Santa Clara Valley Medical Center Hopeful Feds Will Reverse Medicare Termination

On Aug. 12, 2022, a man arrived at the trauma unit of the Santa Clara Valley Medical Center in San Jose bleeding from multiple stab wounds to his wrist and abdomen. Doctors determined that he had stabbed himself with a four-inch knife.

After emergency surgery he was admitted on a “5150 hold” which allows a person “with a mental challenge” such as a suicide attempt to be detained for a 72-hour psychiatric hospitalization. This was later extended to 14 days after an initial psychiatric exam.

Five days later, at 9:12pm on Aug. 17,  after assaulting a health care aide, the patient picked up a chair in his fourth-floor room, threw it through the window, stepped up on the ledge and jumped to his death.

The medical center reported this fatal incident to state health and federal health officials, and began an internal review.

The public health officials also decided to investigate, and their probe of the suicide at Valley Medical Center would snowball in the months that followed, threatening the stability and reputation of California’s second largest public health care system.

About a month after the suicide, investigators from the San Jose office of the California Department of Public Health, at the direction of the San Francisco office of the Centers for Medicare and Medicaid Services (CMS), arrived at the 665-bed public hospital on South Bascom Avenue to begin a two-week comprehensive “survey” of all hospital services and procedures related to the August patient suicide.

Hospital ‘placed patients at risk’

On Jan 26, Valley Medical Center CEO Paul Lorenz received a scathing 136-page report accompanied by a three-page cover letter from San Francisco-based CMS manager Renae Hill. Hill said that based on the Oct.3 survey report, her office concluded that Valley Medical Center had “failed to fully address serious, systemic and recurring issues” that had placed “patients at risk for adverse events.” The patient incidents described in this article are from the survey report.

The federal agency wrote Lorenz that as of Jan. 25, the medical center’s “deemed status has been removed,” terminating the Medicare agreement between Santa Clara Valley Medical Center and CMS, effective April 25.

The county was given 10 days to respond to each of the “deficiencies” found by the state inspectors. “Termination can only be averted by correction of the deficiencies through submission of an acceptable plan of correction and subsequent verification of compliance by the California Department of Public Health” before April 25.

On Feb. 6, Lorenz sent a 55-page response and offered supporting documentation for the state health department, which will review the county actions on behalf of CMS. Some back-and-forth is likely, say county officials, who remained optimistic this week that the Medicare termination would be averted.

In his letter, Lorenz told Jie Wang, facilities district manager, and Tatjana Eby-Siddiqui, San Jose district administrator of the state’s licensing and certification program, that the county medical center “takes its responsibility to its patients very seriously,” and has “undertaken extensive efforts to review and respond to every finding.”

He added: “This submission should not be viewed as an admission or agreement of the facts alleged or conclusions set forth in the statement of deficiencies, and [the medical center] reserves its right to appeal.”

“We have addressed all deficiencies, and expect CMS to accept our plan of correction, putting us in full compliance with the Medicare conditions of participation for hospitals,” a hospital spokesperson said Feb. 22.

High-stakes waiting game

All the county can do at this point is wait for the state health department’s review and hope it occurs before April 25.

The stakes are high, involving tens of millions of dollars in medical bills for hundreds of Medicare patients.

Medicare represents about 31% of the total hospital admissions for the entire Santa Clara County system with an average daily count of 713, according to the county. Approximately 129 of 430 (30%) total daily admissions at Valley Medical Center, approximately 111 of 222 (50%) at O’Connor Hospital in San Jose and about 34 of 61 average daily admissions (56%) at Saint Louise Regional Medical Center in Gilroy.

The Medicare termination affects all facilities, inpatient and outpatient, that are licensed under Santa Clara Valley Medical Center, including the three hospitals and most outpatient clinics.

Despite the termination, the hospitals are required to continue to admit Medicare patients, and as a “last resort” public health care system, cannot refuse to admit patients, with or without insurance.

CMS warned the county that – unless all corrections are made – the Medicare program will not pay for health services for patients admitted on or after April 25. For patients admitted to the county system’s three hospitals before April 25, payments will continue for up to 30 days for any medical services furnished on or after April 25.

On Wednesday, Feb.22 – the same day that community members, health care leaders, county supervisors and staff celebrated the groundbreaking of a behavioral health Center that will offer improved mental health services for children, adolescents and adults – unions representing nurses, physicians and front-line health care workers staged a rally in San Jose where they blamed Santa Clara Valley Medical Center’s problems on chronic turnover, vacancies and short-staffing, which jeopardize workplace safety and patient care.

Unions warn of staff shortages

Riko Mendez, SEIU 521 chief elected officer, said, “At this moment, the county is hosting a groundbreaking event for a new behavioral health facility. We’re glad that the county wants to expand services, but we know that across the county, there are over 2,000 vacancies in SEIU-represented classifications that we cannot recruit for, that we cannot fill, or retain as a county. If we want to have the proper services that our community deserves, we need to fill these positions by paying workers.”

“This crisis is not only impacting workers and departments within our hospitals; the staffing crisis is wide-spread in 9-1-1 dispatch, emergency, social services, and behavioral health,” said Janet Diaz, a clerk at Santa Clara Valley Medical Center and SEIU 521 chapter president.  “To curb this staffing crisis, it will require significant improvements in pay and working conditions if the county is to attract and retain the frontline workers needed to provide adequate levels of care and service.”

Dr. Stephen Harris, chair of Valley Physician Group representing about 450 physicians, dentists, and podiatrists at Valley Medical Center, agrees that the safety concerns must be addressed expeditiously. "We've now seen that staffing shortages are not only potentially dangerous but also a threat to clinical quality," Harris said.  "The county must redouble its efforts to meet the staffing challenges."

“With over 300 vacant nursing positions in our system, daily short staffing has only exacerbated patients’  frustration due to long wait times and thus, resulting in increased assaults on staff, said Allan Kamara,president of the Registered Professional Nurses Association. “Despite being short staffed, nurses are constantly being pulled to do non-nursing jobs, because there are not enough hospital service assistants (HSA), techs, clerical personnel or protective security officers.”

The state inspectors, in their Oct. 3 report, however, put the blame for poor patient care, especially for psychiatric patients, squarely on hospital administrators, citing examples of poor training, staff errors, lax management, inefficient technology, inadequate procedures. unreliable equipment and poor coordination among departments.

Valley Medical Center’s ‘deficiencies’

The state report found that Valley Medical Center failed “to fully address serious, systemic and recurring issues, placing 18 of 51 sampled patients at risk for adverse events.” The hospital failed to ‘ensure that nursing services were provided to meet the needs of patients,” or to “carry out an effective, system-wide quality assessment and performance improvement program.”

The hospital, according to the report, failed to inform patients of rights and services in their native language, citing an instance of a Vietnamese patient being given a Spanish-language document.

In May 2021, a 19-year-old man who was detained under a 72-hour psychiatric evaluation, was not constantly observed while he was in the emergency department, according to the report. He ran out of his room, assaulted a staff member and jumped from a third-story parking structure, landing in a tree. The patient suffered multiple facial fractures, a foot and pelvic fracture, collapsed lung, abdominal bleeding and a severe traumatic brain injury. He had speech and cognitive problems and underwent multiple surgeries and rehabilitation for several months, according to the report.

The hospital was cited for incomplete paperwork on annual reviews of some administrators and physicians, which “had the potential for providers to be performing procedures without demonstrating continued competency and for placing patients at risk.”

The report said the hospital last year had poor tracking of the work load of some physicians, and did not have “an organized nursing service that provided 24-hour nursing services…furnished or supervised by a registered nurse.” Valley Medical Center nurses sometimes failed to follow physician orders, patient plans, or drug indications or keep sharp items in safe places.

“The cumulative effect of these systemic problems resulted in the hospital’s inability to ensure the provision of quality health care in a safe environment,” the report said. “Staff did not ensure a safe environment, initiate a chain of command and provide constant observation.”

Fatal consequences

“The facility failed to have all practitioners’ orders, nursing notes, reports of treatment, medication records, and other information necessary to monitor a patient’s condition, because of an excessive number of duplicate medical records in the electronic health record system with some time delay in timely correction of patient medical records,” according to the report. “This failure resulted in missing patient medical history of previous encounters that impacted patient safety, and in at least one case an unfortunate death.”

The death, in this instance, was the August 2022 suicide.

After his surgery for self-inflicted stab wounds, the man was placed in medical-surgical room, not a psychiatric room. Patient records showed he at one point denied he was suicidal, although another report said he told staff he had heard voices telling him to kill himself.

At 8:56pm on Aug. 17, the patient was reported to have assaulted a staff member assigned to his room. The door was closed for 5 minutes so the staff member could leave a dangerous situation, then when staff members re-entered the room, the man walked around his room, suddenly grabbed a chair and threw it through a window. He then jumped to his death before he could be restrained by staff.

Investigators said the man was to have been in a room with a chair that could not be moved.

Investigators also learned that duplicate hospital records for the man existed but were not known at the time of his August hospitalization. The duplicate records showed he had been treated at the Vallley Medical Center emergency room with psychological issues twice in July, which would have immediately red-flagged him as a potential suicide threat.

In his response to the state health officials, Lorenz said that since last August, a new ‘inpatient nursing manager for quality” has conducted a daily review of all new inpatients on psychiatric holds to ensure that suicide treatment plans are in place.

Lorenz also told the state that the medical center in early February began nursing staff education on improved reporting of patients leaving their rooms.

He also said that early this month all patients on legal “holds” began wearing lime-green colored scrubs, so they could be rapidly identified by all hospital workers.

In addition, Lorenz reported to the state that the hospital in November created positions for a new behavioral response team of psychiatric nurses who will conduct rounds on patients with legal holds. “This team will also assist the hospital in better assessing and identifying individuals at risk of suicide, responding to agitated patients and/or patients with psychiatric issues, and working with the inpatient psychiatric liaison team,” he wrote.

He also told the state that he had created a new position of chief quality officer at the hospital, and that this month began retraining the hospital’s registration staff on the importance of providing patient rights information in appropriate languages.

County Executive Jeff Smith said in a statement that the Medicare termination threat is being taken “very seriously,” and added he believed there is “no chance” reimbursements will stop for the county-run hospitals.

In addition to the confidence expressed by Smith, who retires July 1, Susan Ellenberg, president of the county Board of Supervisors, released a statement to media, saying “Each recommendation to improve services or programs is actionable, and I’m confident [medical center] leadership and staff will implement the recommendations and will work, as they always do, to ensure patient and employee needs are met.”

Lorenz released this statement on Wednesday:

“We take all instances involving patient safety very seriously, as does CMS. This survey is an opportunity to reevaluate all of our processes to ensure our health system is providing the highest level of care for each and every patient, even under the most difficult and challenging circumstances.

“We appreciate the opportunity to review and improve our systems, and to provide the best possible patient care. Not only will we be better for this, but our patients and our community will benefit as well. Patient safety is and must always be our highest priority.”

The reports:

Santa Clara Valley Medical Center CMS 2567 POC Submission 2_06_2023

Attachment A To Form CMS 2567 Statement of Deficiencies _Plan of Correction

Union Santa Clara County Vacancy Report

Three decades of journalism experience, as a writer and editor with Gannett, Knight-Ridder and Lee newspapers, as a business journal editor and publisher and as a weekly newspaper editor in Scotts Valley and Gilroy; with the Weeklys group since 2017. Recipient of several first-place writing and editing awards, California News Publishers Association.


  1. Thanks to Mr. Holtzclaw for this detailed reporting on the county’s public healthcare system. As numerous reports in the San Jose Spotlight over the past three years indicate, working conditions and systems performance at the Santa Clara Valley Medical Center (SCVMC) have experienced extreme stresses that are at, or near, breaking points. Such strains predate the COVID-19 pandemic but have almost certainly been exacerbated by the public health emergencies of the past 36 months (see;;;;;;

    The SCVMC is an important player in the vitally important socialized segment of the U.S. healthcare system, a segment in which all physical facilities are owned by a public entity and all employees are directly or indirectly employed by public entities. No one employed or associated with these facilities–besides private sector vendors–goes home with a profit or a dividend, just a salary.

    Publicly-owned and operated healthcare in the U.S. also prominently includes: a) the Military Health System (TRICARE) that serves 9.5 million active duty and career military retirees and their family members worldwide with the Walter Reed National Military Medical Center as its flagship (; ); b) the Veterans’ Administration health system that serves about 9 million non-career veterans nationwide (; c) the Indian Health Service that serves about 2.6 million American Indians and Alaska Natives ( aboutihs/); d) numerous state, county and municipal hospitals, clinics and health centers (including SCVMC); e) the public university health centers such as U.C. San Francisco ( and U.C. Los Angeles ( as well as clinics and health facilities located on the campuses of public universities, colleges and schools all over the country that serve millions.

    I general, socialized care in the U.S. has the highest levels of patient satisfaction, especially the Military Health System and the Veterans Administration (; This tells us that the public sector, with the commitment of adequate resources, can and does provide very high quality healthcare, care that is at least good enough for DC-based presidents, politicians and Supreme Court judges (

    What SCVMC obviously needs, as the reporting in the Spotlight and here in San Jose Inside strongly suggests, is sufficient resources that allow it to operate at its fullest capacity and thwart management’s attempts to skimp at the expense of staff and patients. Sufficient funding, secured through progressive taxation of income and wealth in one of the wealthiest counties in the country, would guarantee that SCVMC remains the vital institution in the County’s healthcare system, the foundation of the public health system on which hundreds of thousands rely (

  2. Above, see “On Jan 26, Valley Medical Center CEO Paul Lorenz received a scathing 136-page report accompanied by a three-page cover letter from San Francisco-based CMS manager Renae Hill…” Is the link in this supposed to point to a document? Can you perhaps put the 136-page report PDF in the “The reports:” section at the bottom of the article? Much thanx for this important reporting.

  3. I believe I see that the original letter’s information is within the response. This was not obvious but seems clear. enough.

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