DAVIES MEDICAL CENTER: Sutter Emerges As Leading Contender
"Sutter Health emerged last week as the top suitor for Davies Medical Center in San Francisco, a nationally renowned treatment center for AIDS that has been struggling financially," the Sacramento Business Journal reports. The two reportedly "entered exclusive negotiations on February 3" to talk about forming a partnership after "Catholic Healthcare West dropped out of the bidding." The deal would enhance Sacramento-based Sutter's Bay Area presence and complement "its $2.1 billion merger with the four-hospital California Healthcare System two years ago." Davies' "long-term survival" would be improved by the partnership. Davies "lost $4.8 million on net patient revenue of $38.9 million" in the first nine months of 1996. One Bay Area consultant said, "Partnership talks come as no surprise -- everybody is lining up and (Davies) is one of the few hospitals in the area without a formal affiliation."
Defining The Relationship
Neither side has defined Sutter's "partnership" role, nor has it been made clear if Sutter will manage Davies Medical Center or what type of "cash infusion" the center will require. "We are not seeking a buy-out or merger. We are looking for a partner," said Davies spokesperson Bishop Johnson. The Sacramento Business Journal reports that "Davies ... made the first move toward finding a 'partner' when it released a request for proposals last autumn." Along with Sutter and Catholic Healthcare West, "the San Francisco County and Santa Barbara-based Tenet Healthcare also" lined up to make bids. Sutter's bid "is in conjunction with one of its San Francisco affiliates, California Pacific Medical Center," and suggests "that Sutter might be seeking closer ties between Davies Medical Center and California Pacific." However, Davies' reference to a "partnership" may undermine Sutter's approach to "fold[ing] 'affiliated' hospitals into its systemwide network and financially 'obligated group,' thus spreading costs and accountability systemwide," the Sacramento Business Journal reports (Robertson, 2/16 issue).