When innovation, regulation collide
When the music industry transitioned from records to 8-track tape cassettes, to CDs and now to cloud-based music, did the government step in and add regulations to keep the status quo? No. We all transitioned with the technology and times to allow for growth and innovation. When the Austin City Council decided to set three tiers of outdated regulations for ride-sharing drivers, did Uber and Lyft stay in town? No. And now Austin residents and visitors have lost a great service.
Don’t think it can happen here? In business-friendly Orange County, a city council recently decided to punish its own community medical provider for innovation in meeting patient needs, as it faced new technology costs, service challenges, changing demographics and diminished health care returns in a time of Obamacare.
And now that city has lost its premiere medical center.
San Clemente wanted its own hospital and emergency room. MemorialCare Health Care System was its hospital provider. However, MemorialCare is also a business that must watch its overhead and margins. Further, to its credit, MemorialCare recognized that its older facility was no longer effectively serving the San Clemente community. Patient volume has dropped dramatically, with the 73-bed hospital seeing less than 10 inpatients most days. Emergency services were available in surrounding communities. Research showed that more patients were seeking convenient, cost-effective outpatient services instead of acute care or emergency facilities. An empty facility is not a sustainable business, so exploring other options made sense.
Following community trends, MemorialCare worked to transition into building a modern outpatient medical campus and – to satisfy the city’s request – sought legislation that would have allowed for a satellite stand-alone emergency department, which California law currently (and oddly) doesn’t allow.
Unfortunately, in January, the California Legislature (itself usually behind the times in innovative economic strategies) failed to pass an exception for San Clemente. So in the spirit of “no good deed goes unpunished,” the following week, San Clemente City Council voted to downzone MemorialCare’s property, effectively making it impossible to continue the hospital’s innovative development plans as well as afford continuing operation costs. MemorialCare was forced into closure, an outcome no one wanted.
Had all parties worked together to address the real needs of the people of San Clemente, this could have been avoided. Now MemorialCare has filed a multimillion-dollar lawsuit against the city for an unlawful “taking” of its property and development rights without just compensation. The city faces enormous taxpayer-funded litigation costs. The residents have lost their medical center. And residents’ future medical needs will not be met any time soon – especially with the innovative new center proposed by MemorialCare.
It’s not “the good ol’ days” anymore for effective health care. It won’t ever be. We at Orange County Business Council urge the city and MemorialCare to come back to the bargaining table and reach agreement on a medical services model that works for a 21st century economy and the residents of San Clemente.
Otherwise, dust off that 8-track player.