Pondering Sonoma County’s health care future

<p>A small, Sutter-owned hospital with specialty physician investors plays a pivotal role in Sutter Health’s proposal for a new medical campus in Sonoma County, even as state legislators question its location alongside a larger hospital that handles all types of patients.</p><!-- Nothing to do. The paragraph has already been output --><p>The proposed for-profit hospital is one of many in the pipeline across the country that have become enmeshed in the larger national health care debate over whether hospitals owned by physicians are driving up medical costs.</p><p>Most attention has been focused on the proposed 70-bed hospital that would fulfill Sutter’s long-term contract for public health services with Sonoma County and replace Sutter Medical Center. But it would be part of a larger medical campus that includes a separate, 28-bed hospital with physicians as major investors, and a medical office building for physicians, both affiliated with Sacramento-based Sutter Health.</p><p>Even as local health officials convene the latest in a series of hearings Monday on Sutter’s proposal, Sutter is moving forward with plans to begin construction as early as next year.</p><p>Last week, a huge well-drilling rig was testing groundwater levels at the Wells Fargo Center for the Arts, at Highway 101 and Mark West Springs Road, where Sutter wants to assemble the key pieces of its proposed medical campus.</p><p>The county health department’s analysis of Sutter’s proposal determined that the Physicians Medical Center would be an important component of the complex because, without it, Sutter wouldn’t have enough beds to accommodate its predicted market share of patients by 2013.</p><p>“It is a key part that Sutter says it must have to make the hospital work,” said county Health Services Director Rita Scardaci.</p><p>Sutter officials disagree with the county’s assessment of future bed capacity, saying the 70-bed hospital will be enough to meet their predicted market share. They say their market share of patients will decrease, that length of hospital stays will decrease and that the state-mandated switch to a managed Medi-Cal system will also reduce usage of the new Sutter facility.</p><p>The 28-bed Physicians Medical Center would focus on inpatient surgeries and outpatient procedures including invasive cardiac surgery, which has been exclusively a service offered at rival Memorial Hospital. A group of doctors, most likely specialists who would refer their patients to the new center, would own 49 percent of the center and Sutter Health would own 51 percent.</p><p>Critics like Healdsburg District Hospital CEO Evan Rayner say the smaller hospitals in the county are concerned that they stand to lose much-needed revenues if Sutter is allowed to erect a magnet for patients and specialty physicians.</p><p>“One of the concerns of the business plan is that while the one facility could be losing money, the other facility next door is making money, at the potential expense of other hospitals, to absorb the loss and it could affect four or five hospitals in the region,” Rayner said. “The negative collateral financial impact on all of us could be significant in an already fragile environment, thus affecting health care access for the region.”</p><p>While the nearby Healdsburg hospital is staying afloat financially, the others — Palm Drive, Sonoma Valley and Petaluma Valley — are treading a fine line.</p><p>Sutter officials said that bringing in patient revenue from the doctors hospital will be crucial to Sutter’s ability to absorb losses from providing indigent care stipulated by its long-term contract with the county. If Sutter opens the new campus, that contract extends through 2021.</p><p>Over the past seven years, Sutter Health has provided more than $60 million in uncompensated or charity care, which are losses that have been absorbed by the Sacramento-based corporation and made up by revenues at other facilities.</p><p>This would be the second for-profit facility in the county. Last year, Sutter became a majority partner in the ambulatory outpatient surgery center at 1111 Sonoma Ave. in Santa Rosa, which offers some services similar to what’s planned at the new campus.</p><p>However, such physician-owned hospitals have come under scrutiny as the Obama administration crafts an overhaul of the nation’s health care system. At first, it seemed that overhaul would outlaw doctor-owned facilities because opponents have long objected that they create a conflict of interest in which physicians have financial interest in guiding patients to medical services that the doctors themselves own.</p><p>In several Sutter-related meetings, Dr. Kirk Pappas, a leader in the local physicians’ community, has raised questions about the relationship between a for-profit medical center owned by doctors and a nonprofit hospital next door. </p><p>“The incentives for using it are perverse when the center will generate physicians and hospital fees for those who have a financial interest in the building,” said Pappas, a Kaiser Permanente physician and former president of the Sonoma County Medical Association. “Will it create a poor persons’ hospitals and another physicians-owned hospital for those who can pay?”</p><p>Sutter CEO Mike Cohill said there is no attempt to create separate and unequal hospital facilities.</p><p>“Both hospitals will provide quality care for all patients,” Cohill said.</p><p>Because so many larger issues have become top priorities in the Obama administration’s health care proposals, it now appears restrictions on doctor-owned facilities may not be part of the final package after all, especially if support of physicians is needed for its passage in Congress.</p><p>Amador said Sutter has held off on discussing its Physicians Medical Center with area doctors because “we still need clarification about how the legislation will come down.” Sutter, she said, is proceeding as if doctors will be allowed to be investors in medical facilities.</p><p>“It remains in our proposal because we think we will have some decision on health care reform that will give us some clarity on physician-owned hospitals,” Amador said.</p><p>Still, a group of North Bay legislators, including Pat Wiggins, Noreen Evans, Jared Huffman and Wes Chesbro, in a recent letter to Attorney General Jerry Brown cited the Physicians Medical Center as an example of their concern about Sutter’s business practices.</p><p>The Physicians Medical Center would not be subject to the provisions of the Health Care Access Agreement under which Sutter now provides indigent and charity care to county residents. However, to make the proposal more appealing to the county, Sutter has said it is willing to provide the same percentage of uncompensated care at the doctor-owned facility as at the main hospital.</p><p>The county health department analysis of the doctors-owned center concluded: “This carries forward the current situation at the Chanate hospital under the HCAA, but it is a positive development toward better access to care that is not driven by the Health Care Access Agreement.”</p><p>Meanwhile, county planners are reviewing Sutter’s plans for the entire campus while the Office of Statewide Health Planning and Development is monitoring plans for compliance on the main hospital facility.</p><p>In order to comply with the state’s mandates on seismic safety requirements, all Sutter is obligated to do is break ground on the main hospital by the end of 2010.</p><p>County planner Ken Ellison said the department is in the midst of a draft environmental review that he hopes will be ready for a public hearing by late November.</p><p>Traffic consultants are running estimates of car trips generated by the hospital and engineers are contemplating the prospect of 9,500 truck loads delivering dirt that can be piled 10 to 15 feet high in order to create a seismologically safe base upon which to situate the main hospital, the doctor-owned center and a medical office building. That pile would be compacted, leveled and scraped so that the first floor level would ultimately be about five feet higher than now.</p><p>“We are proceeding as if they are all going to be built,” Ellison said. “If you build the buildings one after another, they don’t have to import as much dirt to the property.”</p>