Santa Clara County and the for-profit HCA Healthcare Inc. today announced they have tentatively agreed on the county’s acquisition of Regional Medical Center in San Jose for $175 million.
County officials said the purchase from HCA would enable the county to integrate RMC with the county-operated three-hospital Santa Clara Valley Healthcare System and keep its trauma center open.
In a press release, the county said the purchase will enable the county to keep the Regional Medical Center (RMC) trauma center open as one of three trauma centers in the county. Regional Medical Center is the main emergency healthcare provider for East San José, treating a wide range of critical and life-threatening conditions. Earlier this month, HCA Healthcare downgraded the level of trauma, comprehensive stroke, and certain cardiac services at RMC.
The HCA downgrades took effect on Aug. 12. RMC has historically served about 2,450 trauma patients per year, which accounts for roughly one quarter of all trauma cases in Santa Clara County, the county said..
“Making Regional Medical Center part of Santa Clara Valley Healthcare’s network of hospitals and clinics will ensure that East San José and the surrounding community continue to have access to top-notch Level II trauma, comprehensive stroke, specialized heart attack, and ultimately, labor and delivery care,” said County Executive James R. Williams. “In addition, the county will not have to make significant investments to expand staffing and facilities at our other hospitals, which would otherwise be required, by building on HCA Healthcare’s facility investments and operations at Regional Medical Center.”
The county and HCA said they “are now seeking to negotiate a definitive purchase agreement, undergo due diligence, and take steps to obtain necessary approvals to move forward with the transaction.” They said they hope to be able to complete the transaction in the first quarter of 2025.
The purchase would be subject to inal approval by HCA executive and the Santa Clara County Board of Supervisors.
The county would finance the $175 million purchase with federal COVID reimbursement funds and revenue bonds.
The county has recently obtained approvals from the Federal Emergency Management Agency to receive reimbursement for the county’s response efforts during the COVID-19 pandemic. “These one-time funds, anticipated to be received in the next few months, are appropriate to utilize to invest in acquiring RMC without negatively impacting the rest of the county budget,” county officials said.
The county also is able to issue lease revenue bonds to finance the purchase of RMC, using RMC itself as collateral for the bonds.
The county supervisors will be asked to approve the purchase price, without affecting the county’s existing budget or capital plan.
“It is also important to understand that there is significant financial cost and risk to the county in not purchasing RMC,” county officials said. “Recent changes in service lines at RMC would require surrounding hospitals, particularly Santa Clara Valley Medical Center, to increase staffing and capacity to serve additional patients.”
Regional Medical Center (RMC) is a 258-bed acute care hospital located at North Jackson Avenue and McKee Road. The hospital has a long history of providing care to patients in East San José – delivering $23 million in estimated costs for the delivery of charity care, uninsured discounts and other uncompensated care in 2023 alone, according to the county.
Over the last decade, significant investments have been made in the hospital to improve access to high-quality healthcare and address the diverse medical needs of the East San José community, including meeting California’s seismic standards.
The hospital garnered quality recognition from Healthgrades, an independent national quality ratings organization, as one of America’s 250 best hospitals for three consecutive years – 2024, 2023, and 2022 – putting RMC in the top 5% of hospitals nationwide for overall clinical performance.
“We are proud of our more than $500 million investment in and service to the East San José community for the last 25 years,” said HCA Healthcare Far West Division President Jackie Van Blaricum. “We are pleased this move will position Regional Medical Center to continue providing access to affordable healthcare to patients in the area. This will allow the Santa Clara Valley Healthcare system to expand and enhance their existing network and service lines, offer specialty and subspecialty services available in their network to the East San José community, and continue to deliver positive healthcare outcomes the community has come to expect from Regional Medical Center.”
The county healthcare system serves all residents, regardless of their insurance or income. In 2023, patients who were uninsured or covered by Medi-Cal or Medicare accounted for more than eight out of every 10 county hospital stays and clinic visits, the county reported.
Residents living in the five zip codes immediately surrounding RMC are nearly twice as likely to lack health insurance compared with County residents overall.
Officials also noted that Santa Clara County has one of the most generous financial assistance programs in the nation, which provides free or discounted care to eligible residents with incomes below 650% of the Federal Poverty Level.
Regional Medical Center has more than 1,670 employees and more than 500 physicians who specialize in 21 fields of medicine, dentistry and podiatry. RMCl is an acute-care hospital that offers a comprehensive inpatient and outpatient services, including emergency, cardiovascular, neurosciences, orthopedics and medical/surgical centers.
They don’t even have the money yet. Plus, they intend to you a one-time allocation of money for acquisition – but with a projected $250M deficit next year combined with the issues/billions in expenses with Valley Med – where does the short and long term operating cost come from? What has to be cut to pay for this? And, how sustainable is a hospital that serves a region with so many undocumented people where reimbursements may not be possible? In the end, does this just further strain the system already strained?
Also, I am going to question the validity of trying to use federal COVID funds to pay for this acquisition years after the COVID issue. I would be shocked if they don’t get push back from FEMA – this seems like a rushed, haphazard decision being made by politicians who really have zero understanding of how to manage this process and want to try anyway to keep a non-viable hospital open. I get it – the closing of it stinks, but is this really the best approach?
Time to be honest, indeed. Where will the county get the money to continue to pay for this after acquiring this, that’s after getting all the money to acquire it? The federal government has every right to forbid the funds for being used for the purchase or to demand it back (with interest) if this money is so misused. In theory, county officials could be prosecuted, too, if this constitutes actual legal misuse, not using it for legally approved expenditures, and an existing variant or two now causing trouble doesn’t count. And again, as you note, what about afterward? This is something the county already should have its own money available to pay for, not come (no doubt with an entitlement mentality or at least a stupid presumption) that state or even federal assistance will be coming for the later costs, too, indefinitely.
I find it hard to believe the acquisition would be an eligible expense. I would think that FEMA would be more interested in reimbursing already spent funds the City can account for. Also, like you mention, if the feds are throwing in that much money – they will want to see long term sustainability from a financial perspective, and that doesn’t exist, given the fact this all just happened and infrastructure financing and federal funding sources this complex aren’t something politicians understand. I think they made a lot of assumptions on how the FEMA funds can be used, and we will see a follow-up article with them backtracking on this purchase. If not? We should be worried about wasting any federal dollars spent on purchasing a hospital so impulsively.
I do repairs on a lot of the equipment there and I can’t believe they’re still throwing money around from the COVID slush fund. Have they not run out yet? If not, it should go back to the horrid debt that is the cause of the inflation in this country. It just is not fair especially to working class folks.