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Won't impact hospital project in Santa Rosa or Marin land purchases

[caption id="attachment_20384" align="alignleft" width="300" caption="Sutter officials were clear about one thing -- the construction of a new $284 million Sutter Medical Center of Santa Rosa will not be affected. (click to enlarge rendering)"][/caption]

NORTH BAY -- Sutter Health is looking to trim costs by $700 million across its expansive hospital system by 2014, a move that so far has unrealized impact across the North Bay but will require fiscal belt-buckling nonetheless.

The ambitious savings sought by the Sacramento-based health chain are a direct result of health care reform and rising health care costs, according to a letter sent to Sutter employees by Chief Executive Officer Pat Fry. He noted that Sutter has already saved $37 million by reducing infection rates that can lead to longer, more costly stays at the hospital.

"Under federal health care reform, the government will provide health coverage to 32 million uninsured Americans," Mr. Fry wrote in the February letter. "The government will help cover these new costs by paying health care providers less."

Sutter expects to lose $2 billion over the next 10 years in Medicare reimbursements. It also anticipates a threat to state reimbursement, as California faces a "massive debt – and it is very possible that Medi-Cal will also reduce its payments to doctors and hospitals," Mr. Fry said.

While the impact is not entirely known, Sutter officials were clear about one thing – the construction of a new, $284 million Sutter Medical Center of Santa Rosa will not be affected.

"The new hospital is on time and on course to open as planned in 2014," Sutter Santa Rosa spokeswoman Lisa Amador told the Business Journal.

Nor will the sought savings impact the purchase of approximately 11 of acres commercial real estate in San Rafael, which may house outpatient facilities at some point, said Kathie Graham, spokeswoman for Sutter in Marin County.

Both Ms. Amador and Ms. Graham said Sutter Marin and Santa Rosa, respectively, will continue already-established practices of delivering care in the most affordable, efficient manner.

Ms. Amador noted that Sutter Medical of Santa Rosa is the most efficient in the 24-hospital Sutter system for Medicare reimbursement. Its medical affordability initiative is minus 7 percent – meaning it gets 93 cents on the dollar for reimbursement from the federal government for patients covered by Medicare.  Other Sutter affiliates average minus 24 percent.

"We will need to continue to control our costs and to provide excellent, safe care, which prevents complication and increased costs of providing care," Ms. Amador said.

Medicare specifics for Marin weren't made available.

It's too soon to know what, if any, impact the system-wide savings will have on employees, Sutter Senior Spokesman Bill Gleason said.

"We're looking at everything. We have not achieved the total savings we'd like," Mr. Gleason said. "Reaching that goal is going to require creativity and sacrifice. Reductions in staff are a last resort. We certainly want to avoid them, but we have a really big challenge, and wages and benefits represent approximately 60 percent of all our expenses. We cannot rule it out but, again, it's a last resort."