Santa Clara County Plans to Buy East San José Hospital to Reverse Cuts to Care

In a major move to preserve critical health care support for tens of thousands of residents, Santa Clara County plans to purchase Regional Medical Center, a privately owned hospital in East San José.

County officials on Wednesday announced a tentative agreement to pursue buying the facility for $175 million from its ownership, HCA Healthcare, the largest hospital corporation in the country. The agreement follows months of protests against the company for cutting trauma center, stroke and heart attack services at the hospital to save costs.

The deal would bring the hospital under the wing of Santa Clara Valley Healthcare, the public health system run by the county that already includes three hospitals and a series of clinics and health centers across the county.

“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,” County Executive James Williams said in a statement.

The county said due diligence and a formal purchase agreement need to be hammered out, with HCA and the county hoping to complete the transaction in the first quarter of 2025.

The announcement by the county comes a little more than five years after the county completed its takeover of O’Connor Hospital in San José, St. Louise Regional Hospital in Gilroy, and the De Paul medical facility in Morgan Hill, now called VHC Morgan Hill, from the struggling Verity Health Systems in 2019.

It will also bring Regional Medical Center back into the realm of a public benefit facility. The hospital was previously run by a not-for-profit organization, Alexian Brothers when it was purchased by HCA Healthcare more than 20 years ago.

In February, Nashville-based HCA Healthcare announced it planned to close Regional Medical Center’s trauma center, completely eliminate its severe heart attack services and reduce stroke services on Aug. 12.

The company backed off those plans in mid-July after a coalition of medical workers, including some doctors and nurses from the hospital, as well as community members, patient advocates and elected officials, raised alarms in a series of rallies and demonstrations at HCA hospitals.

Instead, the hospital downgraded its trauma center from a Level II to a Level III — something advocates said was a threat to patient safety because it offers lower levels of care, doesn’t require specialists to be on-site around the clock, and leans more on transferring patients with serious needs to other facilities after stabilizing them.

Instead of eliminating its ST-elevation myocardial infarction (STEMI) program, which handles severe heart attacks, it trimmed those services. One of the cuts targeted the hospital’s catheterization laboratory, where cardiologists insert catheters to help diagnose heart issues. On Aug. 12, it went from being an around-the-clock lab to daytime only.

Stroke services were set to be reduced from “comprehensive” to just above “primary” levels, though the company said the facility would still be able to serve 97% of patients.

A county report in April said Regional Medical Center was the only trauma center and only comprehensive stroke center on the county’s east side and that the reduction of services could have a “cascading effect” on the entire county health care system, as other facilities would have to pick up the slack.

The delayed access to care could potentially increase deaths and other poor health outcomes and could have a “disproportionate impact on communities of color and lower-income communities in East San José.”

Williams said that in addition to eventually restoring the services that were cut earlier this month, the county intends to also bring back labor and delivery services, which HCA cut from Regional in 2020. However, the lower level of services put in place on Aug. 12 will remain in the interim, a hospital official said.

“We have served this community for over 25 years. We’ve invested over $500 million in capital improvements at Regional Medical Center, and we believe this is the best path forward for our organization,” HCA Healthcare Far West Division President Jackie Van Blaricum said.

Reduction in services pushed county action

The cuts at Regional Medical Center were far from HCA Healthcare’s first foray into reducing services in the city.

In 2004, shortly after purchasing the downtown San José Medical Center, the company shuttered that hospital, which included a trauma center, and consolidated services into Regional Medical Center.

Santa Clara County Board of Supervisors President Susan Ellenberg said the county wasn’t looking to expand its hospital system, but alarms were raised after HCA cut labor and delivery services during the pandemic.

“When Regional Medical Center started and then continued to decrease critical services for our East San José residents, ultimately we got to the point where it felt irresponsible to allow them to continue to deplete care in this very high-need population without stepping in,” Ellenberg said.

“It reminded us of a similar pattern with San José Medical Center, where HCA discontinued one practice after another that they felt was not sufficiently profitable and ultimately closed down that entire center. We didn’t want to see that happen again,” she said.

Because the hospital was previously a not-for-profit facility, coalition members, including high-ranking local and state-level politicians, called on Attorney General Rob Bonta and Gov. Gavin Newsom to intervene in the planned closures and cuts, though none of those efforts had yet panned out.

Critics of the company say that HCA prioritizes profits over people and has taken issue with a planned major expansion of HCA’s Good Samaritan Hospital on the west side of San José near Los Gatos.

One of the elected officials leading the charge against HCA’s cuts was Supervisor Cindy Chavez.

“I am really hopeful that this means that the services that our entire community, and specifically the East Side, need so desperately, will be protected into the future,” Chavez told KQED. “I am really grateful that the community raised their voices and really were heard. I really can’t express enough how life-saving this step is for our entire community.”

Supervisor Sylvia Arenas, who grew up in East San José, said the working-class East Side community deserves equitable health care access.

“These are our folks who are working maybe two jobs, children who are maybe living in poverty,” Arenas said. “When emergencies surge, you really need to have the highest level of care available to you, the closest available to you. And that’s what the county is hoping to do with this agreement.”

Williams, the county CEO, acknowledged that the county just earlier this year closed a $250 million budget deficit.

He said the county will be able to cover the cost of the purchase of Regional with a “significant” reimbursement the county recently received from the Federal Emergency Management Agency for its pandemic-related expenditures, though he didn’t offer details. The county could also issue lease revenue bonds using Regional as collateral to help fund the purchase, he said.

This story has been updated.