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Coastal Voices: Board actions motivated by its survival instincts

As long-time members of this community our interest in Sutter Coast Hospital extends beyond our fiduciary responsibility as members of the Board of Directors. Preserving quality health care options for this rural region is critical to our well-being and that of our family, friends and neighbors.

On Thursday night, the Sutter Coast Board of Directors took thoughtful, decisive action designed to help ensure that Sutter Coast is financially viable and able to meet the health care needs of our community now and in the future. At the heart of this action is confirmation of Sutter Coast Hospital’s continued affiliation with Sutter Health as the best option to continue quality care for our community and retain our valued employees and physician foundation.

Our action was motivated by our passion for this hospital, but driven intellectually in large part by the data compiled by The Camden Group during our five-month strategic options study. The study was commissioned to provide us with objective data and analysis about the challenging health care environment and options and opportunities to overcome our challenges 

The Camden Group findings were reviewed, interpreted and evaluated by a 15-person Steering Committee comprised of community members who generously volunteered hours and hours of their time to serve as a sounding board and provide candid feedback. Several hundred members of the general public also provided input by responding to a community survey.

One of the most significant components of this process is community information and engagement. Due in large part to community feedback, we voted — with the support of Sutter Health leadership — to retain our local Board of Directors for the time being.

While regional board governance is common not only in the Sutter Health network but in other hospital networks, regionalization is not being pursued at this time. The steering committee has graciously agreed to continue providing input and feedback, and will provide a formal means for continued community involvement well into the future.

Regardless of governance, Sutter Coast has some immediate indisputable challenges that must be addressed:

The hospital has lost money for the last three years.  While recent cost-saving measures have helped to stem the size of the losses, it is projected the hospital will be operating at a loss of $10 million per year by the year 2018. 

Nationwide, the number of in-patients is declining in part because technology has allowed for more and more procedures to be done outside of hospitals.

The average number of patients in the hospital each day has steadily declined from an average of 25 in 2008 to 19 in 2012 (a 25 percent decrease).

Seventy percent of our patients are insured by Medicare or MediCal, which do not cover the full-cost of care.  The number of patients 65 and older in our community is projected to grow 12.5 percent through 2018.

Labor costs (wages and benefits for our valued employees) have increased by 21 percent in the past five years.

Opportunities to increase revenues are limited because of our rural location and demographics. 

We recognize that it is not enough to simply take steps to help Sutter Coast survive. Our hospital must be healthy enough to have sufficient resources to invest in services and technologies that are essential to retain and attract patients and physicians. 

The Board’s multi-pronged turn-around plan includes:

• Continued enhancements to already high quality care.

• Aggressive physician recruitment to retain and attract top talent.

• Increased efficiencies of hospital operations and cost reductions.

• Application for Critical Access designation, which allows for increased reimbursement for Medicare patients.  More than 65 percent of rural hospitals across the country are already classified as critical access.

Active communication with the community and involvement of the Steering Committee.

We recognize there has been significant misinformation and concern about what a Critical Access designation would and would not mean to Sutter Coast. The application process is at least eight to 12 months long. During that time we plan to better educate our physicians, employees, community leaders and patients about Critical Access, prepare our facility, and take steps to mitigate issues identified. 

In the meantime, it’s important for the public to know that Critical Access doesn’t reduce our services. Instead, it allows us to continue to provide health care services to the entire community and get sufficient reimbursement for the services we are providing patients covered by Medicare — our largest patient population.

It is clear that the status quo is not an option. It is also clear after review of the Camden Group Study that Sutter Coast — like most small rural hospitals — has limited viable options to regain solid financial footing.

We look forward to continuing to work with the hospital leadership, our medical staff, community leaders and the general public as we move forward with a plan to help ensure that Sutter Coast can meet the health care needs of this community now and into the future.

Ken Hall is chairman of the Sutter Coast Hospital Board of Directors, Nancy Ehorn  is vice-chair, and John Jacobson is secretary. 

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