Hospital planning committee sets strategic course

After months of mulling, the Sonoma Valley Health Care District Strategic Planning Committee has formulated a set of key principles to guide the district toward a viable future.
Sonoma Valley Hospital chief executive officer Carl Gerlach has often stated and the committee has long acknowledged that for small, district hospitals to survive, they must affiliate. The question is how? On Wednesday, Jan. 14, Strategic Planning Committee chair Richard Fogg submitted to the hospital district’s board of directors a set of key principles which Sonoma Valley Hospital chief financial officer Jim Mc Sweeney had drawn up, and Fogg had revised. At the committee meeting Jan. 21, members voted to accept what are described as “Organizing Principles for an Integrated Health Care Delivery System.”
The basic premise is this: “In order to be competitive with Kaiser, the dominant provider of health care in the North Bay, we must become part of an integrated health care delivery system.” Committee member Dr. J. Nevin Smith said, “The goal here is to stay in business – to have another alternative.”
The statement of key principles starts off with the basic goal “to provide quality health care and hospital services to all residents of the SVHCD first, and subsequently to a broader market area as appropriate.” The four components making up the system are physicians, hospitals, community health centers, and an insurance vehicle. All of these entities need to be willing to enter into long-term agreements “that align their financial incentives in a manner that rewards all for them for successfully competing with Kaiser.”
A key principle is that the committee must learn from the experience of the Health Plan of the Redwoods (HPR), a system that worked…until it failed. “We must seek an insurance partner that is willing to adhere to these organizing principles,” the document states. The “physician component” must already exist and that this component “must be governed by physicians and have equal standing with the other components.”
Supply and demand must be controlled so that eventually the hospitals will be able to allocate services among themselves. Resources should be allocated locally, and the system as a whole and any individual component within it “must take on financial risk only to the extent it is related to the services that unit actually provides.” In the long run, one of the hospitals involved must have the capacity to provide tertiary services.
The tenth principle states that, “Ultimately, the health care system will be successful only if it is accepted by the consumer as equal to, or better than Kaiser in cost and delivery of health care services.”
As for how to accomplish all this, Fogg said, “The role of this committee will be to leave it up to Dr. Smith, Jim McSweeney and Carl [Gerlach] – with the codicil that if you need any help, let us know.”