Pediatric and obstetric units at Saint Louise Regional Hospital in Gilroy will shut their doors within 90 days to cut costs in a system that has been hemorrhaging money to the tune of $100 million a year and is up for sale.
South County’s expectant women and children will be hit first in the Daughters of Charity Health System’s move to resuscitate an ailing bottom line, as hospital owners court new buyers after a proposed $843 million sale went sour in March when California Attorney General Kamala Harris placed tough conditions on that deal.
Closure of the obstetrics unit means about 25 percent of women in the hospital’s service area who annually need such care and seek it at St. Louise now must go elsewhere. In 2013, 555 deliveries took place at the Gilroy hospital.
In confirming the DCHS decision Tuesday, SLRH President and CEO Jim Dover told the Dispatch the cuts are necessary to keep the hospital’s doors open and will mean the loss of about 30 jobs.
“The goal is to get Saint Louise back to break even,” Dover said. “If a service is losing $2 million a year (like obstetrics at SLRH), we have to look at it. We can’t just continue to do it. The Daughters don’t have the resources to do that…their pockets are running dry.”
Officials with the nonprofit Roman Catholic order looked at the entire health system in Santa Clara County and found that a majority of expecting mothers—60 percent—go to hospitals in San Jose for deliveries.
On average, three patients a day use the obstetrics unit at Gilroy’s Saint Louise Regional Hospital, Dover said. The pediatrics unit sees on average six admissions each month.
With both units operating at a loss, Dover said the cuts had to be made in order to pass along the hospital system to its next owner in good financial shape.
“We continue to be here and we want to continue to be here for the next 50 years,” the hospital’s president said. “For three patients a day, is losing $2 million a year the highest and best use of the funds? It was not an easy decision but we had to do it.”
Gilroy Mayor Don Gage acknowledged that people are going other places to deliver their babies, like Valley Medical Center in San Jose, or to Lucile Packard Children’s Hospital in Palo Alto to treat an ailing child.
Hospital administrators have assured him the move will help keep the St. Louise’s doors open, he said.
“It’s just like ridership on a bus; if you don’t have the numbers you can’t keep the line open,” Gage said Tuesday. “What they’re trying to do is keep the hospital running and that’s where they were losing the most money.”
While the specifics were not hammered out by Tuesday afternoon, negotiations could take place between hospital officials and impacted labor groups within two weeks, according to Dover.
“No nurse has received a pink slip,” he said.
All six DCHS facilities are for sale, including Saint Louise, which also runs De Paul Medical Center in Morgan Hill, after Prime Healthcare backed out in March. Attorney General Harris approved the $843 million deal, but with vigorous conditions that killed the sale, Prime’s founder said in announcing his decision.
The first round of new bids for the DCH system are expected by Friday, according to Dover.
“If we get to break even, we’ll be ready for the next buyer who can invest in the facilities,” he said.
