Coyote Valley development likely to influence pace
n By Carol holzgrafe Staff Writer
A bankrupt hospital in Los Angeles and a San Jose hospital’s closing mean bad news for Morgan Hill’s hopes of enhanced medical services. The reviving DePaul Health Center will stop where it is for the foreseeable future.
But for a developer trying something new, the news is good. Venture Corp. will now be able to include an MRI (magnetic resonance imaging) facility in a medical condominium where doctors will own their own space in Morgan Hill Ranch business park
Joining Morgan Hill at the short end of the stick is O’Connor Hospital in San Jose, the Daughters of Charity’s flagship hospital in the Bay Area. The Daughters own Saint Louise Regional Hospital in Gilroy and the former hospital in Morgan Hill.
Development of Coyote Valley is a key to the adding more health services in Morgan Hill, officials were told. As the area’s population grows more health services will be added.
Joanne Allen, a senior vice president at O’Connor, told the City Council Wednesday that the two events out of the board’s control will cause a slowdown in bringing back medical services to Morgan Hill.
“Robert F. Kennedy Hospital in Los Angeles is scheduled to close in December,” Allen said, “but it has a significant debt that O’Connor is responsible for. And the closure of San Jose Medical Center is diverting ambulance traffic to O’Connor.”
Between the RFK debt and the need to deal with increased patient volume Regional Medical Center in San Jose, the former Alexian Brothers hospital and also part of the Daughters group, O’Connor will not be able to spend the $9.5 million it had planned for the hospital side of the DePaul center. Re-opening the hospital building will require extensive and expensive renovation to bring it up to current code requirements.
The nearby medical office building is already at code and operating. Allen said. With 11 physicians, the officers are at 70 percent occupancy.
“It’s back to the drawing board,” Allen said, to explore partnerships, grant proposals and other ways of finding improvements.
“It’s the real world,” said Joe Mueller, chair of the Morgan Hill Community Health Foundation, formed by the council to facilitate returning medical services. “We’re going to keep doing things, just with a different funding source.”
Mueller considers O’Connor’s problems to be a temporary setback only and emphasized that Morgan Hill has not been abandoned by O’Connor.
“We’re disappointed that we couldn’t come to you tonight saying we can do phase one and turn the lights on,” Allen said.
O’Connor’s staff took over responsibility for re-opening the medical office building next to the old Saint Louise hospital – now DePaul – on Cochrane Road at Highway 101 in 2003, responding to Morgan Hill’s complaints that most doctors and medical services had followed the hospital to Gilroy after the Morgan Hill facility closed in 1999.
O’Connor has had success filling the medical offices with physicians and had hoped to include an MRI facility, urgent care, retail pharmacy and cafeteria (Allen’s phase one), investing $9.5 million along the way.
The Daughters of Charity, an international community of Catholic women, runs O’Connor, the Saint Louise Regional Hospital in Gilroy and six other hospitals in California.
On the winning side, Robert Eves’ Venture Corp. is planning a building of medical condominiums – physician-owned offices – in his Morgan Hill Business Ranch on Butterfield Boulevard. Most medical offices are rented to physicians but Eves planned his project when several doctors approached him with a request to buy space.
Eves told the City Council in September that he had a request for space from a group of doctors who just opened an MRI unit in Gilroy. Because an MRI facility is a money maker that can be used to subsidize less lucrative, but necessary, medical services, the O’Connor staff asked the council in September for time to find an MRI group for the DePaul Health Center.
Council agreed but wanted to know by Dec. 1 that an MRI group would agree to come to DePaul or they would consider giving the honor to Venture Corp. Eves had already given up the idea of including an outpatient surgical center in favor of DePaul but he was willing to give DePaul/O’Connor a chance at the MRI.
Because of the hold on DePaul’s future, council passed an ordinance, 5-0, allowing Venture Corp. to include the MRI. However, newly installed councilman Mark Grzan asked Brian Kelly, vice president for sales and marketing for Venture Corp. a question that stopped them all for a moment.
“Does this MRI facility include CT scans,” Grzan asked.
Kelly said he didn’t know but Allen said that different imaging processes require different licenses.
Councilman Larry Carr suggested approving the MRI and any service included in that license but told Kelly that they would have to return for an amendment to the ordinance if other licenses were needed, which would trigger building plan alterations. Which is what the council did.
On Thursday, Venture Corp.’s president, Robert Eves, said he’s not sure how his company will proceed because he’s not clear on what entitlements he needs from the city and what licensing requirements are required for different imaging modalities.
“Our job is to construct a facility that will conform to whatever company is going to be in the building,” he said, “and we’re seeking the right to deliver all of those services because they’re attractive to medical professionals, and they’re very much needed in Morgan Hill.”
But with only 35,000 residents, and with a new MRI facility in Gilroy, it’s not clear that Morgan Hill can support two such operations, which puts the future of DePaul in further doubt.
“Opening at DePaul doesn’t depend on Venture Corp., but it could certainly have a detrimental impact,” Barna said. “It’s frustrating because here’s a developer trying to move property, which isn’t wrong, but they saw health care, which is a very complex industry, as a way to do it. They’re messing with a community resource.”
Councilman Greg Sellers said he wasn’t giving up hope on DePaul by giving Venture Corp. permission to bring in an MRI.
“We must move forward,” Sellers said. “As DePaul continues to evolve, I have no doubt they will develop other services.”
Kelly said grading for the Venture Professional building project will begin next week and that at least three physicians had already signed up to buy offices.
Details: www.morganhillranch.com/ Medical condos: www.VentureProfessionalCenter.com
Carol Holzgrafe covers City Hall for The Times. She can be reached by e-mail at ch********@mo*************.com or phoning (408) 779-4106 Ext. 201.
Staff Writer Matt King contributed to this story.
