PH5-020 2015 Alameda Health System
“Helping an institution survive that used to serve people with no choices.”
In July 2013, Bill Peruzzi, MD, MS (MHCM), FCCM, commented on the reason he recently accepted the position as Chief Medical Officer at Alameda Health System (AHS) (a.k.a. Alameda County Medical Center):
“The focus of the challenge is: How does one evolve a virtually pure public hospital system into something that can compete in a competitive market when a large portion of the current population served will quickly have choices that did not exist previously?” Almost a year and a half later, in November 2014, many challenges remained for AHS. Its CEO of nine years, Wright Lassiter, had accepted a new position as President of the Henry Ford Health System in Detroit, Michigan, beginning in December. During his tenure at AHS, Mr. Lassiter led California public hospitals in negotiating an agreement with the state that resulted in $3 billion in supplemental revenue over a five-year period, which contributed to a financial turnaround and expansion of AHS. Mr. Lassiter also was a key player in the effort to obtain a 20-year voter reauthorization of Measure A, a local county sales tax that generated approximately $100 million annually to support the health service needs of indigent, lowincome, and uninsured residents of Alameda County; 75% of those proceeds were transferred directly to AHS. He also led the master plan for a replacement hospital on the Highland campus, which was owned and financed by the county.
However, starting in 2012, financial performance, while still profitable, was deteriorating. 2014 was projected to incur a loss. The health system was unable to reduce its working capital loan
from the county by a scheduled $15 million in 2014; instead the system was frequently hitting its
$200 million limit during 2014. Roughly $130 million of the county loan was a carryover of
operating losses incurred prior to 1998, when governance changed to an independent authority.
The balance was related to the ongoing cash needs of AHS operations.
Also of concern, AHS had missed an opportunity to retain many of its patients newly-insured on
the state health exchange, Covered California, because its largest affiliated managed care plan,
Alameda Alliance for Health, had been financially disqualified from offering a privately
subsidized plan on the exchange.
© 2015 by the President and Fellows of Harvard College. This case was written by Nancy M. Kane, DBA, Harvard T.H.
Chan School of Public Health, as the basis for class discussion and education rather than to illustrate either effective
or ineffective handling of an administrative or public health situation. This publication may not be digitized,
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