COUNTY OF SAN MATEO

Inter-Departmental Correspondence

County Counsel

DATE:

July 22, 2003

BOARD MEETING DATE:

July 24, 2003

TO:

Honorable Board of Supervisors

FROM:

Paul Scannell, Assistant County Manager

SUBJECT:

Burlingame HealthCare Center

RECOMMENDATION:

1)

Adopt a resolution authorizing the County Manager to enter into contracts not to exceed $5 million for the 90-day interim operation of the Burlingame HealthCare Center.

2)

Approve Appropriation Transfer Request (ATR) for the San Mateo Medical Center in the amount of $5 million increasing Other Financing Sources from the Capital Reserve Fund and Available Fund Balance, and appropriating funds in Services and Supplies and Fixed Assets for the 90-day operation of the Burlingame HealthCare Center.

BACKGROUND:

On June 24, 2003, the Board approved a lease agreement with California Trousdale LLC and 1100 Trousdale LLC to lease a building at 1100 Trousdale Drive for the operation of the skilled nursing facility known as Burlingame HealthCare Center ("Facility"). Although the County approved the lease for the Facility, there are certain specific conditions precedent which must be accomplished prior to the County actually entering into the lease and taking control over the operations of the Facility.

Because the current operator, Burlingame Senior Center LLC (Debtor), is in bankruptcy, the State Department of Health Services (DHS) has funded the Facility since October 21, 2002, utilizing a Court appointed Receiver, E. Don Doyle (Doyle). Due to the state budget crisis DHS has indicated that they will cease funding the operation of the Facility, close it, and transfer the patients, unless the County can assume operation of the Facility by August 1, 2003. The County, Doyle, and DHS have worked diligently over the past few weeks to develop a plan that will allow the County to assume responsibility for the Facility by August 1, save the Facility from closure, but also protect the County (and other parties) interests.

DISCUSSION:

The plan developed by the parties is for DHS to issue a license to the County to operate the Facility as a Distinct Part of the San Mateo Medical Center (SMMC) as of August 1, 2003. At that time, the Facility becomes the County's responsibility. However, because the County needs sufficient time to hire employees for the Facility the County would enter into a contract for 90 days with Doyle to manage the Facility operations during the period of time that the County is hiring employees and implementing County systems at the Facility. The County is undertaking a massive open recruiting effort and it is anticipated that the County can fully staff the Facility by the end of the 90-day transition period, November 1, 2003.

The proposed contract with Doyle would be approximately $1.3 million a month. This cost includes paying for the cost of all of the operations of the Facility, including the employees and vendors. The County expects to recover a substantial portion of these costs through State and Federal reimbursements.

If the County is to save the Facility from closure by DHS, it is imperative that the County has an approved interim plan in place by August 1, 2003. During the ensuing 90-day period the County will be able to assume complete control of the Facility and to integrate its operation into SMMC. The most significant hurdle faced by the parties in transitioning the Facility to the County has been the issues surrounding employment. Because the County needs 60 to 90 days to complete its recruitment process, but needs to operate the Facility under its license on August 1, the question has been how the Facility will remain staffed until the County completes its hiring process. The first choice of the parties was to have the current employer, the trustee of the estate, continue employing the current staff until November. However, the trustee has no interest in continuing to employ the employees as they attempt to wind down the estate. Therefore, the only realistic solution is for Doyle to become the employer for the 90-day transition period. He has agreed to do so and under the terms of the proposed contract would pass the costs of employment and operations to the County. The two parties are still working out the final details of the proposed contract, including the insurance issues. The County and Doyle went to San Mateo County Superior Court successfully on Tuesday for a court order authorizing Doyle to act as the operator as a continuance of his role as Receiver.

For the Facility to remain open, the County needs to take financial responsibility during the 90-day transition period. The Board is requested to provide the authority for the County Manager to enter into contracts, not to exceed $4.75 million dollars, and to purchase fixed assets for an amount not to exceed $250,000 for the successful continued operation of the Facility.

VISION ALIGNMENT:

The approval of the requested authority keeps the commitment of "Ensuring Basic Health and Safety For All" and goal number 8, "Help Vulnerable People the aged, disabled, mentally ill, at-risk youth and others achieve a better quality of life."

FISCAL IMPACT:

There is sufficient Available Fund Balance in the SMMC Enterprise Fund to cover costs for operation of the facility during the 90-day period, not to exceed $4.75 million. Funds from the SMMC Capital Reserve Fund in the amount of $250,000 will be used to replace equipment, if necessary, during the 90-day period. A final budget change will be presented to the Board in September to adjust the FY 2003-04 Medical Center budget for the County's operation of the facility for the remainder of the fiscal year.