[caption id="attachment_15881" align="alignleft" width="288" caption="Sooma Valley Hospital will spend about $35 million upgrading the facility to meet state earthquake safety standards, including the construction of a new emergency room and central utility plant. "][/caption]

SONOMA COUNTY – Plans to form a medical group-type partnership between Sonoma Valley Hospital and local physicians will materialize soon, according to officials on both sides, some expecting a deal as soon as the end of the year.

The future partners also discussed a mutual desire to construct a medical office building near the hospital.

“The industry has developed in such a way that if you don’t come together with a group you are going out of business, both on the physician side and for the hospital,” said Sonoma urologist Nevin Smith, who serves on the board of the 300-physician association, the Marin IPA.

Most of the city of Sonoma’s doctors are already connected through the Novato-based independent practice association, but Dr. Smith said hospital or foundation support provides better wages and insurer bargaining power.

“I expect the foundation will be formed sometime in the next few months, definitely before the end of the year,” Dr. Smith said.

Sonoma Valley officials have hinted at the possibility of launching a foundation or outpatient division with doctors for more than a year, but recently plans have progressed.

The models are seen as the most effective mechanism for recruiting doctors in a time when solo practice has become too expensive, and during the past 18 months most North Bay hospitals have jumped on the bandwagon. It is currently illegal for hospitals to employ doctors, so the groups are set up through contracting or an independent nonprofit.

In a Business Journal interview with the Marin IPA’s Chief Executive Officer Joel Criste in late September, the administrator confirmed the desire to collaborate with hospitals in their recruitment efforts but said he could not say anything more specific.

Sonoma Valley Hospital CEO Carl Gerlach has long discussed the possibility of a common structure for local doctors and the hospital, but he did not mention a timeline other than saying it was part of recent physician committee discussions.

“We have a natural connection with physicians, and many of us have come to the conclusion that building a medical foundation is necessary to recruiting and retaining new physicians in the area. We are still evaluating exactly which business model would make the most sense,” Mr. Gerlach said.

“The goal is simple but extremely complicated to attain.”

The groups also plan to construct a centralized medical office, which is an identified need in the hospital’s master plan. Currently, physicians are scattered in independent offices or small clusters within a mile of the facility.

“All of the offices around the hospital were set up in an era of individual practices, and we would love to have a common space that could provide better economies of scale,” said Sonoma internal medicine Dr. Clinton Lane, whose office is about a block from the hospital.

He and several others own the condo building on Perkins Street, and two years ago the group agreed to sell to the hospital if it wanted to rebuild a larger medical office.

“Everyone is in favor of doing a joint medical office with the hospital, we just don’t know when,” said co-owner of the building, family practice Dr. Rolf Olness.

Mr. Gerlach said SVH would likely find a third party to pay for construction of the building and then doctors and the hospital could lease space. The hospital is currently faced with funding a $35 million renovation to meet state earthquake safety standards. He mentioned the possibility of using an adjacent lease-with-the-option-to-buy property for the medical office, but officials are still keeping their options open.

“What I know for sure is that we want office space, and looking forward I am certain it will only improve how health care is provided in this town,” Mr. Gerlach said.