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  E-Mail Forum – 2014  
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  DMC Evolving Plan
October 20, 2014
 
 

At tomorrow’s City Council meeting, City staff will present the outline of a three-year plan to cover the operating deficit of Doctors Medical Center, as follows:

Each Year for three years

·         $5 million from City of Richmond transferred from the Chevron Environmental and Community Investment Agreement
·         $2.9 million of debt service that Contra Costa County would waive (total debt is $75 million)
·         $4.3 million that other hospitals would provide as a subsidy
·         $5 million from a new parcel tax that would go on the ballot spring of 2015
·         $0.8 million from DMC operating cost  reductions

Total = $18 million

The assumption is that the City’s contribution to a plan that carries DMC forward three years will incentivize others to pitch in to make up the additional $13 million per year required..

Each piece of the puzzle is, however, an individual challenge.

·         The City’s ability to provide funding when it is needed, perhaps as early as January 2015, is tied to Chevron’s release of the funds, which is, in turn, tied to the resolution of litigation over the Modernization Project. The city attorney estimates that resolution is, at best, 6-8 months off.
·         A debt service waiver by Contra Costs County would require a vote by the Board of Supervisors.
·         Other hospitals are not likely to continue to provide operating subsidies (they have provided $19 million already) until they see a long term sustainable model, not a three-year plan. They may be more interested in paying down some debt than providing an operating subsidy. They mainly are motivated by self-interest to avoid overload on their facilities from patients that otherwise would have used DMC.
·         The voters defeated a parcel tax earlier this year, but a new one would be for less money, perhaps an average of $50 per parcel.
·         Not sure where $0.8 million would come from.

One thing no one is talking about is the $50 - $100 million it will cost to replace the seismically deficient building before 2020. Planning would have to start soon, and the debt service for a bond would cost another $5 - $6 million.

This is not meant to be either negative or pessimistic, but it shows the fragility of such a plan. Any additional ideas or suggestions are welcome.

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