Review of state data shows widespread use of equity transfers
MARIN COUNTY - The Marin Healthcare District and many of its allies have accused Sutter Health of singling out Marin General Hospital for the transfer of tens millions of dollars out of the medical facility. But an examination of state data shows such transfers amounting to hundreds of millions of dollars are common for the Sacramento-based health giant and its affiliated hospitals in San Francisco and the North Bay.Money in, money out
Numbers in parenthesis indicate net transfers to Sutter Health and positive numbers indicate net transfers from Sutter Health to the individual hospitals.Equity transfers, California Pacific Medical Center, 2002--2008
2002: ($105,074,610)
2003: ($118,004,866)
2004: $6,675,664
2005: ($63,879,000)
2006: ($63,214,546)
2007: ($65,505,901)
2008: ($64,750,915)*
*Amended by Sutter to $72,300,207Equity transfers, Marin General, 2002--2008
2002: $2,845,014
2003: ($2,440,444)
2004: ($17,705,874)
2005: $2,517,267
2006: ($11,969,464)
2007: ($38,689,634)
2008: ($49,267,381)*
*Amended by Sutter to $20,300,000Equity transfers, Sutter Medical Center of Santa Rosa, 2002--2008
2002: $10,891,326
2003: $3,951,589
2004: $8,144,825
2005: $16,354,622
2006: $27,474,370
2007: $16,058,395
2008: $3,846,809Equity transfers, Novato Community Hosptial, 2002--2008
2002: $5,657,872
2003: $11,100,562
2004: ($1,755,945)*
2005: ($14,042,627)
2006: ($5,259,999)
2007: ($9,745,267)
2008: ($8,946,362)
*Listed as “Transfer to Affiliates.” Money was still transferred out of hospital, but not to parent company.Equity transfers, St. Luke’s Hospital, 2007--2008
2007: ($109,282)
2008: ($3,092,663)
Source: Office of Statewide Health and Planning Development. Audited Annual Financial Disclosure Reports, 2002 through 2008. See the instructions for interpretation.
Sutter has ardently defended what it describes as a routine practice among large hospital organizations of transferring funds, known as equity transfers, while critics in Marin have levied scathing rebukes of the practice.
“Yes, money has been pooled,” Sutter spokeswoman Kathie Graham said. “That’s part of the Sutter practice. The other thing about the pool is that monies are invested and this really becomes a safety net for some Sutter hospitals that have really struggled.”
But Jon Friedenberg, the Marin Healthcare District’s chief fund and business development officer, said the “money belongs to the patients at Marin General, not Sutter. We have repeatedly called on Sutter to return the money. We’re hoping they see their error.”
According to annual financial disclosure reports submitted to -- and audited by -- the Office of Statewide Health Planning and Development, the Business Journal found the following about Sutter-operated hospitals in the Bay Area:From 2002 to 2008, about $480 million was transferred out of California Pacific Medical Center.From 2002 to 2008, about $120 million was transferred out of Marin General. In 2009, an unaudited $36 million was transferred, which would bring the total to roughly $156 million.From 2002 to 2008, more than $86 million was transferred into Sutter Medical Center of Santa Rosa.From 2002 to 2008, about $55.1 million was transferred out of Novato Community Hospital.From 2007 -- when Sutter took control of St. Luke’s in San Francisco -- to 2008, about $3.2 million was transferred out of that hospital.
Reports before 2002 of the financial disclosures were not available in a digital format on the state health agency’s website.
Exactly where the money is transferred to is not clear, and Ms. Graham said it varies largely upon the financial status of its 26 statewide hospitals. Ms. Graham explained how Sutter equity transfers worked.
“Each Sutter affiliate retains enough cash on hand for 14 days to meet expenses. If they have additional cash, that money is then pooled with all of Sutter. And that’s what equity transfers are,” she said.
The numbers from the state health agency have the potential to cast doubt on arguments made on behalf of the Marin Healthcare District -- though never explicitly from the district itself -- that Sutter has treated Marin General as a personal ATM compared to other Sutter hospitals.
The dispute over the equity transfers has come to a head following the heath care district’s retaking control of Marin General, which occurred about three weeks ago. Mr. Friedenberg has previously told the Business Journal that the equity transfers are “indefensible and not in the best interest of the community.” He recently said the district will explore all options to get the money back.