Merger likely to keep ValleyCare afloat

'ValleyCare won't be able to go it alone,' new CEO says

ValleyCare Health System will likely merge with a larger hospital group in the near future to provide long-term financial stability and secure its position as Pleasanton's community hospital.

ValleyCare was established in 1961 and has grown from a small hospital in Livermore into a comprehensive health system with medical facilities in Livermore and Dublin, as well as Pleasanton.

Since its beginning, ValleyCare has remained not-for-profit, which means any earnings have gone right back into the health system in new programs and services, equipment and facilities.

But its ability to continue delivering high quality health care is threatened by fierce and growing competition for patients and services from larger groups, increasing medical care costs and a whopping $86 million in outstanding debt.

In the last five years, ValleyCare has lost an average of $3.5 million a year, although Scott Gregerson, ValleyCare's new chief executive officer, is determined to stop the losses next year.

In remarks to the Rotary Club of Pleasanton last week, Gregerson, described as one of the best "change" managers in the industry, said that his predecessor, Marcy Feit, ValleyCare's long-time CEO and a change manager, herself, when she took over the failing hospital system two decades ago, was being paid $2 million a year plus perks when she abruptly resigned last February with the blessing of ValleyCare's board of director. Two of her top executives also were earning more than $1 million.

They're gone and, as part of his first actions, Gregerson also laid off a number of other employees he said weren't needed. Further belt-tightening is continuing, he said, while he's on the prowl looking for a financially-strong and larger health care partner.

Gregerson said Johns Hopkins Medical Center in Baltimore came to the rescue of Sibley Memorial Hospital in northwest Washington, D.C., which was in a similar financial situation, and Sibley today has retained its identity with more medical services now available in the community it serves.

He also showed a graphic entitled, "A crowded dance floor," listing ValleyCare's formidable competitors, including Kaiser Permanente, Sutter Health's Eden Medical Center in Castro Valley, Washington Hospital in Fremont, John Muir in Walnut Creek and San Ramon Valley Medical Center, which has just announced an alliance with John Muir to build a 9,000-square-foot outpatient clinic in Pleasanton.

"The future for ValleyCare is going to be within a partnership with a major hospital; group," Gregerson said. "Right now, I don't see anybody riding a white horse over the hill to rescue us, but I know that ValleyCare won't be able to go it alone."

Already, ValleyCare has developed strategic affiliations with UC San Francisco Medical Center and its Benioff Children's Hospital, UC Davis Medical Center's Cancer Care Network and Stanford University's medical center. All three of those medical centers have expressed an interest in expanding into the Tri-Valley.

First, Gregerson said, he has to "right the ship" at ValleyCare to restore an adequate revenue stream and that leverage that improvement to find a managing/operating/financial partner to join ValleyCare in continuing to serve the community.

"We have a great hospital and we are going to come out of our financial problems and be in far better shape," he said. "We've been in an unsustainable trajectory. We have to face the brutal reality of where we are."


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Posted by WatchDogNeeded
a resident of Livermore
on Apr 26, 2014 at 8:52 am

Why in the WORLD would the ValleyCare Hospital Board of Directors continually have allowed the previous Executive Officer Marcy Feit to receive "two million dollars a year PLUS perks". I would think there would be some way to renegotiate her contract (especially given their poir financial condition) and any current member of the board that was involved with the hiring of Marcy Feit should resign there position. Shameful.

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Posted by Al
a resident of Another Pleasanton neighborhood
on Apr 26, 2014 at 10:36 am

So if Marcy earns $2M/yr, and her two top peeps were at $1M/yr each, and the annual deficit is $3.5M, I would say "problem solved," and with $.5M to spare (plus the cost of the those mysterious perks).

Yes, I know it's not that simple. Wonder what the new guy's salary is? I bet it's $2.5M/yr because he's smart enough to dump the $4M/year cost of the three.

Call me naive, but if I had earned $2M/yr (plus perks) for several years, I would consider working pro bono for a few years, esp during a financial crisis when others are belt-tightening or being laid off.

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Posted by HealthCare Affiliate
a resident of Ruby Hill
on Apr 26, 2014 at 7:00 pm

Scott's salary is $330,000/yr. Yes Al, it is amazing that the executives at ValleyCare could collect such a huge sum and the hospital was in the RED for several years. Not to mention the recent default on $ 86 million. There were several executives, eight, I believe, collecting these "over the top" amounts. Meanwhile, the employees are the lowest paid in the Bay Area with the crummiest benefits ever. It will all come out in the wash, Al. ValleyCare has been "Top Heavy" for a long time and the gravy train is coming to an end. Scott, Do Your Thing!

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Posted by Al
a resident of Another Pleasanton neighborhood
on Apr 26, 2014 at 10:02 pm

Thank you, Health Care Affiliate: Good to know that Scott's salary is reasonable.

My perspective on Pleasanton's hospital is limited, consisting only of accompanying my elderly parents there, multiple times, for simple and complex issues. I watched them like a hawk, and I was impressed and grateful for the good care they got. Sorry to hear it was from staff who are not paid fairly.

To what do you attribute this long-term "top-heavyness"? Surely there is oversight? I wish we could hear that the hospital is just terrific all the way up the chain to the top.

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Posted by Volunteer
a resident of Hacienda Gardens
on Apr 27, 2014 at 10:01 am

A charitable foundation we can no longer afford. One of the biggest reasons ValleyCare is in financial debt occurred when Marcy Feit created a Charitable Medical Foundation to monopolize health care systems in Pleasanton. ValleyCare spent millions buying doctors practices and bringing in new doctors to start a new foundation. ValleyCare Medical Foundation is a charitable foundation but due to loopholes the Charitable part of the foundation has been minimized in favor of influencing doctors to refer their patients to ValleyCare for all services.
ValleyCare started this foundation to compete against similar Charitable Foundations such as Palo Alto Medical Foundation, and John Muir Medical foundations. The medical foundations bring doctors under one umbrella and as a large group they are able to negotiate higher reimbursement rates from insurance companies that in turn increase insurance rates to all the residents in the area the foundations operate. Insurance rates are determined by the costs incurred in your zip code so even residents that do not patronize the Medical Foundations end up paying higher insurance premiums. Oddly the Charitable Foundations guidelines they operate under have so many loopholes they can deny care to the poor and uninsured and still operate as "Charities". The Charities are tax exempt as long as the Billions of revenue they generate is spent by the end of the year. In order to spend all the money the doctors, and executives have to pay themselves large bonuses. Legitimate Charities have to compete with them because Charitable Medical Foundations are also allowed to receive tax free donations like the Salvation Army. In the end everyone loses; the poor are left with limited resources, children are diverted away from Children's Hospitals, Cancer patients are diverted away from the best cancer centers, our communities are cheated out of significant tax revenues, and everyone ends up paying more for their health care, and insurance. Of course their is always a winner with a Golden Parachute at the top of the Pyramid.

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Posted by Al
a resident of Another Pleasanton neighborhood
on Apr 28, 2014 at 9:43 am

Wow, Volunteer. That's quite an indictment. I do remember an era when many of the MDs I knew of were all moving to join ValleyCare under some big umbrella. And some did not, very pointedly. I wondered what that was about, but was too busy with eldercare to research it.

Is there a way to back out of this? Are there other points of view? This is a very sad story.

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Posted by Fox Bilked the Chickhouse
a resident of Another Pleasanton neighborhood
on Apr 28, 2014 at 11:11 am

Let's see, the top 3 executives of ValleyCare were knocking down more than $4 million/year for the last 20 years -- that's a total of over $80 million. And ValleyCare is in debt for $86 million. So, virtually all the debt run up over the last two decades went to pay 3 grossly overpaid executives. That's pathetic. Where in the hell was the Board of Directors doing during this time, contemplating their navels? Wasn't Ken Mercer on this board? Maybe we want to hold off on naming the sports park for him. Lots of other Pleasanton and Livermore power brokers were on the board as well.

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Posted by Interested Reader
a resident of Livermore
on Apr 29, 2014 at 9:11 am

Just to clarify the previous comment from 'Volunteer' - ValleyCare Medical Foundation and Valleycare Charitable Foundation are two separate entities. More information is available at their respective websites:
Web Link
Web Link

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Posted by RN
a resident of another community
on Apr 29, 2014 at 3:05 pm

First of all if Mr. Gregerson actually quoted those salaries of 1 & 2 million dollars, then those employees must've gotten a raise since they left. In his attempt for "transparency" in previous publications he's already quoted their salaries at less than 1/2 of the 2 mil & 1 mil dollar figures he's now tossing around. Let's see what he ends up negotiating for his "package" since he's become the permanent CEO. That ol' figure of $300 thousand plus will surely be out the window.
And don't think he's "permanent". His track record is come in make big changes & leave. He's never had to live with his changes for long, but we the citizens will have to subject ourselves, families & friends with what is left of a quality patient focused organization that has taken over 50 years to build as the transition is abruptly made from community hospital to corporate hospital.
Who laid the groundwork for all of the national awards that ValleyCare has received, certainly wasn't Scott. It was the leadership that within 3 weeks are all gone due to Scott & the Board of Directors.
Be careful what you wish for.

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Posted by very concerned citizen
a resident of Walnut Grove Elementary School
on Apr 29, 2014 at 3:18 pm

Okay, Mr. Gregerson & Board Chairman John Sensiba have now talked so much to the press it maks even less sense. If ValleyCare had truly lost 3.5 million dollars per year for the last 5 years, then I guess the biggest question is why any of the Board is there also. Mr. Sensiba was chair of the Finance Committee prior to becoming Board President. So he totally failed as the Finance Committee chair & the Board elects him to Chair? What am I not understanding here?
The Board Finance Committee has the final say on all expenses, salaries, purchase, et. They set the administrators' salary, not Mrs. Feit. They approve the total operating budget, so hold them responsible. Hold Mr. Jensen responsible for the submission of failed budget. So he submits the 5th year of a deficit budget, resigns & walks away with his "golden handshake".
Corporate members, your work is cut out for you. You have a Community Hospital Board that has failed its' community, pointed their fingers to everyone but themselves & established a hostile work environment to the degree that all of the top patient care staff have left. These staff members were the ones who set the culture that enabled ValleyCare to win all of the awards for top care that they have done over time including their recent JCAHO award.
Now the Board brings in a retired small-hospital executive who's been running a B&B & doing real estate to become the COO.
Hold on it's almost too late to save our health care system.

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Posted by Corp Member
a resident of Another Pleasanton neighborhood
on Apr 29, 2014 at 6:33 pm

Those of us who have been supporting Valley Care through the years are watching this situation with grave concern. We have options. Mr. Gregerson
was actually hired by Feit to complete a merger which he never completed.
There are board members currently serving who where trusted with the finances over the past years and now claim to have all the answers. Voting members are now looking at re-calling a few board members who should have never been put their in the first place. We are also looking a negotiations with another hospital group without the involvement of the current board.
This should not be a problem since the bylaws have been thrown out the window. Valley Care now has a realtor as COO, reporting to a Attorney, as CEO, reporting to a CPA as chairman. All we need is a clown to do the surgery and our circus is complete. We have better options!
In the above article the only thing that was said that was actually correct is that we are talking about Valley Care, other than that the rest was
Grossly incorrect.

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Posted by leaving soon
a resident of Castlewood
on Apr 29, 2014 at 6:45 pm

It's funny how Health Care Affiliate claims the poor employees don't get paid enough? yet the board has already started laying off, cutting salaries and planning to take even more from the employees. Folks lets be real here, most of these board members tried and failed to get on other boards. Those companies were spared. Did they wake up one morning and decide they suddenly want to dedicate themselves to health Care? Or were they just desperately looking to get on a board and start their do-gooder power trips! As a soon to be ex-health care worker, I would like to see these board members pay the hospital back for their board retreats, and I would like to see background checks on them and their spouses. Lets really see who we have on the board and what their about.

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Posted by Dealer
a resident of Danville
on Apr 29, 2014 at 9:03 pm

People are sooo concerned over what other people make? I am a car dealer, I made $2.8 mill last year, am I over paid? you bet! that's the whole idea!
Don't forget, this is California, so if she was making $2 mill a year (which I doubt) after taxes that only nets her about $150,000 !!!! :-)

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Posted by outraged
a resident of California Somerset
on Apr 29, 2014 at 10:43 pm

I just found out that Mr. Sensiba is a CPA. OMG Let me see if I got this straight:
*Mr. Sensiba is a CPA - I'm sure he can read budgets & financial statements
*Mr. Sensiba was the head of the Finance Committee for several years before being elected Board Chair
*Mr. Sensiba allowed the Finance Committee to approve deficit annual budgets to the tune of 3.5million/year for 5 YEARS!
* Mr. Sensibas' committee approved all of the salaries of the executives

Uhm, I guess my question is why is Mr. Sensiba still at Valley? Board & Corporate Members WHAT the heck are you thinking? This health care community deserves better.

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Posted by blind leading the blind
a resident of Another Pleasanton neighborhood
on Apr 29, 2014 at 11:56 pm

Incompetence runs rampant in Pleasanton.

John Sensiba? I see Marty Inderbitzen is also on the board. Who appointed these board members anyway?

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