included the following for the two Healthcare Districts:
“transitional sphere of influence with the potential for: expansion to include excluded areas, dissolution and consolidation”.  Put simply, the “status quo” is unsustainable. 

The Districts should do one of the following:

Expand.

Annex entire County.  Requires politically unlikely concessions of property tax revenue. 

Consolidate Districts. Eliminates almost half of overhead, but doesn’t solve the “excluded areas” problem.

Dissolution. Restores distribution of 100% of ad valorem taxes and Districts assets to remaining agencies.