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Sutter facility to remain open
by DAVID ABBOTT
Staff Writer
Against a backdrop of across-the-board reductions in health services throughout the county, Sutter Medical Center announced Tuesday that it had terminated negotiations with Santa Rosa Memorial Hospital and will maintain control of the Chanate Road facility.
“Sutter Medical Center of Santa Rosa (SMCSR) and Santa Rosa Memorial Hospital announced today the end of negotiations to complete a purchase agreement and the transfer of services to Memorial. SMCSR will remain open and explore options for growing the business/revenues and decreasing costs in order to reduce the unsustainable hospital losses,” wrote Sutter CEO Mike Cohill in a memo that was circulated to the physicians and employees of SMCSR.
In January 2007, Sutter announced that it intended to terminate services in Santa Rosa, several years ahead of the end of its contract. After more than a year, negotiations between Sutter and Memorial came to a fruitless end, leading to Cohill’s announcement.
Evan Rayner, CEO of the Healdsburg District Hospital, sees the decision as beneficial to the health care system for the county, and thinks it is “dynamic” regardless of who’s involved.
“Competition is good because it breeds better health care,” he said. “Sutter offers services that other providers cannot or will not offer, such as the resident program and their ob-gyn clinic, and other specialty programs.”
Rayner sees the four district hospitals joined together under the Joint Powers Agreement (JPA) continuing to move forward in a collaborative manner. Additionally, the Healdsburg hospital is operating in the black and has implemented many creative strategies as well as opening its eight-bed Wetzel Family ER, and the four-bed Patricia and Ray Chambers ICU.
During the course of negotiations with Memorial, Sutter was also having ongoing meetings with the county that were mandated by the Health Care Access Agreement (HCAA). When Sutter announced its intentions last year, there was a large outcry from the community, and county officials who said that the move would violate its contract to offer services until 2021.
“We’ve been confident all along that they were going to live up to their agreement,” said Fifth District Supervisor Mike Reilly. “Sutter is mainly a safety net for the indigent and the under-insured: a community health safety net. We feel that they will live up to their agreement to provide health services until 2021, and they have indicated that they will live up to that agreement.”
The facility has been part of the community for more than 130 years. Sutter’s decision to leave followed a disclosure that it had posted a $6.8 million loss in fiscal 2005 and a $4.5 million loss the previous year. The facility is also in need of improvements, including earthquake retrofitting, which will add to the cost of keeping it open.
Efren Carrillo, president of the board of the South West Health Clinic believes that Sutter’s decision will give local providers more time to redesign the structure of health care delivery.
“A lot of people were concerned because we couldn’t meet the demand for health services,” he said. “This moves us in a positive direction.”
But not everyone in the local health care community was impressed.
Lori Austin, interim CEO of Palm Drive District Hospital is unsure of the affect the announcement will have and thinks that Sutter has an obligation to the community to be forthright in proclaiming its intentions.
“The initial announcement [of the talks with Memorial] caused a lot of turmoil and decisions to be made in the local health care community,” she said. “They owe it to the medical community to explain what they’re doing and how much they’re in it, and the County needs to know what gaps need to be filled.”
Austin doesn’t like the ambiguity that Sutter displays, and thinks it’s unfair that when the economic situation looks bad — such as it does for many community hospitals — the corporate hospitals have the luxury to open and close at will.
Regardless of the effects on local health care, Sutter — along with all the other providers in the county save Kaiser — face an uphill battle in an increasingly competitive, yet under-funded endeavor.
In his memo, Cohill outlined some of the difficulties, and apologized to employees for the roller coaster ride the facility has taken over the past year.
“The six Sonoma County non-Kaiser hospitals serve a disproportionately high uninsured, indigent and Medi-Cal patient base while receiving reimbursement rates well below cost. In fact, the governor has just received approvals to amend the special session budget bill, which includes Medi-Cal program cuts of 10 percent that become effective July 1, 2008. These hospitals must make up for the gap by shifting unpaid costs to commercial health plans, which drives up health care costs for employers and consumers. However, Kaiser Permanente enjoys 61 percent of Sonoma County’s commercially-insured market and does not face the same issues because it is a member-only based organization that does not include in its mission treating uninsured and indigent patients other than for emergency treatment as required by State and Federal Law,” he wrote.
“I realize how difficult the last year has been for all of you as you waited for answers and information on the outcome of this transaction,” Cohill said. “I am truly sorry for the stress and discomfort it may have caused you and your family.”
“Sutter Medical Center of Santa Rosa (SMCSR) and Santa Rosa Memorial Hospital announced today the end of negotiations to complete a purchase agreement and the transfer of services to Memorial. SMCSR will remain open and explore options for growing the business/revenues and decreasing costs in order to reduce the unsustainable hospital losses,” wrote Sutter CEO Mike Cohill in a memo that was circulated to the physicians and employees of SMCSR.
In January 2007, Sutter announced that it intended to terminate services in Santa Rosa, several years ahead of the end of its contract. After more than a year, negotiations between Sutter and Memorial came to a fruitless end, leading to Cohill’s announcement.
Evan Rayner, CEO of the Healdsburg District Hospital, sees the decision as beneficial to the health care system for the county, and thinks it is “dynamic” regardless of who’s involved.
“Competition is good because it breeds better health care,” he said. “Sutter offers services that other providers cannot or will not offer, such as the resident program and their ob-gyn clinic, and other specialty programs.”
Rayner sees the four district hospitals joined together under the Joint Powers Agreement (JPA) continuing to move forward in a collaborative manner. Additionally, the Healdsburg hospital is operating in the black and has implemented many creative strategies as well as opening its eight-bed Wetzel Family ER, and the four-bed Patricia and Ray Chambers ICU.
During the course of negotiations with Memorial, Sutter was also having ongoing meetings with the county that were mandated by the Health Care Access Agreement (HCAA). When Sutter announced its intentions last year, there was a large outcry from the community, and county officials who said that the move would violate its contract to offer services until 2021.
“We’ve been confident all along that they were going to live up to their agreement,” said Fifth District Supervisor Mike Reilly. “Sutter is mainly a safety net for the indigent and the under-insured: a community health safety net. We feel that they will live up to their agreement to provide health services until 2021, and they have indicated that they will live up to that agreement.”
The facility has been part of the community for more than 130 years. Sutter’s decision to leave followed a disclosure that it had posted a $6.8 million loss in fiscal 2005 and a $4.5 million loss the previous year. The facility is also in need of improvements, including earthquake retrofitting, which will add to the cost of keeping it open.
Efren Carrillo, president of the board of the South West Health Clinic believes that Sutter’s decision will give local providers more time to redesign the structure of health care delivery.
“A lot of people were concerned because we couldn’t meet the demand for health services,” he said. “This moves us in a positive direction.”
But not everyone in the local health care community was impressed.
Lori Austin, interim CEO of Palm Drive District Hospital is unsure of the affect the announcement will have and thinks that Sutter has an obligation to the community to be forthright in proclaiming its intentions.
“The initial announcement [of the talks with Memorial] caused a lot of turmoil and decisions to be made in the local health care community,” she said. “They owe it to the medical community to explain what they’re doing and how much they’re in it, and the County needs to know what gaps need to be filled.”
Austin doesn’t like the ambiguity that Sutter displays, and thinks it’s unfair that when the economic situation looks bad — such as it does for many community hospitals — the corporate hospitals have the luxury to open and close at will.
Regardless of the effects on local health care, Sutter — along with all the other providers in the county save Kaiser — face an uphill battle in an increasingly competitive, yet under-funded endeavor.
In his memo, Cohill outlined some of the difficulties, and apologized to employees for the roller coaster ride the facility has taken over the past year.
“The six Sonoma County non-Kaiser hospitals serve a disproportionately high uninsured, indigent and Medi-Cal patient base while receiving reimbursement rates well below cost. In fact, the governor has just received approvals to amend the special session budget bill, which includes Medi-Cal program cuts of 10 percent that become effective July 1, 2008. These hospitals must make up for the gap by shifting unpaid costs to commercial health plans, which drives up health care costs for employers and consumers. However, Kaiser Permanente enjoys 61 percent of Sonoma County’s commercially-insured market and does not face the same issues because it is a member-only based organization that does not include in its mission treating uninsured and indigent patients other than for emergency treatment as required by State and Federal Law,” he wrote.
“I realize how difficult the last year has been for all of you as you waited for answers and information on the outcome of this transaction,” Cohill said. “I am truly sorry for the stress and discomfort it may have caused you and your family.”
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