Hospital partners with Marin General
As expected during its meeting on Thursday night, the Sonoma Valley Health Care District formally signed a management affiliation agreement with the Marin Healthcare District, which primarily oversees Marin General Hospital.
The move, which was unanimously approved by the board, is expected to benefit both Sonoma Valley Hospital and Marin General by improving reimbursement rates from third-party payers and helping to bring a wider range of medical services to the Valley.
"I am more convinced than ever that this is workable and within the best interest of Sonoma Valley Hospital," said Dick Fogg, chair of the hospital's finance committee, who presented the proposal to the board. "We're seeking better health care at a lower cost with regional partnerships."
The smaller district hospital has long looked for a big brother, a larger health-care organization, to help stabilize costs. Sonoma Valley Hospital previously flirted with affiliations with Sutter Health and formed a joint powers agreement with five other district hospitals in 2007 to try to work collectively towards increasing reimbursement rates while sharing staff and services. The idea is power in numbers - the more doctors and patients are represented, the stronger the bargaining power with insurance companies and third party payers.
"We're surrounded by Kaisers, Sutters and Sisters (St. Josephs Health System). All of these are multiple hospital chains," Fogg said, explaining that those hospitals can get better costs in all areas of hospital management. "They can combine their toilet paper needs and everything."
Through the agreement, the two hospitals will be able to share information, staff and services. Marin General's administration will help Sonoma Valley find new streams of revenue and implement cost-saving techniques. Of particular interest to Sonoma Valley is working with Marin General to streamline the billing process.
"That kind of consultation is literally priceless. And we're getting it from our sister next door," Fogg said. "It provides a structure for the exploration, development and implementation of joint projects and programs deemed mutually beneficial."
So why would a larger district hospital seek to partner with the cash strapped local hospital? Fogg explained that since Marin General severed ties with Sutter Health last year, they have searched for other health providers to develop partnerships to keep the clout it established as a Sutter affiliate.
"Marin General would clearly like to have our referrals, but that's a doctor's decision, not the decision of anyone in this room," Fogg added.
Boardmember Madolyn Agrimonti asked if the hospital could encourage doctors to refer patients to Marin General physicians, but CEO Kelly Mather explained that practice is illegal. The idea is by working together, the local doctors would feel more comfortable sending patients to specialists at Marin General versus Napa or Santa Rosa.
Fogg also pointed out that Marin General and Sonoma Valley Hospital already share a large physician pool as both hospitals were original investors in the PRIMA Medical Group, a physicians group that practices in both counties. He also pointed out that 81 percent of Sonoma Valley Hospital patients are either on Medicare or Medi-Cal, two programs that are both facing budget cuts. That means saving cash will become increasingly important as the state and federal programs may again delay payments, causing uncertainty in the hospital's bottom line.
The one-year agreement includes a clause allowing either party to leave the agreement with 90 days notice. The board added that the hospital completely maintained its autonomy in the agreement, and is not giving Marin General power over the local hospital, but is instead creating an avenue for the two facilities to work together more seamlessly.
"You'll have all the control you had before," Mather assured the board.
The board members were all supportive of the proposal, which has been negotiated since the fall.
"This is not the proposal we started with, this is much better," said board member David Chambers.
Also during the meeting, the board and administration discussed the continued need for a parcel tax to keep the hospital afloat. The current parcel tax, at an annual rate of $195 a parcel, will sunset in 2013. The board discussed a need to get a new campaign organized early to develop broad community support.
"We live on our parcel tax ...," Fogg said.