Daly City Hospital Survives Bankruptcy Again, But For How Long?

The safety net hospital bordering San Francisco may have a buyer but its long-term future feels far from secure.

Seton Medical Center, a safety-net hospital in Daly City, has experienced two financial crises in three years. Photo by Ida Mojadad

With a pending sale due for approval any day, Daly City’s hospital that largely serves low-income patients and seniors is no longer in immediate danger. But the instability still has staff and patients anxious about its long-term future — after all, it was in a similar position just four years ago.

The owner of Seton Medical Center, Verity Health, declared bankruptcy in August 2018, setting off a panic about what would happen to the safety-net hospital that roughly 27,000 people in southern San Francisco and northern San Mateo County rely on for emergency services. About 80 percent of those are MediCal and Medicare patients, who would have to travel farther for care even in life-or-death emergencies. It’s also the largest employer in Daly City. 

By January, Strategic Global Management, a subsidiary of KPC Group of Companies, emerged as the sole bidder, offering $610 million for Verity’s four hospitals: Seton in Daly City, another Seton in Moss Beach, and two in Southern California. The California Attorney General’s Office held a public meeting in August and is expected to lay out its final sale conditions this fall, according to San Mateo County Supervisor David Canepa’s office. A judge approved the bid earlier this year.

“We were pleased to participate in four separate public meetings in the communities surrounding all four hospitals being acquired by SGM,” said spokesperson Jeff Corless in a statement. “The meetings had broad employee, physician, elected official and community stakeholder participation. The consistent theme was, ‘save our community hospital.’ That remains our top priority.”

When Verity bought the hospital system from Daughters of Charity in 2015, the Attorney General imposed conditions which were designed to keep the hospital operating for at least 10 years. Just three years later, however, the hospital declared bankruptcy. Phoebe Minkler, a Seton nurse of 9 years, says colleagues are wearier this time around and less willing to stick around — which makes it harder to train staff for the long haul.

“A lot of people are scared about the future,” says Minkler, who’s represented by the California Nurses Association. “We just heard this a few years ago — it’s more promises. We’re left in a kind of lurch again.”

Minkler and her coworkers would like SGM to commit to investments like reopening labor delivery and establishing the cancer unit that Verity promised. But they’re also just hoping the hospital doesn’t lose services at this point, and for the new company to commit to the seismic retrofits needed through 2030 that would signal a long-term investment running the property as a hospital.

Though the City Council of Daly City approved a resolution in 2018 to keep the land zoned for hospital use, fears remain that developers are eyeing the 32-acre site for lucrative housing. Extending the sale conditions another five years and following through on the retrofit would better ease those fears, says the National Union of Healthcare Workers, which represents about half of Seton workers.

“The top priority for Seton workers is keeping the hospitals open with no decrease in medical services for the surrounding communities,” said NUHW Research Director Fred Seavey in a statement. “We’re ready to work with the prospective owner to make that a reality, but it’s hard not to have concerns when the company has not committed to keeping the hospitals open long-term or seismically retrofitting Seton Medical Center.”

Minkler and another Seton staffer, Rosalie Zamora, say patients have asked if the hospital is closing. Keeping Seton running at full speed is a matter of life or death to many, including longtime Daly City resident Elaine Villasper. Her family has gone to Seton for services since the 1990s but it became a lifeline for Villasper when she went into septic shock days after developing an infection during childbirth. She spent a week in the ICU recovering from organ failure and a stroke and was told that if they went to a hospital farther away, she may not have survived.

“The doctors, nurses, and other medical staff provided great care to me and my family and I owe my life to them,” says Villasper, who supports NUHW demands. “A hospital is a key part of any community, and it would be detrimental not only to the workers, but to our city if the hospital was not able to provide its services.”

Even with Seton’s future more secure than it was a year ago, Canepa feels a long-term fix is needed to the inequities of hospital services in San Mateo County. He’s starting to look at surcharges on for-profit hospitals concentrated in the southern, wealthier parts of the county to prevent financial strain on safety-net hospitals like Seton or the public San Mateo Medical Center.

“What’s really fascinating to me is the schism between the haves and the have-nots,” Canepa says. “Daly City is really the symbol for that. We have a lot of MediCal and Medicare [patients], where are they going to go?”

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