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Medicare cuts force Sutter Auburn Faith Hospital’s parent non-profit to look at $700 million in new cost savings

By: Gus Thomson, Journal Staff Writer
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Deep government reimbursement cuts – combined with demands that doctors and hospitals deliver more care for less money – are forcing Sutter Auburn Faith Hospital’s Health parent non-profit to look for about $700 million in new savings by 2014. Mitch Hanna, Sutter Auburn Faith Hospital chief executive officer, said that decisions on savings have yet to be made by the Sutter Health board but that it’s going to be a continuum of cost-saving practices already initiated over several years. “We’re looking at expenditures because, with the federal health care reform act and with Medicare funding being reduced, it’s going to impact Sutter Health by $2 billion in the next decade,” Hanna said. At the same time, Sutter Health is cognizant about concerns about healthcare being too expensive, he said. Implementation of new measures are expected to be announced in the first quarter of next year, Hanna said. One of the key components of a study performed by McKinsey & Co. was that Sutter Health should work more as a system, not as independent hospitals, Hanna said. “Some of the recommendations won’t impact us as much because we’ve already centralized things between Auburn and Roseville, like our business office,” he said. “There’s not a big impact on employees.” Sutter Auburn Faith employs about 600 people. Battling infections The focus at Sutter Auburn Faith Hospital has been on quality measures such as reducing the number of central line-associated bloodstream infections, Hanna said. Bloodstream infections can lead to sepsis – one of the leading causes of hospital deaths. Sutter Health has made it a priority throughout its system to reduce the infections. Hanna said each infection costs the hospital an additional $35,000 to $40,000 and it has been more than four years since the last bloodstream infection at Sutter Auburn Faith, he said. By improving quality, Sutter Health has reduced costs, Hanna said. The healthcare provider has estimated it has saved $37 million in costs through its reduction in bloodstream infections. Over all of the Sacramento-based Sutter Health’s system in Northern California, the bloodstream infection rates dropped by 76 percent. The hospital estimated efforts saved 52 lives and prevented 330 cases of infection from 2007 to late last year. The Sutter Health commitment to Auburn can be seen in the amount of construction planned or now taking place, Hanna said. There is $22 million in current or proposed construction, including $5 million that is being spent to renovate and privatize hospital rooms, he said. Plans are to renovate the hospital’s operating rooms in 2012, at a cost of $9 million, he said. “There have been a lot of positive changes,” Hanna said, adding that a new MRI unit will be ready for use next month. Another change in the last year was the closure of the hospital’s birthing unit. Hospital officials said at the time that it was closed in June because of a changing demographic that showed fewer babies will be born in Auburn. Sudden birth at hospital Auburn couple Ryan and Amanda Smith say they were the first family to have a baby born at the hospital since the changes. Amanda Smith was due to give birth at either Sierra Nevada Memorial Hospital or Sutter Roseville Medical Center but when contractions started a week early – and the Grass Valley hospital medical staff erroneously told her to stay home – she ended up giving birth in a wheelchair at the Auburn hospital’s emergency room. That was on Sept. 30 and the couple’s sons, Evan, is doing fine. Amanda Smith said Sutter Auburn Faith is a three-minute drive from their Atwood Road home compared with an estimated 25 or more to Roseville and 40 minutes to Grass Valley. While the Smiths said Friday they’re happy with the way things turned out, they’d still like to see a birthing center return one day to Auburn to help future parents. Sarah and Josh Demas were the last couple to have a baby born at the Auburn hospital before the birthing center closed. Sarah Demas said the Roseville hospital and staff seems more rushed than what she experienced in Auburn. “I’d like to see them try to open up a smaller area than they had,” Demas said. “They’ll have more of a demand because they’ll have a new generation having kids.”