Sutter Health Plans $3.5 Billion Systemwide Upgrade to Expand Facilities, Meet Seismic Requirements
Sutter Health officials yesterday said that the health care network will spend $3.5 billion over the next 15 years on renovations, expansions and seismic upgrades at medical facilities statewide, the Sacramento Bee reports. Sutter hopes that the renovation of the company's inpatient hospitals will help Sutter "keep pace" with expected increases in the state's population (Rapaport, Sacramento Bee, 4/5). Sutter predicts a population increase of one million state residents in the company's service area over the next 10 years. In addition, Sutter officials said that the company plans to spend about one-third of the $3.5 billion to improve facilities other than inpatient hospitals -- such as physician offices and diagnostic laboratories -- to modernize the health system's "approach to medicine." Sutter also will use some of the $3.5 billion to help the 26 hospitals in the company's network to meet state-mandated seismic standards, which require hospital owners to retrofit their facilities by 2008 or replace them by 2013. Sutter must have an operating margin of 3.5% over the next 15 years to cover the cost of the $3.5 billion renovation, company spokesperson Bill Gleeson said (Silber, Contra Costa Times, 4/5). Last year, Sutter reported an operating margin of 1% and a net operating income of $35 million on revenues of $3.5 billion (Sacramento Bee, 4/5). Sutter plans to reduce costs and negotiate increased reimbursements from private insurance companies and public health insurance programs, such as Medicare and Medi-Cal. Gleeson also said that Sutter plans to issue tax-exempt revenue bonds next month to cover about $215 million of the cost of the renovations (Rose, Santa Rosa Press Democrat, 4/5).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.