Sutter says Recent Charges Misrepresent Record

In a statement issued Monday night to The Citizen, Sutter Health’s VP of Communications Bill Gleeson responded to the letter calling for an investigation of its business practices sent by various Bay Area lawmakers led by state Sen. Ellen Corbett to the office of the attorney general, by saying the health care provider has spent more than $5 billion on facilities in Northern California and has invested more than a billion dollars in “community benefit” over the past two years.

The statement provides rebuttals for three of the four hospitals detailed in the two-page letter sent last Friday–Santa Rosa Medical Center, St. Luke’s in San Francisco and Marin General Hospital–but fails to mention the current situation at San Leandro Hospital within the context of the charges. Here’s the complete statement from Sutter:

The letter misrepresents Sutter Health’s impressive track record of preserving and expanding access to care as well as our demonstrated service and commitment to low income patients and communities. For example: Sutter Health has invested over $5 billion in capital since 2000 to build and improve hospitals and clinics all over Northern California. Sutter Health serves more MediCal patients in Northern California than any other health care organization and has model charity care and discount policies in place. Our network invested more than one billion in community benefit – including charity care – in just the past two years. Sutter’s commitment to providing charity care has grown to nearly $2 million per week (in 2008).

Santa Rosa
Sutter Medical Center of Santa Rosa (SMCSR) is building a new integrated medical campus in Santa Rosa. The vision of the integrated medical campus is to bring physicians and services to one location for patient convenience as well as to make better coordinated use of inpatient and outpatient services.

The SMCSR campus will include a new seismically safe 70-bed SMCSR hospital that meets all the requirements of the Health Care Access Agreement (HCAA) with the County of Sonoma and anticipates including all the services currently offered by SMCSR except invasive cardiology. Invasive cardiology is not a service required under the HCAA and was not available at the County’s hospital in 1996 when Sutter Health assumed responsibility for the County Hospital.

Additionally the medical campus will also include a general acute care hospital – a.k.a. Physicians Medical Center (PMC) – owned by local physicians which will focus on inpatient and outpatient surgical procedures including invasive cardiology. The new SMCSR and PMC are designed to complement services and better utilize resources to promote the best quality of care for all patients. Both hospitals will be under Sutter Health’s Charity Care policy and accept uninsured, Medicare, Medi-Cal as well as privately insured patients.

Sutter Health’s Equity Cash Transfer Policy
The Equity Cash Transfer Policy is a part of Sutter Health’s capital finance strategy which is based on the concept of an Obligated Group. The Obligated Group is a contractual relationship that binds together all of Sutter Health’s affiliates (with the exception of philanthropic foundations) under a single common balance sheet, working together to provide services in the many communities served by our network.

The purpose of the Equity Cash Transfer Policy is to enable Sutter Health to take the greatest advantage of available capital resources for the benefit of the communities we serve, as well as our system and our affiliated entities. In Sutter Health, like so many other organizations, each affiliated organization (hospital or medical foundation) retains enough cash on hand to meet expenses. Those funds are used to cover salaries, benefits, supplies, and other expenses. This assures that our affiliates can manage operations with no disruption in service.

If affiliates have additional cash on hand after expenses – and there’s certainly no guarantee of that in today’s challenging environment – that additional cash is pooled with all other affiliates in a central account at Sutter Health. When we pool cash, it is called “Equity Transfer.” (Funds received from donors are excluded from equity transfers and stay dedicated to the affiliate.)

Sutter Health operates much like a family that supports each other in good times and bad. In good times, affiliates share a portion of their revenue in excess of expenses in order to help strengthen the network. In times of need, affiliates can count on the Sutter network to help ensure their services continue to be available to the local communities. Without this safety net, some Sutter affiliates would have been at risk of financial insolvency.

Our network invests whatever earnings it generates collectively. This ensures maximum return on our investments and allows us to borrow much-needed capital for equipment and facility improvements. In 2008 alone, we invested more than $1 billion in capital improvements and a half-billion dollars to fully-fund the Sutter Health Retirement Plan.

The California Attorney General reviewed the Equity Cash Transfer Policy in connection with its formal review of Sutter Health’s affiliation with St. Luke’s Hospital in San Francisco, consented to the proposed affiliation and registered no objection to the policy. Similarly, in accordance with Internal Revenue Service reporting provisions, equity transfers are disclosed on the IRS Form 990 Information Return (and posted on the Sutter Health Web site). The IRS has reviewed the Equity Cash Transfer Policy in connection with its audit activities, and likewise had no objection to the policy.

About the transition of Marin General Hospital to the Marin Healthcare District in June 2010
Sutter Health will be returning to the District a debt-free, high-quality hospital whose value we have substantially increased, along with millions of dollars in cash, accounts receivable and other assets, all in strict accordance with the precise terms of a court-sanctioned Settlement Agreement. All exact details are contained in the agreement which was approved by all the parties and presented by the District during its public hearings.