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Once the construction of Sutter General is complete, the 74-year-old Memorial Hospital will be closed.
Once the construction of Sutter General is complete, the 74-year-old Memorial Hospital will be closed.

Healthcare Market Profile: Sacramento-Arcade-Roseville

Seismic changes: Construction, consolidation milestone for Sutter

By Linda Wilson
Posted: July 25, 2011 - 12:01 am ET

In June, workers placed the final steel beam on a 10-story, 242-bed hospital under construction in Sacramento, Calif. The event marked a milestone in a $724 million, multistructure project for Sutter Health.

The hospital, across the street from Sutter General Hospital, will house services for women and children. The two hospitals will be connected via a three-story structure, spanning a major street in Sacramento's Midtown neighborhood. The construction project also includes a substantial renovation of Sutter General, a new parking garage and a four-story outpatient building. The outpatient building houses doctor's offices, ambulatory surgery, outpatient imaging and the central power plant for the entire campus.

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Upgrades to Sutter General include new cardiovascular operating rooms and cath labs, which will share pre-procedure space; an expanded adult emergency department; a separate pediatric emergency department; and new laboratory and pharmacy spaces.

Once construction is complete, Sutter will shutter Memorial Hospital, a 74-year-old hospital three miles away. The overall goal is to consolidate the operations of Sutter General Hospital and Sutter Memorial Hospital in efficient, state-of-the-art facilities at a single location. The buildings also will meet California's updated seismic codes, which require that all hospitals be built to withstand a major earthquake.

The difficulty in bringing an old building up to the new seismic codes was one of a number of reasons why Sutter executives decided not to rebuild at Memorial. “It is in a residential area, so we could no longer fly a helicopter in. It is off the freeway quite a bit, so access to it from a vehicular method can be somewhat difficult and confusing,” says Tom Gagen, CEO of Sutter Medical Center—which includes all of Sutter's Midtown buildings.

Sutter Roseville Medical Center operates the system's Level 1 trauma center and a neonatal intensive-care unit, but most other tertiary services will be at Sutter Medical Center. Services for women and children will move to the Midtown location from Memorial, including a 54-bed neonatal intensive-care unit and 20-bed pediatric intensive-care unit. Cardiovascular procedures will move from Memorial to General.

The consolidation will lower costs because it will eliminate duplication of services between Sutter General and Memorial hospitals.

As a result of the consolidation, Sutter will downsize the total number of licensed beds from 600 to 499. Sutter will be able to function with fewer beds because the new hospital will have private rooms, compared with semi-private rooms at Memorial. Sutter General has a mix of private and semi-private rooms.

“Semi-private rooms are inefficient,” says Larry Maas, assistant administrator of the master site plan for Sutter Medical Center. At Memorial, it is not uncommon for one of the beds in a semi-private room to be empty because the other occupant has an infection or because of a mismatch in the patients' gender.

Sutter's Sacramento project, which has been in the works since the late 1990s, is part of a larger development project in the Midtown neighborhood. A live theater is in the midst of raising money to build on land Sutter donated to it.

Sutter executives also hope their medical campus will include a hotel and Ronald McDonald House. “The economy has caused all of that to slow down, but we still believe it will happen,” Maas says.

The new campus should help retain Sutter Health's position in the Sacramento-Arden-Arcade-Roseville metropolitan area. Sutter also operates three suburban hospitals: Sutter Roseville, Sutter Auburn Faith Hospital and Sutter Davis Hospital.

In a 2009 report, the California HealthCare Foundation calculated Sutter's market share at 29%, compared with 28% for Catholic Healthcare West, 23% for Kaiser Permanente and 17% for UC Davis Health System. The four health systems dominate the market and have “significant negotiating leverage over health plans,” the foundation said in its report. The market also has a relatively high occupancy rate—71%, compared with a statewide average of 59%.

As result of the market's stability, competition among the health systems “has been characterized by market observers as ‘healthy … but steady … not volatile' and ‘lacking (the) animosity' or ‘combative … gloves-off element' seen in some other communities,' ” the foundation notes in its report.

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