Back to the drawing board?

What does Measure R's 30-year history mean for Marin General?

It's like deja vu all over again - "Yogi" Berra

When voters cast ballots next month they will choose from six candidates to fill three seats on the Marin Healthcare District (MHD) board. The votes will be the latest link in a chain of controversy and contention that stretches back almost 30 years.

Three candidates-Jennifer Rienks, Larry Bedard and Michael Whipplesupport the continuation of the current governance structure of the MHD. The publicly elected board deals with policy issues; a separate appointed board deals with day-to-day operations at Marin General Hospital. Even though the appointed board deals with operations, it's really the administration of the hospital that has the hands-on role at the hospital.

In opposition to the three candidates who support the bipartite governance structure are three candidates-Joseph Salama, Evelyn Foster and Jennifer Hershon who to varying degrees oppose having an appointed board dealing behind closed doors with operations. Salama has been an especially vocal opponent of the governance structure that first became a bone of contention in the district in 1985.

It's a story often told within the context of issues relating to the Marin Healthcare District and Marin General, but it's understandable if voters in 2014 aren't up to date on the history that even now colors the current election.

In 1985, the Marin Healthcare District hired Henry J. Buhrmann as its new CEO. Hank, as everyone called him, was a shrewd CEO in the turbulent healthcare world of the 1980s. Stocks were soaring and so were healthcare costs. But while costs kept increasing, revenue kept declining for hospitals across the country.

Government disbursements for Medicare received continual chops from the feds. And the state wasn't any more generous. Insurance companies, health maintenance organizations, preferred provider organizations, a whole arena of new health plans entered the national consciousness. The goal was to keep costs down while keeping up a level of healthcare delivery that Americans demand.

Market forces were not particularly kind to community hospitals, most of which stood as stand-alone institutions in community hospital districts, created to ensure that Americans could receive quality care no matter where they lived, in a major metropolitan center or in relative rural isolation. The problem was simple economics. Stand-alone hospitals couldn't keep costs down nearly as efficiently as hospital systems that included dozens of facilities under one corporate umbrella. A multi-hospital system could negotiate with insurance companies for better prices, bargain with suppliers for better costs.

Community hospitals couldn't match that economic leverage.

That was the common belief back in 1985, when Hank Buhrmann, hospital administrator extraordinaire, came to Marin. After taking up his new post at Marin General, Buhrmann proposed a radical idea for Marin's premiere hospital facility. Burhmann proposed that the MHD lease Marin General to a new entity called the Marin General Hospital Corporation, an entity that Buhrmann happened to create with the help of attorney Quentin Cook, whom Buhrmann had brought along as attorney for the MHD. The elected board of the MHD voted to lease the hospital to Buhrmanns new entity, lock, stock, assets and accounts receivable. In exchange, the MHD was supposed to see a loosening of the tight economic conditions that had been strangling community hospitals across the country. The arrangement would allow Marin General to operate more on par with hospitals that were part of a system and those who could negotiate prices in private. It would allow Marin General to be more agile in the competitive healthcare world.

Right from the start, Buhrmanns move, a masterful business strategy, infuriated a group of active and informed residents who viewed Marin General as a community hospital-their community hospital. Buhrmann had sold, or at least leased, a major asset that belonged to the community, they said, without a vote of the public. And now the public had no control over operations in the hospital.

The deal, while it may have made good business sense, created a bitterness that poisoned Marin County for decades. The lease arrangement became even more contentious when in 1986 Marin General, through the lease arrangement, became a member of the California Healthcare System and eventually wound up as one of 27 hospitals in the Sutter Health group.

After spending years under the Sutter wing, some say yoke, Marin General broke from the healthcare corporation and became once again a stand-alone facility.

Under the Sutter administration, the healthcare corporation had appointed its own corporate board. In the 2008 MHD election, that kind of governance structure was a major debate point. The group that had opposed affiliating with Sutter continued their opposition to the splitboard concept. The fact that Sutter had withdrawn millions of dollars from Marin General and put it in its hospital-system pot didn't assuage any concern among the opponents who said the split-board arrangement could lead to continued problems.

For its part, Sutter said that hospitals in a system contribute to overall system coffers if they can, and the profit sharing is a routine way to ensure the entire system, with all of its hospitals, remains healthy. Opponents of Sutter in Marin didn't buy the argument. And they said the bipartite board structure was part of the problem because it allowed Sutter to make decisions in private using corporate-appointed board members. The opponents said Sutter acted to benefit Sutter rather than Marin.

The controversy that started when Buhrmann came to town reached a conclusion when Sutter and the Hospital District agreed to part company. One of the major questions in the divorce was how the Marin Healthcare District would govern the hospital. In 2008, a slate of MHD candidates supported continuing the corporate-board model. Sutter opponents campaigned on their continued rejection of the bipartite model.

The Kurt Salmon Associates consulting firm early on in the game said that the district had little choice in choosing a governance structure. During the Buhrmann administration and the time in the Sutter system, MHD board meetings were marked by rancor, stinging accusations, political theater and a more than an occasional demonstration of political dogma from Sutter and split-board opponents.

The rancor and acrimony between the group of residents who had wanted to wrest control from Sutter and the group that thought Sutter was a good partner for Marin General, was toxic. If that toxicity continued to spill over into public board meetings, the chances of ending up with a successful Marin General Hospital would be slim, said the consultants.

The criticism of Sutter hit the fan after the corporation released a report about "excess" cash it withdrew from Marin. News about the excess cash transfer went public at a meeting of the Lease and Building Committeeof the Marin Healthcare District. Members of the committee already knew that Sutter had extracted about $25 million from Marin General in 2008.

Beyond the $25-million excess cash figure, Sutter revealed that it had also taken about $24 million in excess operating revenue and used it to replenish a sagging pension fund. Under a transfer agreement, Sutter was obligated to turn over the hospital with a fully funded pension program. Sutter already had replenished the pension fund to the tune of $500 million.

With the rancorous board meetings and the excess cash revelation as a backdrop still fresh in the minds of Marin residents, the MHD faced the certainty that it would have to go to voters to approve a major bond issue for state-mandated seismic improvements to the hospital. The consultants said if the infighting continued at mind-splitting levels, voters would be unlikely to commit to a bond proposal. The consultants said the district needed a firewall between the public board and an appointed board to allow the appointed board to conduct itself in calmer deliberation with issues concerning the operations of Marin General.

The Marin Healthcare District adopted the governance structure, which mirrored the structure of the bipartite board under Sutter. With one big difference.

Critics said that transferring the two-part board from Sutter to the new independent nonprofit corporation board would retain what amounted to the same secret district governance the hospital endured under Sutter. Supporters of the firewall concept and retaining a bipartite board said that in the Sutter system, the appointed operating board may indeed have acted in the best interests of Sutter rather than Marin, but the new appointed board would act in the best interests only of the hospital and the county.

Voters went along with the concept when they approved the bond measure. But opponents, including those who originally opposed the Sutter affiliation, continued their opposition, as they do to this day and this election.

Measure R on the November ballot would essentially continue the two-part board governance structure that was set up as an interim arrangement as the Marin Healthcare District withdrew the hospital from the Sutter system. The measure calls for the Marin Healthcare District to lease Marin General to the nonprofit Marin General Hospital Corp. (rather than to Sutter, which had been the case when Marin General was part of the Sutter system). The Marin General Hospital Corp. would pay $500,000 in annual rent to the district in addition to a percentage of profits at the hospital. The profit-return contingency would kick in as long as the hospital was deemed financially healthy and profits reached a certain level.

The measure needs a simple majority of votes from residents in the MHD, which includes most of Marin, except Novato and parts of West Marin.

Opponents of continuing the twopart board governance structure say the continuation still amounts to privatizing the hospital, a public asset. They also say it ensures that the nonprofit corporation board will be able to make key decisions in private, shielded from public scrutiny. But supporters of the arrangement point out that given the past rancorous and dysfunctional district board meetings, keeping that firewall continues a necessary component, essential to doing business in a calm and non-contentious atmosphere that's necessary in the continuing competitive healthcare-delivery atmosphere.

Opponents of the arrangement also say it allows the corporate board to appoint members who may not act in the best interests of the community, and the public would be unable to act.

But supporters of the bipartite governance structure point out that the publicly elected board and the corporate board will cooperate to choose candidates for the corporate operating board, and the elected board will have the power to approve or reject candidates. That means elected board members will have a measure of control over who is able to serve on the operating board. Because the publicly elected district board has the power to reject nominees, the public has a measure of participation through the elected representatives.

The arrangement, which continues the interim governance structure enacted after Sutter's departure, still doesn't sit well with longtime critics of the district. Nancy McCarthy is a Greenbrae lawyer and former Marin Healthcare District board member and staunch critic of the Sutter arrangement and the two-part governance structure. She filed a lawsuit on behalf of Linda Remy, another former member of the district board who opposed Sutter and the two-part governance structure. The suit sought to block Measure R.

The legal action alleged that statements in the measure and some of the ballot arguments supporting the measure are untrue or misleading. The suit alleged that Measure R would allow the hospital district to transfer the lease to an outside party without voter approval. It also claimed that the value of the hospital was underreported through a failure to include the $394 million in bonds voters approved.

Earlier this month, Marin Superior Court Judge Mark Talamantes rejected the legal action and cleared the way for Measure R to proceed to the ballot, giving voters another opportunity to weigh in on an issue that has remained in play for almost 30 years. #

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