Sutter and Doctors Groups Prosper

CRISIS IN NORCAL HEALTH SYSTEM HIGHLIGHTED BY SUTTER AND SLH 

SAN LEANDRO HOSPITALWhen it comes to framing the San Leandro Hospital situation as a populist issue–pitting regular folks at odds with a billion dollar corporations–cobbling doctors with nurses and residents against Sutter has always been uncomfortable. Kind of like feeling sorry for Lehman Brothers because they weren’t big enough to be saved by the Treasury. It’s the well-off hobnobbing with the common man in a fight against The Man.

A study reported in the health policy magazine, Health Affairs, says profligate insurance companies are not only to blame for the nation’s need for health reform, but hospital providers and doctor’s groups are also profitting from the situation.

Hospital fees rose over 10 percent from 1999-2005, according to the study as more facilities were consolidated among fewer corporations. The report, in addition, to stories in BusinessWeek and the Wall Street Journal, singles out Sutter Health, the provider which runs 24 hospitals in the state, including Eden Medical Center and San Leandro Hospital, and Catholic Healthcare West, which operates 39. Both are able to leverage higher rates from insurance companies because of their size. It also says Sutter negotiates with five hospitals within the U.C. system.

Conversely, Southern California hospital provider, Prime Health, is widely known and vilified for gobbling up bankrupt hospitals in new markets, quickly canceling existing contracts with insurance companies and renegotiating for steeper fees. With the District’s recent legal moves this week, the possibility of Prime re-entering the discussion about San Leandro Hospital is increased and may emerge as a possible endgame. Sort of like replacing a philandering husband with Tiger Woods.

According to BusinessWeek, a ploy to stifle supply at hospitals increased higher fees for hospitals. Sutter’s $300 million rebuild of Eden Medical Center features a notable reduction in beds than the original despite a need for a larger number of rooms in Alameda County. The report fleshes out what this means to provider’s bottom line.

Hospital-bed capacity declined and the physician workforce failed to grow enough to cover demand, a tightening that also enhanced provider market power, according to the report. State regulations also limited the ability of insurance companies to restrict customers’ access to doctors and hospitals.

To combat the rise of fewer, more powerful health providers, especially in Northern California, the report says many prominent doctors began to form medical groups starting in the mid-1990s. They now, according to the report, command “double-digit” fees further straining the system.

Many critics of the Eden Township Heatlhcare District’s attempts to fight Sutter over, among other things, the alleged unprofitability of San Leandro Hospital, say the facility loses unknown amounts of revenue from doctor’s groups who allegedly “outsource” procedures and diagnostic tests to clinics outside of the hospital. Former Eden Medical Center Chief of Staff Dr. Miles Adler and current Eden Township Healthcare District Director Dr. Vin Sawhney have both been accused of this action by supporters of Sutter.

While the community focuses on saving lives by keeping San Leandro Hospital open, others may be more keen on saving dollars and cents.

-STEVEN TAVARES

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