Sutter advances expansion efforts despite revenue drop Friday, May 6, 2005 A drop in net income in 2004 for the Sacramento Sierra Region Sutter Health system has not deterred plans to remodel and expand Sutter Davis Hospital. “Sutter didn’t lose money last year, we just didn’t make what we were budgeted to make,” said Nancy Turner, Sutter Health spokesperson. “We were taking care of the same number of people but we were being reimbursed less.” The $17.2 million improvement plan approved by the Sutter Health Board in early April is currently under review at the state level, Turner said. The project, scheduled to begin in the next several months at the 2000 Sutter Place location, includes a remodeling of the existing Medical Office Building and construction of a second building to house 22 primary and specialty care physician offices, a blood draw station, drive-up pharmacy and a café for staff and patients. Seventy additional parking spaces would also be constructed. Approximately $1.2 billion for the Sacramento Sierra Region is set aside over the next 10 years to pay for hospital, outpatient and physician care center improvements along with new technology, which includes the money for the Davis project. “The earnings we generate are already being reinvested back into our communities at an unprecedented rate,” said Sarah Krevans, regional executive officer for Sutter Health, in an Apr. 22 press release. “We are in the midst of a very necessary capital expansion plan in several communities so that we can continue to offer the state-of-the-art medical care that our patients deserve.” Representatives saw the 2004 regional income fall below original projections, which covers hospitals, outpatient services and physician care centers in Auburn, Davis, Roseville and Sacramento. Day-to-day operations and investment income decreased from $123 million in 2003 to $97 million in 2004. However, the numbers from 2004 were still ahead of breaking even. Anthony Wright, executive director of Health Access California, a nonprofit organization that advocates for affordable health care, said reporting lower than expected earnings is not unusual due to the fluid nature of health care. Turner noted that the hospital saw a greater number of patients in 2004 who were covered by government programs like MediCal and Medicare, which only pay for 65 percent of a patient’s total costs. A more inclusive charity care program also led to the decrease. Expansions of the charity care program at Sutter were implemented in February 2004 to include a greater number of people falling under three categories: “catastrophic protection” for uninsured patients, discounted care for uninsured patients who earn 200 to 400 percent of the federal poverty level and free care to individuals and families at or below 200 percent of the federal poverty level. As a result, the number of cases requiring charity care increased from $22 million in 2003 to $43 million in 2004, a 91 percent jump, according to an Apr. 22 Sutter press release. The region also saw an unanticipated lower number of patients in the last quarter of the 2004 fiscal year. What Sutter and other hospitals define as charity care is an issue of contention with Wright, particularly regarding billing and collection practices with the uninsured. Wright described the potential for charity care to be abused. A hospital could define a charity care case as someone who receives treatment and is billed, but, because the person cannot afford the payments, must go to bankruptcy court. “We believe charity care is care provided without expectation to payment, and the hospital says we will provide this care as part of our mission as a nonprofit charitable institution,” Wright said. “That’s what they should do. Whether they do that or not is still an open question.” At Sutter, Turner defined charity care as care written off for the uninsured or underinsured when a patient cannot afford costs or the hospital does not receive full reimbursement for patients with MediCal or Medicare. “We do believe that our mission as a health-care institution is to make sure that anybody can get their health care needs met regardless of their ability to pay,” Turner said. “We would never turn away a patient because they didn’t have money to pay.” As of now, Turner said they are continuing to re-evaluate all of the programs in the Sacramento Sierra region. Sutter Health is a nonprofit organization with 31 hospitals in Northern California, headquartered in Sacramento. At the systemwide level, earnings targets were met, but the net income declined about 8 percent from 2003 to 2004. |