New Sutter hospital: additional problem or part of a solution?

A s Sonoma Valley and other district hospitals struggle for long-term viability, will the new 70-bed hospital and ambulatory surgery center proposed by Sutter Medical Center of Santa Rosa create new problems? Or, sharing a common set of challenges, could it be part of a possible long-term solution?
At a Dec. 21 meeting, the Sonoma County Board of Supervisors heard Sutter’s presentation of its proposal, as well as comments on its possible impact on local health care districts. “My appeal,” said Chairman of the Northern California Health Care Authority Bill Boerum, “was that [the supervisors] carefully consider the impact to the district hospitals. Then maybe they can create or dream up some terms that would ameliorate adverse impacts.”
Sutter’s new plan, as presented at the meeting, is a scaled-back version of a plan submitted in 2004, which called for a 118-bed hospital as part of the delivery of services required under the Health Care Access Agreement (HCAA) with the county and state earthquake requirements. Sutter Chief Executive Officer Mike Cohill, in a letter to the Sonoma County Board of Supervisors introducing the current plan, called the previous plan “economically infeasible.”
The new business plan describes a 70-bed acute care hospital to be owned and operated by Sutter. It will provide services as required by HCAA through 2021. The plan includes relocating inpatient acute care services currently provided at the Chanate campus and covered under the HCAA, including obstetrics, nursery care, a level III neonatal intensive care, medical and surgical, intensive care, emergency services, supporting ancillary services, and a full range of women’s reproductive health services.
The plan includes building the new hospital as part of a larger medical campus at the Wells Fargo Center for the Arts site, which would include a privately financed and owned medical office building and a 28-bed “physicians medical center,” which is expected to be a partnership among local physicians, Sutter Medical Foundation North Bay and Sutter Health providing surgical and cardiology services.
In his letter, Cohill presented Sutter’s rational for the new, “appropriate sized” hospital. He cited the adverse conditions often described by Sonoma Valley Hospital board members and strategic planning committee members, at various states in their process – population decline, Kaiser’s dominance, continued government cuts, rising health care costs, falling hospital admissions, and also escalating construction costs and the state-mandated seismic upgrades. “Kaiser has a 61 percent share of the market today,” his letter stated. “Hospital economics are built on the backs of commercially insured patients because they are the only patients that pay for the actual cost of care. It is simply unsustainable for the six non-Kaiser hospitals in Sonoma County to survive in light of a shrinking commercially insured population with rising health care costs and continued decreases in government programs. This gap is insurmountable.”
“Simply put,” said Robin Hagenstad, Sutter’s chief nursing officer, in a prepared statement, “we have significantly less patients today and anticipate continued decreased patient demand in the future. In spite of an aging population with increased health care needs, the need for inpatient beds is decreasing due to the adoption of new technology, as well as the use of minimally invasive surgical technologies, which allow many procedures to be performed on an outpatient basis or with a shorter hospitalization.”
Cohill urged the County of Sonoma to work together with Sutter “and be realistic about what is possible in today’s economy and changed conditions in delivering health care in Sonoma County.”
Boerum urged the supervisors to consider including the JPA in their deliberations, so they can better understand the impact of the Sutter proposal on district hospitals. He reflected afterward that the board must consider the proposal on its own merits, and that it’s up to the professionals in the districts to supply the board with pertinent information to help them make their decisions. “If there are no terms or conditions applied to the Sutter proposal, those unknown impacts are going to hurt the district hospitals. And if they go down, who picks up the care for the indigents and uninsured?”
Sonoma Valley Hospital Chief Financial Officer Jim McSweeney echoed the concern. “What I fear is both Sutter and Memorial trying to serve only the shrinking indemnity insurance market. The well insured market. That would leave the district hospitals with [the rest].”  Reaching for some positive outlook, he suggested that if Sonoma were able to realize its aspirations and form a virtual network with area hospitals, then possibly Sutter might be interested in joining. But so far, there’s been no indication of interest on their part. “It’s amazing to me that neither Memorial nor Sutter has really gone out to compete with Kaiser,” he said.
Whatever the supervisors decide, the district hospitals must move on their own positive course. “You can’t let Sutter’s defensive play knock us back on our heels,” Boerum said. “And that could happen. The way is for us to look at this closely, ask questions and to suggest terms the supes might embody in any agreement they might approve.”
Rita Scardaci, director of Sonoma County Public Health Services, announced three public meetings to discuss the issue further. Meetings will be held Jan. 13, from 3-5 pm, Jan. 14, from 8-10 a.m. and 3-5 p.m. at The Department of Health Services Rotunda Conference Room at 3313 Chanate Road, Santa Rosa. At these meetings, Sutter will again present the proposal and interested stakeholders will be able to comment.