By Lisa Rapaport, The Sacramento Bee, Calif. Knight Ridder/Tribune Business News
May 12--Sutter Health will spend $200 million over the next five years to remodel Sutter General and build a new women's and children's hospital in midtown Sacramento, hospital officials said Friday.
The capital project is part of a 10-year regional expansion plan that includes additions to emergency and trauma services at Sutter Roseville Medical Center, new medical office buildings in Roseville and Lincoln, and the possibility of construction in Davis and Auburn.
The ambitious plans come at a time when the vast majority of hospitals in the state are losing money on patient care and struggling to maintain stable credit ratings.
Financial problems were a main force behind 23 hospital closures in the state between 1995 and 2000, according to a recent study by the University of California at Berkeley.
Sutter, however, has investment-grade bonds and saw substantial gains in its operating surplus last year.
For the year ended Dec. 31, investments and real estate sales helped Sutter achieve net income of $111 million on revenues of $3.5 billion.
'There's been a lot of down news of hospitals holding on for dear life, but now there's been a turnaround for us,' said Jim Gray, chair of the Sutter central region board of trustees. 'We have modest and conservative expectations of increased revenue and cost reduction to finance expansions.'
Sutter officials said their health system will also go to the bond market and the community to help fund expansions, which will ultimately include work on a midtown Sacramento business improvement district.
As part of the master growth plan, Sutter Memorial in east Sacramento will close once its services are moved to Sutter General and the new women's and children's facility. While hospital officials offered no date for closure, they said it is likely to come before 2008 to avoid major state-mandated earthquake safety renovations.
'We focused our first phase of planning on the regional expansion, and one of the next phases is to decide the fate of Memorial,' said Thomas Gagen, chief executive officer of Sutter Medical Center, Sacramento.
By fall, Sutter will develop capital plans for Auburn Faith Community Hospital, which will need retrofitting or a new facility, and the 48-bed Sutter Davis, which needs more room for outpatient services, Gagen said.
Sutter said it will spend about $156 million to build its new 156-bed women's and children's hospital at 29th and L Streets. The seven-story building will house maternity services, a neonatal intensive care unit and pediatric wards for neurosurgery, cardiac and cancer care.
At Sutter General, an additional $43 million will be spent to add a new pediatric emergency unit to the recently expanded ER and to accommodate cardiovascular and transplant services now offered at Sutter Memorial. The work will transform Sutter General into a 290-bed facility.
The health system will spend another $25 million in Placer County by the end of 2003.
Much of this will fund nine new treatment bays for Sutter Roseville's emergency department and eight additional beds for the intensive care unit.
Sutter will also add a 62,000-square-foot medical office to the Roseville campus and purchase land to erect a 12,000-square-foot medical office in Lincoln.
Sutter said it has yet to determine whether the region will gain jobs as a result of planned expansions. Much of the construction relocates existing services to new facilities.
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(c) 2001, The Sacramento Bee, Calif. Distributed by Knight Ridder/Tribune Business News.
