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Cover Story December 20th, 2007

  Untitled Document

A Commentary
by lyle e davis

Back in the early days of America's history, small towns and hamlets would be visited on a fairly regular basis by traveling salesmen . . . often in the form of a stage show set up on town square where the locals would be entertained before being presented by fantastic claims for a new product or service by a glib, smooth-tongued operator.

The routine seldom varied. There were opening acts to warm up the crowd. They would promise the star attraction would be appearing soon and he would bring answers to all that ailed you . . . whether it be gout, boils, or lumbago. Kind of a single product or service that was a cure-all for everyone. Mesmerized, the crowd would often wind up buying the product or service being presented. It was only after the traveling show had left town that the townspeople began to look closer at what it was they had bought. Often, they were disappointed. Often, the promises made by what later came to be called "snake oil salesmen" never materialized.

One begins to wonder today if we as a community weren't promised many things that have not come to pass, or worse, not needed in the first place. Were we dazzled by professionally produced charts, graphs, videos, and glib, smooth talking orators and their legal consultants?

For sure, we bought what was being pitched. We agreed to pony up $496 million dollars as a result of a successful funding drive known as Proposition BB. Chief Interlocutor, Master of the Legerdomain, Silver Tongued Orator, Master Showman, Brilliant Executive, was in the persona of Michael Covert, CEO of Palomar Pomerado Health District.

By all accounts, Mike Covert is an excellent executive. He gets things done. He assembles a masterful presentation . . . and makes his pitch. Usually, successfully.

For these skills he is paid a whopping $528,000 a year. And that’s just his base salary. To help him out in tough times he was given a bonus in March of this year of $160,000. And did we mention his benefits? He receives medical, dental and vision insurance, optional life insurance, and a monthly car allowance. Costs a lot of money to drive a car these days, you know, gas prices and all. But let’s consider the case Mr. Covert made for his employer, The Palomar Pomerado Health District and the on-again, off-again progress of the proposed new hospital.

Consider also the upcoming proposed bond sale for Tri-City Hospital.

How do these things happen?

First off, in the case of Palomar Medical Center, it appears we had a perfectly good hospital. Wasn't very old, either. The PPH Traveling Road Show, however, had to dispel that image. They had to persuade the townspeople, gathered together for the big Miracle Medicine Show, that they had a problem. Then they had to persuade these same townspeople that they, PPH, had the remedy for that problem. And it would be painless.


First, they said there were state earthquake standards to meet and this ancient hospital that was at least 50 years old had to be abandoned and a new one built because it was simply too costly to retrofit the existing hospital to meet the state standards. Further, our population was growing so fast that we had to grow with it to accommodate the growth. Why, over the next twenty years, they said, North San Diego County communities are expected to grow to approximately 1.3 million residents, including a steadily increasing senior population.

On top of that, PPH was the only trauma center serving North San Diego County.

Were we sold a bill of goods when PPH drafted Resolution No. 08.04.04 (01), calling for an Election to Authorize the Issuance of Bonds, now known as Proposition BB?


Had the gullible townspeople examined these statements a bit more closely they would have found that:

There was only one section of the hospital, the Adams Wing, that was even approaching 50 years in age. The rest of the hospital was of fairly recent vintage. The entire south half of PMC is less than 20 years old! The infamous McLeod Tower is about 36 years old. The lowly Adams wing is about 46 years old. The PPH Facilities Master Plan confirms that the buildings at PMC are not and were not 50 years old! It would have cost approximately $56 million to retrofit the older buildings to meet state earthquake standards.

According to a newspaper report in 2003:

"Palomar Pomerado board members decided in 2001 to spend more to completely redesign their hospitals instead of spending $56 million to simply install braces and supports to meet the 2008 standards. The $329 million project is essentially two jobs: In November, board members approved spending a maximum of $266 million to build a new patient-treatment tower ---- to replace the current tower that will be demolished ---- at the 319-bed Palomar Medical Center; and up to an additional $63 million to build a new patient tower, medical office building and increase the number of beds at the 119-bed PomeradoHospital."

In spite of this, "Based on an evaluation of reports prepared by outside experts, the Board of Directors (the "Board") of the District has determined that it would be significantly more expensive to retrofit and upgrade the existing Palomar Medical Center than it would be to build a new medical center."
According to PPH math, $56 million to install supports and braces and thus meet the state earthquake standards is "significantly more expensive" than $531 million (now in excess of $773 million).

1. Palomar Medical Center serves as the only Trauma Center in North San Diego County.

This would have come as a great surprise to traumatic injury cases in the cities of Oceanside, Carlsbad, Encinitas, Solana Beach and Del Mar (all North County cities), who were served by the catchment area of Scripps Memorial Hospital in La Jolla. Further, traumatic injury cases in major segments of Rancho Penasquitos and Carmel Mountain Ranch, and in a small corner of Poway, were served by the catchment area of Sharp Memorial Hospital in Kearny Mesa.

PMC's service as North San Diego County's only Trauma Center is another interesting aspect of the Prop BB Dog and Pony Show. (i)

2. Our population is growing so fast we have to build another hospital to meet the need of our expanding patient demand. Why, over the next twenty years, they assured us, North San Diego County communities are expected to grow to approximately 1.3 million residents, including a steadily increasing senior population.

The expected growth to 1.3 million residents is an interesting aspect of the Prop BB story. According to the PPH Facilities Master Plan (page 1-7), the PPH district currently serves a population of about 452,738 people, and by 2020, it will serve about 592,825 people, a population increase of about 30%. 1,300,000 minus 592,825 equals 707,175 people. Where are these 707,175 future people? And why is PPH building a hospital of the future for them?

Well, the traveling road show did its job and did it very well. In November, 2004 . . . all of the townspeople and the folks who populated the various hamlets and villages within the Palomar Pomerado Hospital District passed Proposition BB. Got 69.84% of the available votes, too.

So now they had their money. $496 million dollars. The total cost of the projected capital projects was $753 million. The balance would be provided with $210 million in revenue bonds and $47 million from cash reserves and philanthropy.

Now, where to build the new hospital? After a protracted and sometimes acrimonious debate, PPH decided it wanted to locate in the ERTC (Escondido Research and Technology Center).

Initially, the Escondido City Council passed a resolution indicating that they wanted the Palomar Pomerado Health (PPH) district to build its new hospital in Escondido, but not in the Escondido Research and Technology Center (ERTC). PPH has stated that the only viable location within the City of Escondido is in the ERTC.

On January 12, 2006, the North County Times reported . . . "The council agreed to rezone the business park site for the new hospital only after health district officials said they planned to put $73 million into Palomar's renovation and expansion. The price tag has since grown to about $93 million." The City of Escondido had agreed to allow the new hospital to be located in the ERTC based on the above conditions. PPH accepted Escondido's compromise offer, then started actions apparently designed to undermine the compromise with the City of Escondido.

Councilman Ed Gallo: We had negotiated and discussed this to the point where we finally decided that an element of trust enters into the equation. We decided to trust PPH and take them at the word and entered into the MOU. All we want from PPH is to do what they committed to.

Councilman Ed Gallo

Councilmember Dick Daniels: Well, naturally I’m concerned. I was on the campaign committee with Ken Lounsbery, and Jerry Kaufman. I was delighted with the acceptance. I don’t think the cost overruns are surprising. I remain confident the district will fulfill its development agreements, the MOU, and keep the faith, not only with the ERTC facility but with the campus downtown.

Councilman Dick Daniels

I haven't heard anything official from the district. I assume they are developing alternative revenues to accomplish the original goals . . . but without updated information I can't comment on it.

Councilman Sam Abed: I am concerned about the cost overrun. Proposition P’s (Public Works Bond Issue) budget ran about 10% over budget; Prop BB was budgeted for $740 million, then it went to $990 million, then to $1.2 billion dollars. They’ve since pared it back down to around $990 million. Still, that’s about a 25% cost overrun. Substantially more than Prop P’s overrun.

Councilman Sam Abed

Harvey Mitchell, President, Escondido Chamber of Commerce: "Whenever you build anything, you try to live within a budget. We want to keep the hospital here in town. It's a wonderful thing to have. These things can all be worked out. We may have to stretch it out. Because of slowdown in construction, perhaps costs may come down. We have an overall goal . . . sometimes we have to compromise on both sides to make it work out.

Harvey Mitchell, President, Escondido Chamber of Commerce

We don't want to lose the downtown facility. Private money may come in and help develop it. We'll have to work together.
David Barkin, President, Escondido Downtown Business Association: We’re very concerned about what is likely to happen. If PPH does not follow through on their commitment it could be devastating to the downtown community. At this point, we are looking forward to hearing what Mike Covert (PPH CEO) has to say. (Editor’s Note: Mr. Covert was scheduled to meet with the Escondido DBA yesterday morning (Wednesday), after The Paper had already gone to press).

Attorney David Barkin, President of Escondido’s DBA

At this point, with only $3 million dollars allocated to renovate the downtown hospital from what was originally $74 million . . . and with the apparent diversion of funds from the downtown hospital to Palomar Medical Center West . . . we have deep concerns as to whether we have been abandoned.

Naturally, if we are abandoned we will feel we have been, at a minimum, deceived, if not betrayed. Still, we wait to hear what Michael (Covert) has to say.

Only one year after the successful passage of Prop BB, during the Board's special joint meeting on December 20th, 2005, significant project cost increases (+$230 million) were disclosed. Concerned board member Bruce Krider requested that the Finance Committee study and suggest strategies for containing the cost increases. Mr. Krider requested that the Finance Committee do this "real quick." The requested meeting was delayed and, when held, did not cover any study of containing the cost increases.

Under a renovation plan presented in public workshops, the medical center would become the district's administrative offices, plus a revamped behavioral health center and a skilled nursing facility for long-term care. The district is also looking for private partners interested in adding shops and restaurants, offices and apartments to the campus. (The moving of the district’s administrative offices from Innovation Drive in Rancho Bernardo to Escondido is important. It was to provide a large work force that would likely patronize downtown Escondido and help avoid downtown blight).

Escondido Mayor Lori Holt Pfeiler: I really believe they will keep their commitments. It’s in their interest to do so. I know they plan on selling the property on Innovation Drive in Rancho Bernardo; with the funds from that sale they will likely invest in providing the office space to accommodate their administrative work force in downtown Escondido.

Mayor Lori Holt-Pfeiler

Councilman Daniels: That was a large inducement to the entire council, to move 400 or so employees to downtown Escondido. It would be a major benefit to the city, the downtown area specifically. It is of concern to me.

We're partners in this; PPH needs to keep us up to date. It would be helpful to hear from them.

Councilman Gallo: I agree. This was a concern of the whole council . . .what about downtown? All we want them to do is what they said they were going to do. We just have to keep a close eye on that area.

Councilman Abed: We have to make the downtown Palomar Medical Center a viable one because of the 500 medical businesses surrounding it. If they don’t keep their commitments it would be the second biggest setback for downtown and E. Valley since the North County Fair (now known as Westfield Mall) opened. I'd like to see them come to the council and deliver what they promised in the MOU and to the development agreement. We understand some adjustments due to cost.

I would like to see how they proposed to do a retrofit for $3million. We want to work with them . . . but we want to see them make a sincere effort to keep promises. We have not heard from the hospital since we approved the project almost two years ago.

Councilman Gallo: Updates were due in September, October, December . . . the last update, I can't even remember when it was.

The Chamber’s Harvey Mitchell: Oh, I don’t think their goals have changed. I think they will bring "the suits," just like they promised.

Councilman Daniels: The existing campus of the downtown hospital is very important. We, as a council, are looking forward to an update. We need to be able to report to our constituents. Thus far, we have not been told plans have been changed.

Mayor Pfeiler: This is their budget right now. Their cash flow is such that they will be able to accomplish a lot of what they committed to. The downtown hospital is an asset already paid for, it provides services. We cannot afford to rebuild every service that they provide into the new hospital so the natural action is to continue to provide those everyday services at the downtown campus. If you look at those services, and at their operations, you can readily understand that they simply are not going to throw that asset away.

Plus, it's in their interest to invest in downtown area because it gives a high rate of return for very little investment. I think you’ll see redevelopment of downtown AFTER the new hospital is built, complete with new administrative facilities . . . and if they sell their property at Innovation Drive, they will likely move over here even more quickly.

A letter that the district sent to property owners, targeted by the downtown renovation project, is dated Dec. 5, 2005. In it, Palomar Pomerado chief architect, Mike Shanahan, reminds recipients of the district's plans to renovate and expand Palomar Medical Center.

The letter goes on to state that the district has hired the real estate firm of Grubb & Ellis "to locate and coordinate the acquisition of the properties necessary to complete our project," and another real estate firm to appraise the sites. The letter says that Palomar Pomerado officials will contact property owners, after the appraisals are done, to discuss the possibility of buying their land.

In February, 2006, the PPH Board of Directors and Finance Committee negotiated a development agreement with the City of Escondido for infrastructure improvements near the ERTC site, and a Memorandum of Understanding (MOU) for the downtown PMC redevelopment.

A Memorandum of Understanding (MOU) is a legal document describing an agreement between parties. It is a more formal alternative to a gentlemen's agreement, but less formal than a contract.

That MOU, however, appears to have several holes in it, big enough to drive a semi through:
"PPH will make a good faith effort to maintain, renovate, and repair portions of the Downtown Medical Campus. PPH will consider conversion of existing hospital space to office space at a later date. The city will vacate and transfer the Valley Boulevard Road Segment, as defined in the MOU, to PPH for construction of a new building at the Downtown Medical Campus.

An architect’s rendering of the new Palomar Medical Center, West

PPH will move its corporate and administrative offices to the Downtown Medical Campus.

PPH will be responsible for financing the improvements to the Downtown Medical Campus.

Note that last item. It is quite important. PPH promised the City of Escondido that it would undertake a redevelopment effort for the existing downtown site. Without completion of the redevelopment effort by PPH, it is likely that the move of the hospital, and associated medical offices and support businesses, will result in urban decay and blight in the downtown areas surrounding the existing hospital.

Councilman Gallo: The council has also adjusted zoning to allow more uses in that area. Evidence that the District has not kept either the council or the public up to date on information is the fact that a number of medical practitioners are already moving out of downtown; several businesses have also already left. They have moved over to the Scripps Facility near 15 & Citricado Parkway. Scripps opened up a 50,000 sq. ft. medical facility there. If and when the hospital moves, more medical practitioners are likely to leave. Hospitals don't open where the doctors are, doctors open offices where the hospitals are.

Also in February, 2006, when the MOU was being negotiated, it was pointed out to the Escondido City Council and PPH that in July, 2005, PPH had presented a plan for the downtown site that included a modest hospital expansion building just east of the main tower. That building fits on the existing site with the removal of the old Adams Wing. At 10 stories, the hospital expansion building can replace the hospital functions now in the McLeod Tower when the Tower is eventually converted to medical and administrative office space.

Some PPH arguments claim that the retrofit of Palomar Medical Center would have been too expensive. An analysis in 1999 by structural engineers indicated a cost of $6.6 million to perform all needed seismic retrofits of Palomar Medical Center. PPH since argued that lost "business opportunity" is not included in that estimate. (ii) Additionally, in its Facilities Master Plan, PPH failed to include about 100,000 square feet of hospital space that is in full compliance with the state's structural seismic regulations.

The 180,000 square feet of compliant space at Palomar Medical Center is larger that the current Pomerado Hospital, and the replacement cost of this space and the parking structures at Palomar Medical Center, in today's dollars, is almost $200 million. What community can afford to dismantle a $200 million acute-care hospital facility? Palomar Medical Center, the Heart of Downtown Escondido, must be saved as a community hospital. (February, 2006)

What About Emergency Care Downtown?

“In February of 2006, a request was made to insert language committing PPH to "24-hour Urgent Care if permitted by state law." During the discussion, it became apparent to another city councilmember that the MOU did not even include a commitment to "23-hour Urgent Care" as presented and promised by Mr. Covert in previous public meetings in Escondido. February 9, 2006

The emergency rooms at Fallbrook, Tri-City and Pomerado hospitals are all decades older. PPH keeps telling the public that PMC is an old and overcrowded facility. Yet, PMC is PPH's main source of revenue. PPH will continue to lose market share if it keeps making disparaging remarks about PMC. It must face this dilemma over the next 5 or 6 years. If PPH begins making positive and glowing remarks about PMC, they will be assisting me (Attorney Robroy Fawcett) in my effort to "Save The Heart Of Downtown Escondido" as a full-service acute care hospital.”
(February 14, 2006)

Mayor Pfeiler: I know they are working on that. Again, it is in their interest to provide such a service. That will come, I’m sure, in time.

Did PPH Play By the Rules Before, During and After the Election?

On January 10, 2007 . . . more than two years after the passage of Prop BB, the Fair Political Practices Commission fined Prop BB contributors for not filing proper reporting forms. The amounts of money were substantial. The fines were not.

Palomar Medical Center Medical Staff of Escondido failed to timely file a semi-annual campaign statement disclosing contributions totaling $50,000 (1 count). $900 fine. Palomar Medical Center Auxiliary of Escondido failed to timely file a semi-annual campaign statement disclosing contributions totaling $10,000. $400 fine. Pomerado Medical Staff of Poway failed to timely file a semi-annual campaign statement disclosing contributions totaling $50,000. $900 fine.

$110,000 in unreported financial contributions. A total of $2200 in fines . . . in what amounts to "chump change" for well heeled backers of Prop BB.

Chamber President Harvey Mitchell: Not many companies of that size are able to help non profits out. They’ve been very responsible in their community by working with various groups. Palomar steps up to the plate.

Councilman Gallo: Well, it’s pretty clear the FPPC saw something there, and responded.

Other questions linger: Why did PPH issue a check for $375,000, as authorized by Michael Covert, to the PPH Foundation a few weeks before the election, and just after the PPH Foundation contributed $375,000 to the Proposition BB campaign? Why did the PPH Foundation then, in turn, issue an identical check for $375,000, signed by Escondido Mayor Lori H. Pfeiler, back to PPH just before Thanksgiving? Was the check from PPH to the PPH Foundation a mistake? Or an illicit loan? At the time of the election, was PPH, in fact, the largest contributor to the Prop BB campaign?

Mayor Pfeiler: Well, at the time I was the treasurer for the Palomar Foundation. That was one of my duties, to sign checks as approved by the board. I know the board discussed this at length and determined that it was appropriate that we support the Prop BB campaign.

Is PPH Playing Fair with the City of Escondido?

Then comes another major surprise . . . and another reason for not keeping promises made. On Thursday, May 24, 2007, it was announced by PPH that soaring costs cause(s) PPH to "delay" the downtown renovations.

Now, instead of $731 million, the cost for a new hospital in the ERTC has soared to $811 million, from an original estimate of $531 million in July 2004. To cover the soaring costs, Palomar Pomerado Health is positioned to use the $73 million originally earmarked for renovation of the downtown hospital (Palomar Medical Center), and apply that money to the cost overruns on the new hospital. This effectively cancels the downtown renovations!

Also, PPH cannot afford to build a Women's and Children's center in the ERTC, so it is positioned to continue to use the downtown facility beyond the seismic retrofit deadline (initially 2013), for the Women's and Children's center.(iii)

Could We Have Simply Retrofitted Palomar Medical Center Downtown?

Councilman Daniels: We have existing patients. I'm not a hospital expert. Don't know whether we could have done the renovation and still been able to comfortably treat our patients.

It was interesting to see that a hospital in San Diego County which had similar problems that originally confronted Palomar Medical Center, solved their problems in a much less expensive way . . . all the while continuing to see and treat patients.

As an example of what might have been done in Escondido, let's take a look at the La Jolla VA Hospital Retrofit:

As of Saturday, June 16, 2007, The Veterns Administration (VA) hospital in La Jolla next to UCSD is undergoing "Earthquake Retrofitting". Massive columns and beams are being added to the hospital building's structure. The hospital is open for business during the retrofit with people going in and out and the parking lots being full.

Above, La Jolla’s Veteran’s Hospital being renovated

The seismic corrections on Building No. 1 at the VA Medical Center in San Diego, were funded in the amount of $47,100,000. (iv)

The $52.2 million contract with Clark Construction of Costa Mesa, California, started in November 2005.(v)

Building 1 is an 855,000-square-foot, 6-story cruciform structure that was built in 1970. The original design included eight stair towers along the exterior of the building. These towers serve as structural connections and support for the building. The seismic retrofit design required removal and replacement of the existing structurally deficient stair towers to meet today's stricter seismic building codes.(vi)

On Tuesday, July 10, 2007, an Escondido Doctor, the late Charles Stehly, MD, wrote the following letter to the editor of the North County Times:

Keep Hospital Downtown

"I have practiced at Palomar Hospital and lived in Escondido for over 30 years and, just like the hospital board members, am amazed at the increased cost of building a whole new hospital in the Auto Park area of our city. This will drive up the cost of health care for all of us who live in the Palomar hospital district. The move will also hurt downtown Escondido since there won't be money left to significantly renovate the present hospital site.
Since much of the present downtown hospital is fairly new and will meet earthquake standards for many years, and since the present site is so convenient for those relying on public transportation and ride sharing, the PPHS board should realize that the original plan to build a new tower at the downtown site is best for the district residents. Abandoning this site and building a whole new hospital is like throwing the baby out with the bath water, and I should know since I practiced obstetrics for over 30 years at Palomar.

District residents should contact the Palomar hospital board by e-mail at tlc@pph.org or call (800) 628-2880 and ask them to keep our hospital downtown.

Dr. Arthur Stehly

Councilman Abed: This should happen in 3 phases; phase 1, which was to have happened six months ago, the District acquires all the property across Valley Blvd; then we close Valley Blvd and they build a new admin bldg and they move all employees downtown, as promised, and then Phase 2: move to ERTC hospital; Phase 3, go back downtown to do upgrade on McLeod Towers and other projects. We have not yet heard about the new buildings. I believe they've acquired most of the properties, excepting one building . . . but we haven't been told by PPH.

There were promises made to voters that may be difficult to carry out; my concern is the downtown hospital. We would like to see what the hospitals plans are. We have not seen an update on what's going on downtown.

Councilman Gallo: Too late. The hole is dug. And it is a huge hole! (The groundbreaking was last Friday at 11:30).

Harvey Mitchell: We have to leave it to hospital administrators. It’s probably not practical. We could build the new hospital and use this one as well. The rule changes regarding seismic requirements may allow us to do that.

ERTC Soil Remediation

At the new hospital site, called Palomar West, the City called this phase "soil remediation" in the 9/12/07 City Council meeting. The soil remediation project is going to last several months. City engineer Homi Namdari said that the hospital site is mostly rock (covered with only 5 feet of dirt). The rock needs to be removed for the basements, so blasting will be occurring at the site.

It appears there are more issues involved in the soil remediation than the mere removal of rock, and it will be expensive.

According to the grading plans on file with the City, some areas have "undocumented fill" requiring "the contractor to over excavate and recompact existing undocumented fill in accordance with the recommendations of the soils report."
Item 12, page 1 of 15, Document #GP07-0027, Department of Public Works, Engineering Division, City of Escondido.

"No fill to be placed until the City Grading Inspector has inspected and approved the bottom excavation."

Item 13 ". . . Rocks larger than six inches in diameter shall not be used in the fill."

Item 16 "The fill shall be compacted to at least 95 percent." (viii)

In fact, there are big rocks and boulders buried in the ERTC property acquired by PPH for the new hospital. There is evidence that PPH knew about the buried rocks (with accompanying voids), and the estimated remediation costs, BEFORE it acquired the property.

Unfortunately, PPH purchased the ERTC Property "as is": ERTC Option Contract (Article 7, paragraphs 7.2 and 7.2.1).

Exemplary quotes from a handout dealing with soil conditions:
"However, for this rock fill material loosely constrained by smaller gravel and fine sands, there is no known method for predicting its seismic performance, ground motion characteristics or stability under ground shaking. We would be hard pressed to place our engineering seal of approval on the report recommending construction of a hospital on these rock fill materials at the ERTC site."

"The most rational option for remediating the grading conditions so the entire site may be used for hospital construction would be to remove and replace the rock fill with fine fill materials using the ground-up boulders in the process. . . . The option of removing, grinding up the rock materials to fine materials and replacing them in a properly compacted process over the site has been estimated at $30 Million."

"We are concerned that some areas of the site may not conform to the City's rock fill placement requirements as shown in Appendix A in the reports. Prior to approval of the final grading for ERTC, and issuance of a grading permit for PPH, we would like to receive clarification on these issues."

The Money Just Keeps on 'a-rollin' . . .

$2.5 Million For Valley Blvd Relocation

Escondido estimates that it will cost $2.5 million to relocate Valley Blvd in order for PPH (Palomar Pomerado Health) to build a 50,000 square foot office building as promised in its MOU.(ix) [Escondido City Manager] Phillips said the city officials do not see the loss of Valley Boulevard as a potentional problem because drivers can use other streets to get around the hospital. There has been no public discussion of the need, or lack thereof, on the traffic effects resulting from the loss of Valley Boulevard.

Councilman Gallo: I don't see the Valley Blvd project until we see something from their side

Alarm Bells Go Off

Wednesday, November 14, 2007
Evolution of PPH Retrofit Costs. The cost for PPH to retrofit its downtown hospital (PMC) has gone from $93 million to $3 million!

This effectively kills the promise PPH had made to the electorate and the city of Escondido in persuading the voters to approve Prop BB.

The cost of constructing the scaled down hospital in the ERTC has increased by an additional $83 million to $773 million. Further PPH must generate additional cash from operations over the next 10 years (an increase to $67.7 million each year) in order to fund the current (scaled-back) expansion plans.

Thursday, November 15, 2007
McLeod Tower "likely to be reclassified"!

"Palomar Pomerado is preparing to break ground on a new hospital that was sold to the public as being more economical than trying to upgrade two Palomar Medical Center towers rated as extremely vulnerable to earthquakes. Covert said Wednesday architects have told him the towers also are likely to be reclassified. Still, he said, "I don't think it will change our time frame in terms of (construction) activity."(x)

This means the McLeod tower can remain in operation until 2030. However, PPH is determined to not save the district's taxpayers any money!(xi)

Availability of Public Information

PPH is a public hospital district and operates under California's open meeting requirements for a local government district.

After March 2005, PPH quit posting the Agendas for it Board meetings on its website. Posting of the agendas has resumed, but the agendas often are not available on the website until after the board meetings.

Public access through the internet is now available to an "unofficial" collection of Agendas, Minutes & Support Documents for the PPH Board and Committees.

Also, the PPH Board of Directors has been using "Special Meetings" in a manner that makes it difficult for a member of the public, who is not part of a newspaper organization, to learn of and to attend the special board meetings. Special Meetings only require 24 hour notice to media organizations, but not to members of the public.

Robroy Fawcett, an Escondido attorney, believes that PPH should provide at least three (3) days notice to the public for any meeting related to the use of Proposition BB funds. Also, he argues that PPH should maintain an email list for notifying persons wishing to be informed of meetings related to the facilities expansion and the use of Proposition BB funds.

The Prop BB Oversight Committee's meetings are also online.

Documentaton Used in this Cover Story/Commentary

We have interviewed knowledgable people about the facts detailed in this story and relied upon documentation provided by both Palomar Pomerado Health District and the City of Escondido. Much of the documenation is presented as endnotes to this story.

Persons interviewed include Escondido Mayor Lori Holt-Pfeiler; City Councilmembers Ed Gallo, Sam Abed and Dick Daniels; Escondido Chamber of Commerce CEO, Harvey Mitchell, David Barkins, President of the Escondido Downtown Business Association; and Robroy Fawcett, Escondido patent attorney. Mr. Fawcett has built and maintains an extensive library of documents related to the PPH issue. It is accessible by going to:

Mr. Fawcett has been an outspoken critic of the planned dismantling of Palomar Medical Center in downtown Escondido, the MOU for the downtown site, and its aftermath. He has taken the position that while there is no question that the new hospital (Palomar Medical Center - West) will be a beautiful, state-of-the-art hospital, it may well result in extensive downtown blight and severe negative economic impact.

Robroy Fawcett, Escondido Patent Attorney

We asked Mr. Fawcett about what he saw as a solution. He came up with a fairly simple solution: complete PMC downtown first!

For one week we made many attempts to reach Michael Covert and/or PPH executive personnel for comment on this story but due to heavy demands on their time, including a groundbreaking ceremony last week, Mr. Covert was unavailable to comment or be interviewed for this this commentary/story. We offer Mr. Covert, or his designee, an opportunity to respond to this cover story/commentary in a Letter to the Editor in a subsequent issue.

A Summary and Recommendations/Potential Solution(s)

If one looks at PPH’s own financial studies, you will readily see that they have completely emasculated the plans and promises they had made to the electorate as well as various city officials.

The cost for PPH to retrofit its downtown hospital (PMC-East) has gone from $93 million to $3 million!

The cost of constructing the scaled down hospital in the ERTC (PMC - West) has increased by $83 million to $773 million.(xii)

Note that in July, 2004, they had planned on an allocation of $73 million for the renovation of PMC - East. By December, 2005 that cost had gone up to $93 million and as of July 2007, the allocation had dropped to $21 million. Even that $21 million is misleading, however, because $12 million of that amount was spent on two warehouses which are sited at or near Palomar Medical Center, West, and should not properly be allocated to PMC - East. That leaves only $9 million allocated to renovate PMC - East. A far, far cry from what was promised.

Equally disturbing is that of the $9 million remaining, a measly $3 million is allocated to renovation of the McLeod tower. $5 million was allocated for the Coral Bulding, across the street from the present PMC - East campus (and way too small to accommodate the work force from PPH’s administrative force which was promised to move here from Rancho Bernardo). $1 million was allocated to buy a fourplex, which has been razed and is to be used for parking. Result? $3 million to renovate McLeod Tower.

Additional Issues

While researching this story we came upon another issue that was troubling. While it is unrelated to Proposition BB it is related to the transparency and openness of the Palomar Pomerado Board of Trustees and its administrators.

Recently, a contract was entered into by the District with San Diego Chargers Running Back, LaDainian Tomlinson, for $2 million. It calls for $400,000 per year for five years. LT and his powerful, popular image is to be used to drive the massive fund raising effort that will seek multi-million dollar donors as well as the rank and file members of the marketplace. They will likely be seeking to raise in the neighborhood of $50 million.

What troubles us is we were told that the board met in closed session to discuss “potential litigation.” They came out of the meeting and handed out the contract after they approved it. There was no public discussion by the PPH Board, and the public has no input because the contract was not available to the public until after it was approved. Immediately after approving the LT contract, the PPH attended a meeting of the PPH Foundation where they had talked about creating a “buzz” in the community to implement fundraising efforts.

To come out of a closed session, having had a discussion amongst board members, ostensibly about “potential litigation,” and then have no public input before spending $2 million of the District’s money does not sit well with us.

The Board needs to vote on something in open session, even if it has been discussed in closed session, which has been properly agendized. It also needs to have notification of the public so the public might have input so such issues.

Sources: We are indebted to Robroy Fawcett, the Escondido attorney, who has followed this issue closely, and documented the events surrounding it. Also, Wally Gutierrez, a frequent critic of the PPH/Prop BB issues. Documentation upon which we relied are as follows:

(i) San Diego County's Division of Emergency Medical Services (EMS) designed and oversees the Trauma System in San Diego County.
A map of the Trauma System catchment areas is located at:
(ii) (Citizens Assn. For Sensible Development of Bishop Area, and Bakersfield Citizens for Local Control).
(iii) A video of the presentation to the PPH Board at a meeting held on May 22, 2007, is at the following link:
Video File (22MBytes)


http://www.pugetsound.med.va.gov/opa/ pressrel/pressrelease.cfm?id=1040

(vi) http://www.andersondrilling.com/Projects_Detail.aspx?pProjectId=61


(viii) Item 17. A soils report, prepared by URS Corporation, was dated January 2007. Item 3, under City of Escondido Grading Notes. For mention of "soil remediation" by the City staff in the City Council meeting of 09/19/07, see See Video at minute 19:12 of video 9 (Item 14).

(ix) The Project is included in Escondido's Capital Improvement Plan for 2007/2008 on page 46.
http://civics.robroy.cc/CIPBudget2007-2008p46.pdf (page 46)
http://civics.robroy.cc/CIP 2007-08 - 2011-12.pdf (Entire Document 10.5 MBytes)

(x) State to re-assess hospitals' vulnerability to quakes
(xi). Reports, documents, spreadsheets, calculations, analysis, and/or information used to determine estimated cost of upgrading the McLeod Tower at PMC to a level above an SPC-1.
A copy of the application is available at the following link:

"SB1953 Seismic Evaluation of Palomar Medical Center (Phase Report 1A), dated October 25, 1999"
http://civics.robroy.cc/PMC-SeismicEval10-25-99partial.pdf (2 MB)
http://civics.robroy.cc/PMC-SeismicEval10-25-99cont.pdf (10 MB)

The cost estimates for the seismic improvements to Palomar Medical Center were amazingly low. The structural engineers recommended that PPH "allocate a budget allowance totalling at least $6,670,000 for the direct construction costs of SB 1953 seismic retrofit measures" for Palomar Medical Center!

(xii) Cost Comparison Handout:
http://civics.robroy.cc/DBABdhandout111407.pdf (hs 7.2 and 7.2.1).





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