Northern California's beleaguered Alta Bates Summit Medical Center has kicked its turnaround efforts into high gear-much to the chagrin of some local community advocates.
Just weeks after disclosing a projected $40 million annual loss, the two-hospital system has replaced its chief executive officer and announced drastic cost-cutting measures that include consolidating a number of services and possibly shuttering its inpatient psychiatric department.
Last week, Alta Bates Summit named Warren Kirk its new president and chief executive officer. He replaces Irwin Hansen, who resigned abruptly in August amid pressure from Sutter Health, the medical center's Sacramento-based parent company (Aug. 20, p. 11).
Kirk, 43, became chief administrative officer of Alta Bates Medical Center, Berkeley, in February 1999. He was appointed chief operating officer later that year when the 468-bed hospital merged with Summit Medical Center, a 420-bed facility in neighboring Oakland.
One of Kirk's first tasks as Alta Bates Summit's new chief will be to merge the two hospitals under a single operating license. While the two facilities share a senior management team, they operate under separate licenses. Kirk said licensing the hospitals as a single organization may allow the system to receive higher reimbursements from Medicare and insurers. But mainly, he said, it will create a more integrated corporate outlook.
"We're really trying to change the culture of the organization so that it's not so city-centric. We don't want to be a Berkeley hospital and an Oakland hospital; we want to be one dynamic enterprise that serves both areas," Kirk said.
One controversial aspect of this new corporate structure, however, involves closing Summit's smaller obstetrics unit and sending expectant mothers three miles away to the Alta Bates campus. Plans also call for consolidating oncology and minimally invasive surgery at Alta Bates, and cardiovascular surgery, cardiology and orthopedics at the Summit campus.
Officials further suggested that if the system doesn't receive better reimbursement rates within a few months, it may eliminate all 99 psychiatric beds at its Herrick campus in Berkeley.
"It's a disappointment but not a surprise. A lot of us feared that this was going to happen," said Beth Cappell, an advocate for the Oakland-based consumer group Health Access California.
During the hospitals' December 1999 merger-a move that brought a flurry of legal action and complaints from community leaders-officials promised residents that the system would continue to maintain obstetrics and other services at both facilities, she said.
"The consolidations show a real disrespect for the two communities-Berkeley and Oakland-each of which have different residents with different needs," Cappell said. "It's more than just the three miles between the hospitals; there's a huge cultural gulf between the college town of Berkeley and the diverse, residential town of Oakland."
Kirk, though, contended that Alta Bates Summit must consolidate services to ensure the future of both its hospitals.
"Reducing staff and renegotiating contracts (with insurers) is not going to be enough to stem the losses," he said.
So far this year, Alta Bates Summit has shuddered beneath a $25 million loss, which is expected to top $40 million by year-end. Sutter hired the Hunter Group, a Florida-based healthcare turnaround firm, to help the two-hospital system out of its financial hole. Two months later, the system said it would have to cut 300 jobs, or about 6% of its workforce, and reduce the amount of building space it owns by as much as 40%.