Reason for Investigation To perform a mini post audit of the H.s.a. financial results since the hospital closed on

The first was the financial factor dominated by the assumption of losses.

Other factors were: St. Joseph’s commitment for enhancement of the clinic system; a significantly easier and less costly transition from an acute to 1 ambulatory system; retention of 450 employees in the short term; and the culture of St. Joseph’s as expressed in their presentations.” Findings: On 1/28/97, County Board of Supervisors on a motion by Supervisor Simon and seconded by Supervisor Blom voted 3 to 2 to authorize exclusive negotiations with Tenet Health Systems. All of the nine Negotiating Committee members had voted for St. Joseph’s instead of Tenet. Health Services enterprise fund losses from 1998 through 2002 totaled $26,100,000. A loss of $3,700,000 is forecasted for 02/03. Therefore, since signing a 20-year contract with Tenet, the County Health Services Agency will have absorbed $29,800,000 of losses through June 30,2003. Tenet did make a one-time payment of $12,000,000 for clinic operation that has not been used to reduce the $29,800,000 loss. H.S.A. expects to breakeven for the ’03-’04 year and return to $7-$9 million dollar losses in the next two years. CONCLUSIONS Following the Negotiating Committee’s recommendations of 1/27/97 could have significantly reduced the $29,800,000 loss as St. Joseph’s agreement would have covered any losses from operations for 12 years.