Marin General's Domanico: 'We defied conventional wisdom'

[caption id="attachment_35910" align="alignleft" width="176" caption="Lee Domanico"][/caption]

GREENBRAE -- One year removed from a protracted divorce with Sutter Health, officials at Marin General Hospital said the county’s largest health care facility is financially stable and poised to remain on the path of being a successful, independently run hospital.

That prospect wasn’t always considered likely.  Dire predictions once dominated the discussion, with skeptics doubting the Marin Healthcare District’s ability to recruit physicians, negotiate with HMOs or establish favorable lines of credit if it transferred away from Sutter.

But since retaking control of the Marin’s only trauma center last June, Marin General has announced a flurry a strategic partnerships, has received numerous large donations and has invested heavily in new technology while expanding services.

“Our most important challenge from a year ago was to build confidence in our ability to survive as a freestanding institution and demonstrate our leadership,” said Lee Domanico, chief executive officer of Marin Healthcare District. “I believe we have made progress on both-earning the confidence and beginning to demonstrate our competence.”

Mr. Domanico cited in particular the formation of the Prima Medical Foundation shortly after Sutter ceded control, in collaboration with the Prima Medical Group and the renamed Marin-Sonoma IPA.

As hospitals and health care providers nationwide race to recruit and retain a broad mix of physicians in response to health care reform, the new foundation was key to Marin General, Mr. Domanico said.

“It’s a key element of our future,” Mr. Domanico said of the foundation. “It’s by far the largest medical foundation in Marin, and so I think it bodes well not only for the future of the hospital but also the medical community as a whole.”

The foundation has 60-plus physicians, mostly in primary care, but Mr. Domanico anticipates both the number and the specialty areas to increase over time, as physicians increasingly look toward larger foundation models.

Another key partnership is with UCSF, which will work with Marin General to provide neurosurgeons. Between the Prima Medical Foundation, UCSF and clinics that the health care district formed relationships with, Marin General is poised to become a more integrated health system, driven in part but not solely by the federal health overhaul, according to Mr. Domanico.

Other collaborations are likely in the future-the hospital already has a purchasing relationship with Catholic Healthcare West and is in the process of exploring some form of partnership with Kaiser Permanente, for which the details are still being worked out, Mr. Domanico said.

Apart from forming strategic alliances-including with Sonoma Valley Hospital-Marin General has also remained financially sound. Operating revenue last year for the hospital is where the administration expected it to be, at around $280 million to $300 million, and the hospital is profitable. Mr. Domanico said.

“We’ve been able to maintain the revenue as compared to the prior year. We’re profitable. Maybe not as profitable, but we’re investing and we have expenses like Prima and we are investing more of our operating cash into Marin General,” Mr. Domanico said. About $4.6 million will go toward the medical foundation through 2012.

The district has about $30 million in cash on hand compared with $5 million at the time of the transfer, according to Mr. Domanico.

According to financial reports submitted to the state, net patient revenue in the first quarter of this year was $71 million, compared to $70.5 million the previous year

The district is also debt free, having paid off a line of credit to the county and another $22 million that was advanced to Marin General by numerous larger insurers including Blue Shield, Aetna, Cigna and others.

“I think in many ways, we have defied conventional wisdom, and that’s an example,” Mr. Domanico said, adding that it also recently paid its IT vendor.

And the hospital’s foundation has raised $5 million just this year – from nothing last year, when the district was consumed with the transfer, Mr. Domanico said.

While much has been accomplished over the year, much work remains ahead.

A lawsuit between Sutter and the health care district is currently in arbitration, with Marin General hoping to reclaim $120 million that Sutter transferred out of the hospital.

And like all hospitals, Marin General must make seismic upgrades – a project expected to cost around $400 million. However, the governor recently signed legislation that will permit the hospital to extend the original deadline of 2015 to 2021. The hospital likely won’t need the entire extension to complete renovations, but it will allow Marin General to do so at a “more appropriate pace,” Mr. Domanico said.

The health care district will likely be seeking a bond of about $250 million by late 2013 to help pay for construction.

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