Nearly nine months after choosing to work together on a turnaround plan for the financially distressed Tri-City Medical Center, negotiations between UC San Diego Health and the Oceanside health care district have reached a tipping point.
What both sides initially thought would be a done deal by the end of March has dragged on much longer, and the Tri-City board took action to bring the situation to a head in a special meeting held Friday. Dr. Gene Ma, the Oceanside hospital’s chief executive officer, said in an email this week that the board unanimously directed him and the hospital’s executive team “to open initial dialogue with outside parties who have expressed interest in light of our significantly improved financial position.”
In response, Patricia Maysent, chief executive officer of UC San Diego Health, huddled with lawyers before presenting an updated proposal to Tri-City executives Wednesday afternoon.
Though the full proposal has not been made public, UCSD said in a statement that it includes a cash infusion of more than $100 million to help Tri-City shore up its finances and raises of about 20 percent over the next three years for the hospital’s existing employees.
“We believe the revised proposal addresses the board’s stated concerns,” the university statement said. “We hope the next step is to present the proposal to the full TCMC board and UC Regents.”
Approval from both bodies would be necessary for any deal to move forward.
Reached Wednesday evening, Tracy Younger, chair of the Tri-City board of directors, said she participated in Wednesday’s meeting and left feeling optimistic.
“Our board wants to make it to the finish line, and I’m feeling hopeful, after today,” Younger said. “I feel like they really have addressed a lot of the remaining issues that we had.”
But what exactly changed in the university’s latest proposal Wednesday was still unclear. The listed raises and cash infusion cited in the statement, a UCSD official confirmed, were part of previous proposals.
Here the details are scant. UCSD said only that the latest revision includes “changes to protect the financial stability of the Hospital and protect the District,” referring to the Tri-City Healthcare District, the government agency that owns and operates Tri-City.
Younger said Tri-City’s concerns were about nailing down details.
“There was a lot of legal language that needed to be clarified so that we could feel secure that UCSD is going to step up and really make sure that we have a viable health care system for years to come,” Younger said.
The decision Friday to ask the administration to begin talking to other potential suitors, she added, was an attempt that a partnership would be found.
“I think what made us nervous is just how long it’s taking,” she said. “You know, we need to have some resolution to this situation soon.”
Despite multiple requests this week, hospital administration did not provide a copy of the audio recording of open-session portions of the meeting as is required under state open meeting laws.
Several people who said they attended the meeting Friday subsequently said this week that the cited reasons for the board’s change of direction involved how and when Tri-City employees would be employed by UC San Diego and how existing debt would be handled.
Initial plans for UCSD to immediately hire Tri-City employees, Ma said in an email Monday, changed to a transition period which would have pushed hiring out to “as soon as three years but as late as five years.”
Wage increases would occur during the transition period. But, he added, there would be a similar transition period for absorbing Tri-City’s liabilities.
A big part of Tri-City’s push to find a large health care system to partner with is its desire to re-open its labor and delivery department, which was shuttered in 2023 due to low patient volume. When it made its initial pitch in October, UCSD officials said that re-opening women and newborn services would be a top priority.
In his email, Ma said that UCSD is already opening a women’s practice at Tri-City “this month;” however, “the timing of reopening (Labor and Delivery) isn’t clear, though they clearly have good intentions and a clear desire to reopen.”
Two people who attended the meeting in person said they did not recall any mention of the two key financial aspects that UCSD cited Wednesday, the large cash infusion and increases in wages for staff.
Younger said she believed omission of those key financial facts from Friday’s public presentation was likely a simple oversight.
“Honestly, that’s one of the things we care about, making sure our employees feel safe and secure and see those (pay) bumps so that they can at least meet the median,” Younger said.
In its statement Wednesday, UC San Diego reiterated its commitment to expanding into north San Diego County.
“UC San Diego is committed to serving the communities of Vista, Carlsbad and Oceanside and believes there is a way forward to help expand needed employment, medical and surgical care in North County,” the university’s statement said. “No matter the outcome of this negotiation, UC San Diego Health is continuing forward with its expansion of ambulatory care in the region, including addition of OB/GYN clinic services, with the continued aim of preserving health care options for patients and their families.”
Sharp HealthCare is the one known suitor currently on the sidelines. In October, the region’s largest medical provider made a competing bid to collaborate with Tri-City, finding its offer rejected due to its making fewer commitments to assume, among other items, Tri-City’s financial obligations.
A spokesperson for Sharp said Monday that the organization had no comment on whether it is still interested in collaborating with Tri-City.
In addition to having millions in long-term debt used to fund previous infrastructure projects, Tri-City found itself facing clawback from several key vendors in 2023 as it operated at an ongoing loss and was unable to keep current with its bills, seeing the amount in its accounts payable accounts grow to $97 million.
Ma said in April that the hospital’s operations had generated positive margins in January and February, and operations were expected to remain in the black in subsequent months.
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