Last fall, St. Rose Hospital — which has the only emergency room in Hayward — faced imminent closure after declining patient volume and rising costs. A last-minute deal with Alameda Health System saved the hospital, and now it’s part of a statewide initiative to confront mental illness.
The California Department of Health Services has awarded $77 million in funding from Proposition 1, a ballot initiative that passed last year, to Alameda Health System to create 10 inpatient beds for medical detox and psychiatric care at San Leandro Hospital and two 20-bed units for geriatric psychiatric patients at St. Rose Hospital.
“We think this offers a solution to the destabilization of St. Rose Hospital over the years,” said Mark Fritzke, the chief operating officer of Alameda Health System. “It will help stabilize the finances of St. Rose over time, and it’ll help fill the hospital, if you will, with much-needed inpatient programs.”
Both San Leandro Hospital and St. Rose Hospital had joined Alameda Health System after facing growing deficits and declining patient volume – issues that threaten one in five California hospitals with closure, according to a report by the national health care management consultant firm Kaufman Hall. Preserving the hospitals under the umbrella of Alameda Health System, Fritzke said, helped the public health care provider maintain its mission to ensure health care access to the low-income patients in the East Bay.
The influx of $77 million in state funding, which comes as part of $3.3 billion from Prop. 1, has given new life to the once ailing hospitals. Voters narrowly passed the measure in the March 2024 election in an effort to revitalize the state’s mental health system by creating more than 5,000 residential treatment beds and more than 21,800 outpatient treatment slots for behavioral health services such as psychiatric care and drug addiction treatment.
“Mental health care is one of the major priorities not only in the East Bay, but for the community of Hayward,” Fritzke said. “Surveys of both Alameda County and Hayward communities have demonstrated that mental health is a priority. So we really feel confident that this would be a big contributor to not only the East Bay, but their community at large.”
Behavioral health services were identified as a “critical” need in a 2025 Alameda County Community Needs Assessment report. Surveys and analyses conducted by the Alameda County Public Health Department between 2022 and 2025 identified a brewing mental health crisis since the pandemic caused by job loss, isolation and the rising cost of living.
Respondents also said mental health service providers were often centralized in Oakland and San Francisco, adding that there is often a “long waiting list” to see a provider. These gaps in mental health care in the East Bay have pushed patients to emergency rooms or medical surge units in Alameda Health System hospitals, Fritzke said.
The California Department of Health Care Services said its investment in St. Rose and San Leandro Hospital fills a “gap” in the continuum of care for people with complex behavioral health needs, according to an agency spokesperson.
“By investing in facilities, services, and infrastructure throughout the state, we aim to improve access to behavioral health services and reduce mental health crises, ultimately creating a more comprehensive and sustainable system,” the department wrote.
Fritzke noted this is only the first round of BHCIP funding from the state. The next will open an additional $1.1 billion in funds for unmet needs across the state, which he said could bring more opportunities to expand mental health services across the East Bay.
“We haven’t gotten there yet, but we’re thinking about whether there are more mental health types of programs that we could also be considering for BHCIP funding,” Fritzke said.
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