In a move to reduce excess capacity, Sutter Health this fall may announce the closing of 353-bed Sutter Memorial Hospital in Sacramento, Calif.
Separately, Sacramento-based Sutter and Rancho Cordova, Calif.-based Foundation Health Corp. have signed a letter of intent to enter multiyear agreements in Northern California through the year 2000. The first year of the agreement is valued at $40 million.
The activity comes six months after Sutter's new president and chief executive officer, Van R. Johnson, took the helm following the resignation of longtime chief Patrick G. Hays, amid speculation that Sutter's expansion had strained the system (Nov. 14, 1994, p. 16). Hays now heads the national Blue Cross and Blue Shield Association.
The closure announcement may be part of the recommendations from a steering committee that has been studying capacity in Sutter's central region, said spokeswoman Nancy Turner.
The seven hospitals in the central region include one in Hawaii and another in Sacramento, 208-bed Sutter General, about a mile and a half away from Sutter Memorial, which was built in 1937.
Looking at the region's expected acute-care needs in 2000, "It looks like we need to decrease by about 500 beds," she said.
The steering committee's recommendations are expected in the fall. Final decisions will be made following three months of input from the community and board members throughout the region, Turner said.
In the proposed agreement with Foundation, Sutter's physicians, hospitals and outpatient facilities in 16 Northern California counties will serve 40,000 enrollees in Foundation's managed-care plans.
The agreements may be expanded and have options for renewal.
Sutter is a not-for-profit integrated system in Northern California that includes seven medical groups with 737 physicians, 17 hospitals and outpatient facilities in more than 40 communities.
Foundation, one of the largest publicly held managed-care companies, has operations in 17 states and the United Kingdom. It has more than 600,000 HMO enrollees in California.