Hospital upgrades drag on Sutter Health earnings

Sutter Health, the parent company of Sutter Medical Center of Santa Rosa, today said its 2011 net income dropped to $634 million from $878 million the previous year across the 24-hospital system, a decline of nearly 28 percent.

The Sacramento-based health system said much of its spending -- $2.5 billion worth -- is going toward seismic upgrades at hospitals across the state.

“Sutter Health’s ongoing commitments to Northern California communities require us to sustain strong financial performance,” said Sutter Health President and CEO Pat Fry. “We’re making significant investments in facilities to comply with California’s earthquake safety regulations and in bringing lifesaving technology to our doctors’ offices and hospitals. With California’s economy still struggling, we’re also serving growing numbers of people unable to pay for their health care."

According to Sutter, it has more seismic obligations than any other California health care organization. One of five replacement hospitals is the $284 million facility under construction north of Santa Rosa.

Other projects include Burlingame, Oakland, Castro Valley and Sacramento. Sutter is also hoping to move forward on a new hospital in San Francisco, which will total another $1.8 billion.

Operating revenue in 2011 was $9.1 billion, compared to $8.8 billion in 2010. Sutter also posted a loss of $14 million in investment income and changes in net unrealized gains and losses from investments classified as trading in 2011, compared to a gain of $236 million in 2010.

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