Sutter revives plan to build hospital

After stumbling in its attempt to exit public hospital services in Sonoma County, Sutter Health is back with a new plan for a 70-bed hospital at the same Wells Fargo Center site it had eyed for a 124-bed facility in 2006.

The Sacramento-based hospital corporation that runs Sutter Medical Center announced Thursday it is returning to Sonoma County supervisors with a revised plan for a smaller hospital. The proposal includes two new features -- a separate surgery and cardiology center, and a medical office building for 60 Sutter-affiliated physicians.

The new plan, estimated to cost $176 million, is a scaled-down version of a $257 million hospital that Sutter proposed in early 2006. Sutter dropped the plan in early 2007, citing mounting financial losses, and proposed transferring the county contract to provide medical services for the poor to its rival Memorial Hospital.

Sutter abandoned the transfer proposal last year after Sonoma County officials were unwilling to allow Sutter to opt out early from its contract. The new plan represents Sutter's acknowledgment that it had to find ways to meet obligations to provide publicly guaranteed health services under contract with county government.

"After evaluating numerous options to meet the (contract) and state earthquake requirements, Sutter Medical Center of Santa Rosa determined that building a right-sized hospital at the Wells Fargo site was the preferred option," said Sutter CEO Mike Cohill.

The new complex at Highway 101 and Mark West Springs Road would replace the former Community Hospital building on Chanate Road that fails to meet state earthquake requirements imposed following the Northridge quake of 1994. Sutter took over the facility in 1996, at the time pledging to either retrofit it or build a new hospital.

With only two sessions of the current Board of Supervisors remaining in early December, the decision on Sutter's new hospital plan will be up to the new board that takes office Jan. 5.

County health services director Rita Scardaci said discussion of the new plan will require a new round of meetings with medical community leaders and will necessitate more public hearings. Those sessions are unlikely until January at the earliest.

"The county will analyze the proposed plan to ensure that the new hospital will continue to provide all of the services required by the Health Care Access Agreement," Scardaci said.

She added that the health department will not have a recommendation for supervisors until next spring.

Sutter's new hospital plan opens up several avenues for increasing revenues. A Physicians Medical Center to be constructed next door to the hospital would have 28 beds and would focus on services such as invasive cardiology procedures, orthopedics and general surgery, Cohill said.

Neither the physicians' center nor the medical office building for doctors who are part of the Sutter Medical Foundation North Bay would be subject to terms of the contract with Sonoma County. The physicians' center, which would have a rooftop helicopter pad that would also serve the hospital's emergency rooms, would be operated by an independent partnership involving Sutter-affiliated doctors and Sutter Health.

The plan includes sale of the former Warrack Hospital, the facility at Summerfield Road and Hoen Avenue that Sutter purchased in 2001.

Cohill said the new plan was more likely to gain supervisors' approval because a 70-bed facility takes into account trends toward lower in-patient occupancy, shorter hospital stays and greater reliance on out-patient procedures that cost patients and insurers less money. Currently, the hospital is licensed for 244 beds, but it provides staff for only 125.

The addition of the medical offices and the Physicians Medical Center would "make the campus more economically viable," Cohill said.

Sutter officials reiterated their intention to comply with the county contract for public health services, such as indigent care and emergency services, that runs through 2016. They also said the new plan, along with $4 million annual funding of the doctors residency program, should reassure the public that Sutter Health is committed to a long-term presence in Sonoma County.

"Sutter Medical Center will make a $176 million investment in this community and move current operations from the aged Chanate campus to a modern medical center at the Wells Fargo site," Cohill said.

Sutter's new plan involves moving everything from the Chanate Road location to the 25-acre site that Sutter bought in 2005 from what was then the Luther Burbank Center for the Performing Arts, the forerunner of the Wells Fargo center. The hospital, surgery center and medical building would be on the northwest portion of the site, while the arts center would remain on the 27 acres that occupy the eastern portion, closer to Old Redwood Highway.

Services would include obstetrics, a Level III neonatal intensive care unit, intensive care, an emergency department and women's reproductive health services.

Sutter spokeswoman Lisa Amador said the company's new plans were undertaken long before rival Memorial Hospital announced two weeks ago that it was halting work on a $68 million expansion of emergency rooms and intensive care units. The hospital operated by St. Joseph Health Systems said the decision was prompted by destabilized credit markets, low Medi-Cal reimbursements and difficulty raising $10 million in donations.

Memorial Hospital officials said late Thursday that they were not yet familiar with details of Sutter's new plan, but they expected Sutter would encounter many of the same challenges in securing facility financing and inpatient reimbursement that Memorial faced.

"We hope this plan will enable Sutter to meet all its obligations under the Health Care Access Agreement," said Memorial Hospital spokeswoman Katy Hillenmeyer.

If county supervisors approve the new hospital plan next spring, Sutter officials said it could have a facility design ready by next fall and could submit details to state health officials by January 2010.

Construction would take two years and a new hospital could be open in fall of 2012, Sutter officials said.

You can reach Staff Writer Bleys Rose at 521-5431 or bleys.rose@pressdemocrat.com.SCALED-DOWN

PROPOSAL

Sutter had previously planned to build a 124-bed facility at a cost of $257 million.

Sutter's revised plan includes a 70-bed hospital at an estimated cost of $176 million with two added features:

A separate surgery and cardiology center

A medical office building for 60 Sutter-affiliated physicians.