News


Stanford Health Care-ValleyCare merger approved

2 hospital groups receive final OK from state's Attorney General

California Attorney General Kamala Harris Tuesday issued the final approval needed for Stanford Health Care to proceed with its acquisition of ValleyCare Health System and its medical center in Pleasanton.

Harris' approval ends a near-year-long effort by the governing board of directors of ValleyCare to find a partner as the health system plunged deeper into debt.

While allowing Stanford Health Care to acquire ValleyCare, Harris also ruled that the Pleasanton-based health system must continue providing medical services here for at least five more years, including its 24-hour emergency medical operation and most other services now available.

The current ValleyCare board of directors and CEO Scott Gregerson apparently will remain in place for now with some consolidation, along with "substantially all of the employees employed by VCHS," Harris said in a 21-page letter and "Conditions to Change" packet.

"We are very encouraged by the report," Gregerson said. "The work of the Attorney General was thoughtful and considered and the community will be well served by her decision."

"This decision validates the work of the (ValleyCare) board of directors and honors the will of our corporate membership many of whom supported this hospital for over 50 years."

He said Stanford will now review the terms as proposed.

"ValleyCare is a great hospital and is now poised to be far better than it has ever been," Gregerson added. "I would be remiss if I didn't thank the employees and physicians for their unyielding efforts to serve this community during a challenging time and we are awed by the potential this partnership will bring."

In an unattributed statement, Stanford Health Care also welcomed the attorney general's decision.

"We are delighted that ValleyCare Health System will be joining Stanford Health Care," the statement reads. "We have successfully received the California Attorney General's approval and look forward to finalizing the transaction in the next couple of months."

As part of the merger agreement, Stanford will provide a capital commitment of $50 million during the first three years and will be co-obligated on, or guarantee, VCHS's $85 million revenue bonds in order to resolve the current bond covenant compliance issues.

Although ValleyCare will remain in existence as a nonprofit, public benefit corporation, it will operate as a subsidiary of Stanford. ValleyCare's corporate members, including some still active who paid as little as $50 to help build Valley Memorial Hospital in 1961, will be terminated as Stanford assumes full operating and management control over ValleyCare.

Some corporate members will be offered membership in the ValleyCare Charitable Foundation, which will continue its philanthropic and fundraising efforts for the Pleasanton organization.

Stanford Health Care will take control of the ValleyCare board of directors by creating a new board that will have 11 directors, consisting of three Class A directors who will be chosen by ValleyCare's current board from among its current members, and eight Class B directors. As vacancies occur, the Class A directors will select replacement directors, whose appointment will be subject to approval by Stanford.

Class B directors will be selected by Stanford from a slate of candidates submitted by a nominating committee appointed by Stanford.

The agreement also gives the Charitable Foundation an oversight responsibility to protect the community's interests by monitoring Stanford's satisfaction of certain commitments under the Affiliation Agreement for a period of five years. The amended governing documents of the Charitable Foundation will give members the opportunity to elect the Charitable Foundation's board of directors from among nominees approved by the new VCHS Board.

For its part, Stanford will provide fundraising expertise and a charitable contribution of $3 million to the foundation. VCHS will continue to provide meeting space necessary for the foundation to carry on its fundraising functions. The sole purpose of the foundation going forward will be to support VCHS and further the charitable purposes it serves.

The ValleyCare Medical Foundation is a separate nonprofit corporation of which VCHS is the sole member. The foundation contracts with ValleyCare Physician Associates to provide medical services in the foundation's clinics.

The new affiliation with Stanford will not initially affect this structure, with the medical staff remaining a part of ValleyCare. However, over time the ValleyCare Medical Foundation operations may be combined into Stanford's Bay Area physician network.

Stanford leadership also will assist and provide support to ValleyCare and its medical staff in clinical care currently offered at the ValleyCare hospital and medical facilities in Pleasanton and Livermore as well as support the development and operation of a broad geographic network of health care providers and facilities in collaboration with Stanford Health Care and the Stanford University and its School of Medicine.

This effort will further the charitable, scientific and educational purposes of the university as well as develop, sponsor and advance services and programs that address the physical and mental needs of the community at large.

Executives and board members of Stanford and ValleyCare are expected to meet shortly to work out specifics of the combined operations in Pleasanton and ValleyCare's other facilities in Livermore and Dublin.

A name change for ValleyCare also is likely that will keep that name but also add Stanford Health Care.

An analysis of ValleyCare's service area, which is reported in the attorney general's letter of approval documents, shows the percent of the hospital's market share in the mid-40s in Pleasanton and Livermore, on the mid-30s in Dublin, and then mostly in the single digit range for patients from other Tri-Valley cities. The exception is a 19.5% market share in unincorporated Sunol.

Comments

5 people like this
Posted by Bill Woodward
a resident of Ridgeview Commons
on Apr 9, 2015 at 11:23 am

VCHS merger Interesting, but upon completion of the merger how will affect present patient doctor relationship? How will it affect the doctors' relationship with the hospital?
ny Email- bill.1930a@gmail.com


4 people like this
Posted by Cholo
a resident of Livermore
on Apr 9, 2015 at 12:04 pm

I have no reason to believe that medical services will be anything but excellent.


Posted by Name hidden
a resident of Another Pleasanton neighborhood

on Apr 10, 2015 at 9:03 am

Due to repeated violations of our Terms of Use, comments from this poster are automatically removed. Why?


7 people like this
Posted by Where's Marcie?
a resident of Another Pleasanton neighborhood
on Apr 11, 2015 at 4:07 pm

It's a little inconceivable to me that an $80 million dollar debt can be run up without the ability to service it and no criminal wrongdoing has occurred. This is the usual scenario with public organizations - they are afraid of backlash and value the relative pittance raised through donations, Christmas Tree Lane, etc... and thus hide the criminal conduct. I would feel better if Kamala Harris would investigate how this large debt was amassed while Marcie Feit was pulling down a million dollar a year salary and constant praise from her hand picked board of directors.


Like this comment
Posted by Ask Cholo
a resident of Another Pleasanton neighborhood
on Apr 15, 2015 at 1:28 pm

Cholo - can you comment on whether you think this debt was amassed based on illegal conduct on the part of ValleyCare management including former CEO Marcie Feit? Thanks Cholo!


Like this comment
Posted by I will help cholo
a resident of Another Pleasanton neighborhood
on Apr 17, 2015 at 10:00 pm

The debt is from construction bonds to build the new wing.


2 people like this
Posted by Hey Not Cholo
a resident of Another Pleasanton neighborhood
on Apr 18, 2015 at 7:08 pm

Those bonds bonds to build the new wing are about $20 Million. The report of $80 million in debt came out of the blue about the time Marcie Feit "retired". Financial institutions don't loan money to organizations that don't have the ability to repay it. So how does Marcie Feit run up an $80 million dollar debt without the ability of the organization to repay it while pulling down a salary of $1 million a year for herself? It should be investigated and a full accounting given to the public.


3 people like this
Posted by Dick Tracy
a resident of Another Pleasanton neighborhood
on Apr 23, 2015 at 10:43 pm

Ok, the secret is out. It was actually all embezzled and sent to a secret bank account in the Cayman Islands.


Like this comment
Posted by corp memeber
a resident of Castlewood
on Apr 24, 2015 at 11:10 am

It's like I said about a year ago, when the changes started happening,
this is all about a couple of Valley Board memebers wanting to get on the Stanford board.
Now they can start getting paid. sounds like mini Clinton's in the making.
As a community, we should all insist that this does not happen,although we welcome Stanford, it's not right that the Valley members gain more because of the merger.


1 person likes this
Posted by Corp member
a resident of Danville
on Apr 24, 2015 at 11:22 am

Just so we are clear ,Marcy never made a $1+ million dollar salary,
Her actual income was a matter of public record. She had one year that was over a million dollars, because she cashed out her retirment after 30+ years of work.
Her actual base salary was was under half of that. CEO pay is set by a team of current board members who hire independant consultants to see what the job should pay in comparison to her counterparts. Marcy's pay was always in the lower third,nataion wide for like hospitals, to think that she somehow set her own pay rate is stupid. The only criminal conduct that has taken place here is that the hospital has been forced to provide FREE Healthcare to people who say they cant pay or won't buy insurance. It really easy to rack up debt when your providing srevices for free. In addition, and debt/bonds that where run up had to first be approved by the board. Wait a minute, isn't the chairman a CPA? must not be a very good one. lol
I guess thats what we get when we let a CPA, Realtor, and a few rotary members run a hospital.


2 people like this
Posted by Thank You
a resident of Another Pleasanton neighborhood
on Apr 26, 2015 at 3:00 pm

Thank you for the info Dick Tracy. That makes sense since it is close to South Carolina where Marcie Feit now lives and ran ValleyCare from the last couple years of her tenure as CEO.

And thanks also Corps Member for explaining how Marcie Feit never earned more than $ 1 million a year except for the year(s) she earned more than $ 1 million.


2 people like this
Posted by ActiveMD
a resident of Pleasanton Meadows
on Apr 27, 2015 at 12:15 pm

OK,Here is how I see it,I'll dumb this down for those of you who went to public school, Marcie was the "CEO" that stands for "chief executive officer" her job was to manage the day to day operations, plan future growth, quality of care, compliance etc. There was a man by the name of Ken Jenson, he was "CFO" that stands for "chief financial officer". he was in charge of all things financinal, including budgets,debts,cash, salarys etc. he reported directly to the chairman of the board John Sensiba, who is also a CPA, and along with other board members have been treating their spouses to nice stays at the Ritz , paid for by Valley Care. So why all the concern about Marcie? lets start looking at who actually handeld the money, approved salarys etc. Also- to "thank you" she never earned over a million, she cashed out her retirment, big difference, Was her income off scale to what her counter parts made at other like hospitals? did she set her own pay? is there a big cash vault at Valley that she could just access for cash anytime she wanted?Did she rightfully accmulate a large retirment after working there for 40+ years? come on pull your head out, at least a little.


4 people like this
Posted by Thank You Active MD
a resident of Another Pleasanton neighborhood
on May 1, 2015 at 8:30 pm

Thank you Active MD for clearing that up and being so condescending! Since most Pleasanton families send their children to PUSD, you are doing a great job of advertising for San Ramon Regional and Kaiser! Who would want to show up sick at a hospital staffed by someone with your attitude? Or a hospital that is so inefficient they run up an $80 million debt that can't be explained or repayed. By the way, those $80 million stays at the Four Seasons must have really been something!


Sorry, but further commenting on this topic has been closed.

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