By Shawn Raymundo

Ahead of the upcoming council meeting next week, the city on Friday, Dec. 6, released a draft of its request for proposals (RFP) that seeks to acquire interest from medical service providers that may want to reopen a hospital in San Clemente.

According to the draft of the RFP, the city is asking a “very limited number” of prospective professional service contractors to submit proposals on potentially setting up a “possible affiliation or partnership arrangement” with the city to reopen the hospital on Camino De Los Mares.

The city notes that it “does not have a firm, preconceived organizational structure or legal structure in mind” and has discussed possible options such as an “outright purchase, sale & leaseback, operating lease and joint ventures.”

“The City seeks a meaningful and substantive relationship including shared investment of capital and resources by both partners with equitable sharing of both the partnership’s risks and rewards,” according to the draft RFP.

In the draft, the city further explains that there are existing improvements that need to be made to the 6.63-acre parcel.

“Since the hospital has ceased operation, if reopened, it would have to be renovated or completely rebuilt up to current state regulations and market standards,” the draft states before listing a series of estimated renovation and replacement costs.

According to the city, cosmetic upgrades to the existing facility could have a price tag of about $39.8 million. To renovate the existing facility, it could cost about $62.81 million, while completely constructing a new facility is anticipated to cost about $163 million.

Since 2006, the city notes, both the state and the U.S. have seen declining inpatient utilization—admissions per 1,000 people. That same trend is likely to still occur as a result of “increased penetration of value-based care models and value-based payment,” according to the city.

The city’s draft RFP goes on to state that inpatient surgeries at the hospital also saw a decline since 2006, when the hospital averaged 1.7 inpatient surgeries per day. By 2015, the average had dropped to less than one a day.

“There is evidence that suggests hospitals that perform lower surgical volumes are at risk of poor quality outcomes; therefore, the Hospital’s viability would be challenged, as it would be at-risk for quality performance and staff competencies,” the RFP states.

Assuming the hospital’s admissions remained the same as 2015, the hospital would have to provide 16 to 22 beds in order for it to remain a viable inpatient facility, according to the city.

Furthermore, the city said, the hospital wouldn’t qualify to receive cost-based reimbursements for Medicare services, because it doesn’t meet the critical access hospital (CAH) distance requirements.

That CAH requirement mandates that the nearest hospital facility be at least 35 miles away; however, there are three other hospitals that are within a 35-mile radius of San Clemente’s vacant hospital, according to the city.

The city has been without a hospital since May 2016, when MemorialCare closed down its Saddleback Memorial Medical Center. The operator wanted to turn the facility into an urgent care location. However, residents and the city council at that time rejected such a notion, advocating instead for an emergency room and hospital facilities.

An action taken by the city that same year to zone the parcel for emergency services prompted a litigation battle between the city and MemorialCare. The medical provider sued the city over claims that the city’s “spot zoning” was unfair and made it difficult financially to support the hospital.

MemorialCare had previously cited a lack of patients and could not provide the services required. It had also sought $42.5 million in retribution, the estimated value of the property, the San Clemente Times previously reported.

The two parties reached a settlement agreement this past June. Since then, the city has intended to reopen the hospital, providing inpatient acute care, as well as surgical, out-patient clinical and emergency room services.

In the RFP, the city notes that it intends to initiate the process for prospective contractors to begin submitting proposals after Jan. 8, 2020 and sets a due date of Jan. 24 at 5 p.m. Assistant City Manager Erik Sund said he will present the draft of the RFP to the city council during its next regular meeting on Tuesday, Dec. 17.

SR_1Shawn Raymundo
Shawn Raymundo is the city editor for the San Clemente Times. He graduated from Arizona State University with a bachelor’s degree in Global Studies. Before joining Picket Fence Media, he worked as the government accountability reporter for the Pacific Daily News in the U.S. territory of Guam. Follow him on Twitter @ShawnzyTsunami and follow San Clemente Times @SCTimesNews.

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