Pleasanton Weekly

Opinion - March 28, 2014

Changes ahead for Safeway, ValleyCare

Two major Pleasanton organizations — Safeway, Inc. and ValleyCare Health System — are undergoing operational and financial scrutiny that could affect their employees and the people they serve in Pleasanton. Safeway and Boise-based Albertsons have signed a definitive agreement under which Albertsons will acquire all outstanding shares of Safeway. The merger agreement, which has now been approved by Safeway's board of directors and Albertsons, controlled by Cerberus Capital Management, is likely to mean that Safeway headquarters and much of its corporate responsibilities will be relocated to Idaho.

As for ValleyCare, the ouster of longtime CEO Marcy Feit and the medical system's restructuring under newly named interim chief executive Scott Gregerson has unsettled those who thought ValleyCare would always be an independent medical center based in Pleasanton and serving the Tri-Valley. There are no indications otherwise at this time, but the move here by John Muir Medical Center in an alliance with San Ramon Regional Medical Center, the growing appeal of the Palo Alto Medical Foundation (PAMF) facility in Dublin and plans by Kaiser Permanente to build a major hospital on land it owns in Dublin are troubling for ValleyCare.

ValleyCare is facing stiff competition in an increasingly uncertain and costly health care market. A move to align ValleyCare more closely with UC San Francisco Medical Center or PAMF might make sense, and these negotiations could already be underway.

Beyond major concerns by salaried staff and hourly workers at both locations, the overall impact for Pleasanton in these two circumstances should be slight. ValleyCare, with its substantial investment in excellent patient care and technology, won't leave Pleasanton, although its headquarters staff could see some changes and possibly new offices elsewhere. Services, treatment and medical staff could even see improvements in a merger/affiliation/alliance with larger hospital groups. We may learn more at ValleyCare's annual meeting this summer.

Safeway's substantial headquarters operations on Stoneridge Mall Road and its Northern California offices at several other locations in Pleasanton could be moved. In the agreement to be finalized later this year, Safeway's recently named president and CEO Robert Edwards will have the same title and responsibilities at the combined company.

Bob Miller, already in Boise where he is Albertsons CEO, will become executive chairman. Cerberus Capital, a leading New York City investment firm that handles these kinds of transactions, sees the merger as a means "to implement operational best practices." That sounds like one headquarters team and location to us — in Boise.

But not to cry for Pleasanton. Clorox recently moved here and is expanding. Workday is expanding its workforce and building a six-story structure also on Stoneridge Mall Road to handle increased business. Several other large companies have sought major space in Pleasanton, some with little success because most available space is filled.

Safeway's architecturally appealing building next to BART and across from Stoneridge Mall, the city's tallest structure, could be sold as soon as it's vacated. In the meantime, the city's lucrative property taxes from this facility will continue to be paid until that happens.

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