New Life At Sutter

<p>Air ducts hang from the skeletal ceiling of a second-story office space in northwest Santa Rosa.</p><p>The dusty concrete floor, insulated I-beams and gray drywall give no hint of Sutter Health's ambitious plans to redefine itself in Santa Rosa.</p><p>Much of this office building just north of Kohl's department store is about to be transformed, at a cost of $13 million, into a medical facility that will house obstetrics, urology, lab services, ambulatory surgery and other specialty health services.</p><p>It is a key strategy by the health-care giant to expand outpatient services in Sonoma County, even as officials of the Sacramento-based company scramble to find ways to stop the financial bleeding at Sutter Medical Center.</p><p>Cost-cutting measures that could result in a downsized medical center are expected to be announced this summer.</p><p>It's a different story just 2½ miles from the hospital, at the Landmark Executive Center where Sutter's medical foundation is converting office space into a home for 16 doctors and creating a new medical center on Santa Rosa's west side.</p><p>The strategy borrows from Kaiser Permanente, providing an administrative umbrella that frees doctors from management headaches. Unlike Kaiser, however, the Sutter model allows doctors to keep their patients and to continue practicing medicine as they have for years.</p><p>News of such an expansion may come as a surprise, if not a shock, for many who associate the Sutter name with the aging Chanate Road hospital that is responsible for providing care to the county's indigent.</p><p>It may come as an even bigger surprise given Sutter's failed attempt to transfer its county obligations to Santa Rosa Memorial Hospital.</p><p>"There are so many misunderstandings about who we are," said Chris Rogers, executive director of Sutter Medical Foundation North Bay.</p><p>Rogers said one of the foundation's goals is to become a "sustainable model for doctors" and to have a stabilizing effect on a troubled health-care environment that in some cases is pushing physicians out of the county, or keeping them from settling here.</p><p>Mike Cohill, CEO of both the foundation and the medical center, said that Sutter Health never intended to completely leave the county.</p><p>"Even when we were in discussion with Memorial, our intention was to stay in Sonoma County," he said.</p><p>Attracting physicians</p><p>Dr. Steve Wolf, a family practitioner with Mendocino Avenue Care Center, is among the doctors who will move into the newly remodeled first and second floors of 3883 Airway Drive.</p><p>Wolf came to Santa Rosa in 2002, a year after completing his residency program at the Carle Clinic in Urbana, Ill. The 40-year-old physician joined the medical group that contracts with the foundation -- Sutter Medical Group of the Redwoods -- in a union that has helped him "weather" difficult times for private practice doctors in Sonoma County.</p><p>"The economic times and medical environment would have been difficult as a individual starting out in a new practice," said Wolf.</p><p>The medical group has been around since the early 1990s but is only now entering a period of rapid growth. Its 51 doctors, primary and specialty care physicians, are at the heart of Sutter's future growth in the county.</p><p>The group, which had only 14 doctors when Wolf joined, is expected to grow to 90 by 2012, with half of that growth taking place within a year's time, according to foundation officials.</p><p>"In Sonoma County, a lot of (medical professionals) are trying to find ways of not losing money," said Wolf. "Sutter Medical Foundation North Bay, with all the growth and recruitment and the fact that we're providing a model that's independent, is getting a lot of attention."</p><p>Wolf described his relationship with Sutter Medical Foundation North Bay as a support lattice for a tree seedling.</p><p>For Dr. James Palleschi, a urologist whose practice has been part of the local community for the past 30 years, joining the Sutter medical group on April 1 became a financial imperative. Formerly Redwood Urology Medical Group, the practice is now called Sutter Doyle Park Urology.</p><p>Palleschi's group of three doctors provides general urology medical services for both adult and pediatric patients, with each physician having specialty expertise that includes male infertility, microsurgery, female urinary incontinence and sexual disfunction.</p><p>Declining government reimbursements for Medicare -- and their downward push on reimbursement rates from private insurance companies -- have squeezed both hospitals and private doctors at a time when health-care costs have skyrocketed.</p><p>Two years ago, the Sonoma County Medical Association conducted a survey among the county's physicians and found that while the county population grew by 15 percent between 1995 and 2005, the number of physicians increased by only 11 percent.</p><p>Palleschi, whose practice needs another urologist, said that even with a headhunter, recruiting young doctors to come to Sonoma County has become increasingly difficult, even with the recent drop in housing prices. As part of the agreement Palleschi and his partners negotiated with Sutter Medical Group, the Sutter Health foundation will assume the task of recruiting another doctor for his practice.</p><p>Headache relief</p><p>It's just one of the headaches Sutter Medical Foundation takes on when it teams up with a local medical practice.</p><p>When doctors join Sutter Medical Group as shareholders, the foundation purchases all their business assets, thereby taking over management of the practice, including its employees and its patients. The doctors essentially become employees of Sutter Medical Group, but continue to see their longtime clients through a professional services agreement with the foundation.</p><p>"It has many of the advantages of Kaiser in that it's an integrated delivery system with electronic health records and central support," said Don Ransom, provider network director for both the foundation and the medical group.</p><p>"But at the same time, it's community-based with practices and offices in the community and people being able to keep their doctors in the community," he said.</p><p>For the medical care that can't be provided by the core group of Sutter Medical Group doctors, the foundation contracts with 391 local primary care and specialty physicians, paying primary care doctors a monthly, per-member fee, while specialists get a fee-for-service rate.</p><p>Medical group doctors also no longer have to negotiate with insurance carriers.</p><p>"As a very small group, we have very little leverage with insurance companies," said Palleschi. "Sutter has far more leverage and certainly has the expertise and the time to do it, which allows us to focus on patient care."</p><p>St. Joseph may follow</p><p>St. Joseph Health System, which operates Santa Rosa Memorial Hospital, is also examining a similar relationship with local doctors through its St. Joseph Heritage Healthcare, a medical foundation in Orange County.</p><p>"The purpose is to develop new practice relationships in affiliation with Santa Rosa Memorial Hospital," said Memorial spokeswoman Katy Hillenmeyer.</p><p>In 2002, the administrative arm of Memorial Hospital's community programs, its doctors and its medical contracts, St. Joseph Health Foundation, folded after only four years in existence for financial reasons.</p><p>It's been almost four months since Sutter announced it had ended negotiations with Memorial Hospital. Sutter Health officials have made it clear they would have to examine business strategies that would reduce its financial losses, which they say have been in the tens of millions of dollars in recent years.</p><p>Cohill, interviewed at the medical center last week, said Sutter would continue to meet its obligation under its county contract, as well as its commitment to either build a new hospital or retrofit the existing facility.</p><p>That leaves little flexibility in trying to figure out how to reduce costs.</p><p>"We have to look at everything, from top to bottom of operations," said Cohill.</p><p>In the past two years, Sutter Medical Center's daily census has declined from 120 patients to 80, he said, adding that, ideally, the medical center should be "staffed like an 80-bed hospital should be staffed."</p><p>Meanwhile, at Landmark Executive Center, which Sutter has secured an option to buy, demolition is expected to begin this summer after the required building permits are pulled.</p><p>When finished, Dr. Steven Levenberg, president of Sutter Medical Group of the Redwoods, envisions a thriving campus where private doctors of different specialities can "rub shoulders on a day-to-day basis" and walk their patients to specialists who are just down the hall.</p><p>You can reach Staff Writer Martin Espinoza at 521-5213 or martin.espinoza@pressdemocrat.com.What: Outpatient medical center, operated by Sutter Medical Foundation North Bay</p><p>Cost: $13 million</p><p>Where: 3883 Airway Drive in Santa Rosa, north of Kohl's department store</p><p>Who: Sixteen doctors belonging to Sutter Medical Group of the Redwoods</p><p>Why: To provide obstetrics, urology, ambulatory surgery and other specialty health services, and allow doctors to keep their patients.</p>