Role of Sutter Health
Sutter Health provides Marin General Hospital with the benefits of regional organization, while preserving local autonomy and decision-making regarding delivery of services.
Sutter Health is founded on the premise that local governance of delivery of services is fundamental to not-for-profit health care, which exists to provide community benefit.
Operating policy is made entirely at the local level; Sutter Health has approval rights over major matters, but does not dictate operating decisions, which are made locally; the Sutter system involves "checks and balances" which limit certain actions Sutter Health can take without the affiliates' approval; and the Sutter system requires multiple levels of review of major matters, ensuring consistent strategic decision making and the long-term viability of the local affiliate.
The benefits to Marin General Hospital of participating in a regional system include:
- Broad geographic coverage, making the hospital more attractive to health plans and employers seeking to contract with fewer, larger networks of providers;
- Development of "best practices," creating a means for employees and physicians to apply lessons learned in other communities, improving both quality of health care services and the manner in which services are delivered;
- Access to sophisticated state-of-the-art information technology, which is often too costly for individual hospitals to develop;
- Access to programs and services provided by other affiliates, helping Marin General in evaluating additions to or modifications of their own services;
- Economies of scale from centralized system support functions (e.g., risk management, legal services) which lowers costs;
- Lower costs for items and services purchased on a system wide basis, such as supplies and liability, property and other insurance; and
- Reduced capital costs created by pooling revenues and obtaining more favorable financing terms.
- Sutter Health ensures that operating funds are available to fund the approved operating and capital budgets of its affiliates like Marin General which have joined the Sutter bond-financing group and adopted Sutter's financial policies. This provides a financial "safety net" that protects affiliates from short-term downturns in operations or local market conditions-especially important to affiliates in earthquake-prone areas of Northern California, such as Marin County.
- Because the Sutter system provides a financial safety net to affiliates, the system as a whole is potentially at risk financially for decisions made by each affiliate. To protect each affiliate from unreasonable risk and to prevent one affiliate from adversely affecting others, the Sutter Health Board must approve certain major, non-routine decisions of the affiliates' Boards. Sutter Health has ultimate approval rights over certain matters, but it does not dictate operating policy or decisions of its local affiliates.
- In order to negotiate system-wide contracts with HMOs and insurers, the Sutter system must be truly integrated. One feature of integration is that the Sutter Health Board has direct or indirect approval rights over members of the local affiliates' Boards of Directors.