Sutter Healths decision to pull out of the cutthroat hospital market in Californias Sonoma County has raised the hackles of local nurses, who vowed to challenge the controversial transaction every step of the way.
Last week, the Sacramento-based system announced plans to close 181-bed Sutter Medical Center of Santa Rosa and sell the centers Warrack campus to rival Santa Rosa Memorial Hospital by 2008. In its letter of intent, Sutter also agreed to shelve plans to build a new
$253 million hospital in the area and to sign a 10-year, noncompetition agreement with 365-bed Santa Rosa Memorial, owned by 14-hospital St. Joseph Health System, Orange, Calif.
Sutter has leased the hospital from the county since 1996, when it signed a 20-year contract requiring it to provide an array of medical services to the poor. The closure would leave the 150,000-resident city with two hospitals, Santa Rosa Memorial and 117-bed Kaiser Foundation Hospital.
Both the California Nurses Association and the Service Employees International Union United Healthcare Workers-West decried the planned closure, arguing that the loss of a third competitor in the market would lead to higher prices, a capacity crunch and a void in specialty and indigent care. The California Nurses Association and SEIU represent 450 and 500 workers at Sutters Santa Rosa hospital, respectively, most of whom will be out a job if they arent hired by Santa Rosa Memorial.
Its unconscionable for Sutter to be abandoning the community like this, said California Nurses Association spokesman Charles Idelson. Theres no way you can shoehorn all of the patients who are currently being served by two separate hospitals into just one. What that will mean is longer waits for care.
Santa Rosa Memorial, however, says it has agreed to assume all of Sutters charitable obligations to the county. It also plans to spend $70 million this year to add 80 beds to the Warrack campus, double the size of its emergency department, and expand parking in order to accommodate the increased patient load.
With the expansion of Memorials inpatient and emergency services, we will have the capacity and capability to meet the needs of the community for generations to come, said George Perez, president and chief executive officer of St. Josephs Sonoma County operations, which also includes 80-bed Petaluma (Calif.) Valley Hospital.
Hospital officials said they hope to complete the terms of the deal in 60 days to 90 days and seek approval from the county board of supervisors before the end of March. The transaction also would require approval from the state attorney general and other regulators.
The deal was inked after several months of closed-door negotiations between Sutter and St. Joseph, which concluded that Santa Rosa could not financially support both hospitals. Santa Rosa Memorial earned $16.2 million in 2005. But Sutter Medical Center, which has been grappling with rising costs and heightened competition from Kaiser Permanente, has racked up $72 million in losses since 1996, including a $6.8 million loss in 2005, said the hospitals spokesman, Mitch Proaps.
Weve struggled financially since our inception, largely attributable to our patient mix, which is highly disproportionately indigent, Proaps said. We have also seen a decline in inpatient volume, partly due to (the national trend toward) outpatient care but also because of a very, very strong and growing Kaiser Permanente presence.
Idelson, however, dismissed Sutter Healths claims of financial distress as a pretext for the closure, pointing out the 23-hospital, not-for-profit system is one of the wealthiest in the state. The company reported net income of $442 million in 2005 on $6.7 billion in revenueearnings that Sutter officials say are reinvested in the form of new services, facilities and technology. It spent $59 million on charity care in 2005.
The planned closure of Sutters facility marks the latest healthcare upheaval for Sonoma County, which over the past decade has seen several of its hospitals teeter on the verge of collapse.