Nearly one year ago, a partnership agreement between UC San Diego Health and Tri-City Medical Center in Oceanside fell apart, with the North County public hospital’s leadership saying it made sense to take more time and ensure that all potential suitors had been considered.
However, while a consultant hired by Tri-City approached a total of 25 medical providers, agenda documents posted to the hospital’s website Monday show that just two have made proposals, and they are exactly the same organizations that made offers in October 2023.
UC San Diego Health and Sharp HealthCare have re-submitted the proposals that they first made 18 months ago, and Tri-City’s governing board will reconsider them at its next regular meeting Thursday. As was the case last time, UCSD is proposing a t powers authority that would have the two organizations tly operate the hospital while investing in operational improvements, including a cancer center and installation of a new electronic medical records system.
Sharp, as it previously proposed, would execute a long-term lease with Tri-City, assuming all of its assets and debt. The facility would serve as Sharp’s “acute care and clinical service line ‘hub’” in North County. Like UCSD, Sharp would modernize electronic records systems and would also make “commercially reasonable efforts to reestablish obstetrics, delivery and newborn care.” Tri-City’s elected board of directors suspended obstetrics and neonatal intensive care operations in July 2023, citing unsustainably low patient volume.
Both UCSD and Sharp propose investing roughly $100 million in Tri-City, helping to stabilize its financial picture, which has deteriorated since the COVID-19 pandemic.
One key difference remains in final approval authority.
As a government agency, UC San Diego needs no voter approval to move forward with a t powers agreement. The university proposal includes a second phase, which would allow the Tri-City board to “fully step away from governance and operational responsibilities,” and even transfer Tri-City’s operating license to UCSD in the future.
Sharp, a private not-for-profit medical provider, would need a public vote to lease Tri-City’s assets and assume its liabilities. But the organization has plenty of experience in exactly this sort of maneuver. It has leased Grossmont Hospital in La Mesa from the Grossmont Healthcare District since 1991. Since then, Grossmont’s campus has seen significant redevelopment, including the age of a general obligation bond that rebuilt the hospital’s emergency department and major investments in specialty sub-hospitals that focus on cardiovascular and neurological care.
With a listed overall annual revenue of $5.1 billion, Sharp is the larger of the two enterprises, though UCSD Health is by no means small with $3.7 billion in annual revenue. While Sharp does some research, especially at its Mary Birch Hospital for Women & Newborns, the university has the obvious edge in research overall, especially with its connection to the UC San Diego School of Medicine.
There is no certainty that the Tri-City board will choose either Sharp or UCSD during Thursday’s meeting. As agenda documents note, the board could choose to end its “partnership exploration,” continuing to operate as an independent, stand-alone medical center.
It seems clear, though, that Tri-City, like most stand-alone hospitals in the state, will struggle to continue going it alone. According to a financial chart included in the partnership presentation, long-term debt increased 53% from 2019 to 2014 while total revenue decreased nearly 22% during the same five-year span.
Thursday’s meeting begins at 3:30 p.m. in the lower level of the hospital’s main building at 4002 Vista Way. An online videocast of the meeting will also be made available for those unable to attend in person, though details were not yet posted as of Monday evening.
