SUTTER HEALTH: FTC Appears Ready to Approve East Bay Merger
Following a three-month investigation, the FTC appears poised to approve the merger of Oakland-based Summit Medical Center and Berkeley's Alta Bates Medical Center as early as today or next week, the San Francisco Chronicle reports. The merger would make Sacramento-based Sutter Health the East Bay's biggest hospital chain. However, even if the merger wins federal approval, Attorney General Bill Lockyer may block it on grounds that Sutter would become too powerful, particularly in the face of Kaiser's plan to close its Oakland hospital, thereby diverting "thousands of patients to Summit." Supervisor Keith Carson noted, "You have to be concerned when you have an organization such as Sutter controlling 50% of patient days in Alameda County, 60% in Oakland and 70% in Berkeley." Meanwhile, Sutter executives claim that the hospitals, both of which operated in the red in 1998 and expect to face greater losses this year, will benefit from the merger, as it will erase administrative redundancies.
The key to winning either the approval or the disapproval of the FTC lies in how government attorneys size the East Bay hospital market, the Chronicle reports. If all 22 hospitals are included in the two-county area, Sutter would serve 28% of all patients -- an insufficient figure to warrant blocking the merger. However if "regulators define the market as the string of cities from Hercules to San Leandro, and east to the Lamorinda hills, Sutter's market share would be 44%" and would balloon to 58% if Kaiser's 13,042 patients head to Summit. Vehemently opposed to the merger is the Oakland-based Service Employees International Union Local 250, which represents 1,065 employees of both hospitals and has expressed fears of job cutting. According to the SEIU analysis, the merger would grant Sutter two-thirds of the market, leading SEIU President Sal Rosselli to conclude, "People won't have the ability to go to Sutter's competitors because there aren't any." However, Wanda Jones, an industry analyst with New Century Health Care in San Francisco, noted, "The market is very fluid and can't be demarcated by some artificial government boundary. There are still too many hospitals with too many empty beds, and more than enough competition to go around" (Abate, 6/25).