Sutter revamps plan to build new hospital

By GUY KOVNER
THE PRESS DEMOCRAT

Sutter Medical Center wants to expand the capacity of its proposed new hospital north of Santa Rosa to 82 beds, boosting the project’s cost to $284 million, officials said Monday.

It is dropping plans for a separate 28-bed physician-owned hospital at the same site, located off Highway 101 on Mark Springs Road.

County officials are reviewing Sutter’s latest proposal to replace its current 135-bed hospital on Chanate Road. It consolidates a plan to build a pair of smaller facilities: a 70-bed hospital owned by Sutter and a 28-bed hospital owned by its physicians.

Sutter’s 70-bed plan had generated wide-ranging debate in county government and health care circles on whether the facility was large enough to provide key medical services to the public.

The health care overhaul enacted in March prohibited physician-owned hospitals, prompting Sutter to combine the proposed facilities into an 82-bed hospital adjacent to the Wells Fargo Center for the Arts, said Mike Cohill, senior vice president of Sutter Health.

“We hope the county finds this plan responsive to their arguments,” Cohill said, referring to discussions between Sutter and county officials.

Rita Scardaci, county health services director, said the new proposal was “a step in the right direction.”

But Scardaci stopped short of saying that 82 beds are sufficient to meet the need for services to the county’s low-income and uninsured patients.

“We have to do more analysis to understand what they are proposing,” she said.

County health officials previously concluded that the 70-bed hospital could meet the need, but they called for more evaluation of the emergency department and medical-surgical unit capacity.

Sutter, a nonprofit health care organization, took over operation of county-owned Community Hospital in 1996 under a contract with the county that requires it to provide public medical services through 2016.

The aging, earthquake-vulnerable hospital, now called Sutter Medical Center, must be upgraded or replaced to meet state seismic safety standards.

County officials balked at Sutter’s proposal to transfer the medical services contract to rival Memorial Hospital in 2007, and Sutter submitted plans for a 70-bed facility at the Mark West Springs Road site in November 2008.

A 28-bed Physicians Medical Center and an 80,000-square-foot medical office building were included in the plan.

The new plan, submitted to the county on June 10, retains the office building but drops the Physicians Medical Center and expands the hospital.

In addition to 82 licensed hospital beds, the latest proposal includes 10 labor and delivery rooms and 24 universal care units, which can accommodate patients staying less than 24 hours.

It also allows for a future 27-bed expansion, which would give the hospital 109 licensed beds.

The new project will cost $284 million, or $108 million more than the 70-bed hospital, Sutter officials said.

Cohill said he was “very confident” the new plan would meet the requirements of the county health services contract.

Sutter Medical Center of Santa Rosa has reported an operating loss of more than $62 million over the five-year period of 2004-2008.

Asked how Sutter could afford to build a $284 million project, spokeswoman Lisa Amador said Sutter is a large organization and it “has an obligation … we intend to meet.”

“We do not intend to lose money on the new hospital,” she said.

County Supervisor Shirlee Zane said she hadn’t reviewed the details of Sutter’s new proposal, but the expansion to 82 beds is in “closer alignment” with the contract requirements.

If the county approves Sutter’s plan, the medical services contract will automatically be extended to 2021, Cohill said.

County health officials will meet with health care stakeholders to assess the 82-bed hospital plan in a public meeting in mid-July, Scardaci said.

The Department of Health Services and the Permit and Resource Management Department will submit a report to the Board of Supervisors on Aug. 3, including recommendations on whether the project’s environmental report should be approved and whether it meets requirements of the medical services contract.

If the supervisors approve the project on that date, Cohill said Sutter is prepared to begin site preparation in October and start construction by a state-imposed deadline of Dec. 31.