Sutter's plan for new hospital raises economic concerns

<p>Sutter Health's revived effort to build a new hospital in Santa Rosa will debut at a public hearing Dec. 22, but medical community leaders already are looking for details about the proposal's financial viability.</p><p>Sutter Medical Center chief Mike Cohill said Friday he is confident that planning now for an integrated medical complex at the Wells Fargo Arts Center site will result in a profitable hospital when it finally opens in 2012.</p><p>"The vision that we have for the Wells Fargo site involves a larger medical campus that provides integrated medical services, cardiology, surgery, lab services and imaging," Cohill said. "We think it will be attractive for patients and convenient for patients. The sum total of all of the enterprises there will create a financially viable medical center."</p><p>Cohill said the hospital's corporate parent is committing a $176 million "investment" toward building the complex, although it hasn't been determined exactly how the project will be funded.</p><p>There are others, however, who question whether the economic downturn is the best time to shop for financing or to promote medical services for people who can't afford them.</p><p>"I think it's not a good time to be building that hospital, period," said Bob Shirrell, a veteran Santa Rosa health care consultant.</p><p>Hospital usage and doctor visits are down, Shirrell said, and people are having trouble affording their medications, deductibles and co-pays at the doctor's office.</p><p>Sonoma County Supervisor Tim Smith, long the panel's expert on health care issues, said putting off planning, a process that will take at least 18 months, won't help resolve structural problems in medical services.</p><p>"I'm optimistic. We're not in an economic downturn forever," Smith said. "We need to look at the future and long-term health care."</p><p>Sonoma County officials decided Friday that concerns about the Sutter plan can't wait for changeover in early January of two of the five members on the Board of Supervisors.</p><p>County Health Director Rita Scardaci said a special session of the board will convene at 10 a.m. Dec. 22 to allow Cohill to explain Sutter's plans and provide time for public comment.</p><p>The Health Department's review of Sutter's plan could take three months, and more public hearings are likely when the agency makes recommendations to the board. She said public health officer Dr. Mary Maddux-Gonzalez will convene roundtable discussions of medical community leaders in January so they can weigh in on specific topics.</p><p>Similar Health Department roundtable discussions in 2007 turned out to be crucial in focusing debate on details of Sutter's earlier plan -- later opposed by supervisors -- to turn over public hospital services to its rival Memorial Hospital.</p><p>Sutter and the county are linked through a Health Care Access Agreement, which runs through 2021 and requires Sutter to offer services once provided by county-run Community Hospital, such as indigent hospital care and women's reproductive care.</p><p>Experts say a key component of Sutter's plan for a 70-bed hospital involves building a Physicians Medical Center next door. In general, insurance companies and federal government reimbursements are higher at stand-alone facilities, thus luring doctors to schedule their procedures there.</p><p>Cohill said putting the 60 physicians affiliated with Sutter Medical Foundation North Bay at a third building at the site would attract doctors who could use both the hospital and the surgery center.</p><p>"We have had informal discussions with the physicians," Cohill said. "We will only know whether they want to be a partner with Sutter after we develop further details on the medical center. Our conversations, to date, have been positive."</p><p>Smith said county officials will evaluate Sutter's proposal, although the independently operated surgery center is not part of the Health Care Access Agreement.</p><p>"If it's more economic to downsize (the hospital) and add a surgery center," Smith said, "the trick is to make sure it matches (Sutter's) obligation."</p><p>No matter how Sutter's proposal is structured, Shirrell said both Sutter and Memorial must contend with the growing dominance of Kaiser Permanente, the integrated hospital, physician and health plan that now claims 60 percent of the insured patients in the county.</p><p>In September 2010, Kaiser plans to open a 78-bed addition to its 117-bed hospital, positioning itself to be about two-thirds the size of Memorial. Shirrell said Kaiser's lower overhead costs and integrated system of everything from billing to referrals make it difficult for private, nonprofit medical providers like Sutter and Memorial to compete.</p><p>"It's just not a pretty picture. At times like that, you should keep your powder dry and not be expanding, particularly in a diminishing market," Shirrell said.</p><p>Cohill acknowledged Sutter faces heavy competition with Kaiser at a time when population growth has slowed, government reimbursements are declining and in-hospital operations are shifting toward out-patient procedures.</p><p>"There is no Band-Aid that will change the current dynamics for in-patient hospitals unless large employers take leadership in bringing more balance to the commercially insured market to increase the pool of insured patients for the six non-Kaiser hospitals," Cohill said.</p><p>Smith said he expects there will be a thorough public discussion of the viability of Sutter's plan in the coming weeks.</p><p>"We'll see what health care professionals think . . . to see if it fits," Smith said.</p><p>You can reach Staff Writer Bleys Rose at 521-5431 or bleys.rose@pressdemocrat.com and Staff Writer Clark Mason at 521-5214 or clark.mason</p><p>@pressdemocrat.com.</p>