JULY 8, 2004

In a front-page story, today’s Vallejo Times-Herald reports that a federal agency issued an “Immediate Jeopardy Termination Notice” to Sutter Solano Medical Center for violations of federal health laws that "posed an immediate and serious threat to the health and safety of patients.” The federal agency stated that if the hospital fails to correct the violations by Tuesday, it will face termination from Medicare and Medicaid funding. This morning, hospital administrative staff were observed removing all copies of the Vallejo Times-Herald from the newspaper vending machine located in front of the hospital. The hospital’s CEO conducted a series of employee forums at which she accused caregivers of leaking information to the press and implied that cooperating with investigators was strongly discouraged. Sadly, this response is symptomatic of the same misguided, Enron-like corporate culture that seeks to paper over Sutter’s problems with expensive media ads.

As Sutter Health’s damage-control advertising campaign enters its fifth week, an initial tally places its cost at more than a half million dollars. Sutter’s spending is expected to rise sharply with its recent airing of radio advertisements that seek to assure the public about its commitment to serve the uninsured. Ironically, Sutter’s funds would have been better spent actually providing medical services to some of California’s seven million uninsured residents, rather than attempting to deflect well-founded criticism of its substandard practices.

In this week’s full-page advertisements, Sutter discusses its "commitment to quality and safety" by describing its investments in technologies like "electronic intensive care units." While technology obviously serves a vital role in our nation’s health care system, Sutter’s advertisements fail to mention the company’s approach to its caregiver workforce – the tens of thousands of nurses, technologists, technicians and support staff who are responsible for delivering the 24-hour, hands-on care to patients. Why is Sutter silent on this issue? Here are the facts:

• Safe Staffing Levels:
  Sutter is the only major hospital system in Northern California that refuses to allow its frontline caregivers to have a real voice in determining safe staffing levels. Caregivers demanded such safe-staffing systems after hospitals, seeking to boost their profits, cut staff to dangerously low levels. For example, Sutter’s California Pacific Medical Center (CPMC) cut staffing by 23% during a recent five-year period, according to state data. Such cuts jeopardize patients’ safety and the quality of their care. A former director of one of the CPMC’s patient care units alleged in a lawsuit that as a result of staff cuts, "...patients were left unattended for prolonged periods of time, which resulted in the following: patients falling and breaking bones; incontinent patients remaining wet; patients not having their dressings changed; and patients not being bathed."



• Compliance with Staffing Laws:
  Sutter has subverted California’s new nurse-to-patient staffing law by failing to meet the minimum required staffing levels at all times while attempting to lay off nursing support staff.



• Caregiver Training:
  Unlike Kaiser Permanente and Catholic Healthcare West, Sutter has rejected a common-sense proposal to improve the skills and training of caregivers by creating a joint labor-management training fund.



• Workforce Retention:
  Quality patient care requires a stable, qualified workforce. Sadly, Sutter has refused to adopt workforce standards, such as adequate retirement for caregivers, that are aimed at attracting and retaining staff. Such standards have already been implemented by other hospital systems like Kaiser Permanente.

JULY 1, 2004

This week, Sutter Health's expensive public relations campaign continued with full-page advertisements in Northern California's major newspapers. According to the San Francisco Business Times, Sutter's "aggressive regional advertising campaign" is "designed to bolster its sagging image."

The Business Times recently published an analysis of Sutter's advertising blitz, in which Bob Gardner, president of the advertising firm Gardner Geary Coll Inc., offered insight into the strategy behind Sutter's campaign. According to Gardner, "The rationale for doing (this kind of image campaign) is that if you strictly rely on a PR firm or the media and you're in some degree of difficulty, you may not get your story out. It's the best way to get your message out without rebuttal by the other side."

CORRECTING THE RECORD

"After a decade of economic challenges, Sutter Health is financially healthy today."

Sutter is attempting to justify its recent, record-breaking profits by claiming that the company suffered financial hardship over the past decade. What's the truth? According to its own financial records, Sutter earned a profit during every one of the past ten years, except for 1994 when it recorded a small loss of $532,000. Altogether, "nonprofit" Sutter made nearly $1.2 billion in profits during the past decade. In 2003, Sutter was one of the most profitable hospital chains in the nation, earning an 8.2% profit margin that is nearly 400% higher than the national average. Observers believe that Sutter's skyrocketing prices, which stem from the company's monopoly-like power across Northern California, have contributed greatly to its booming profitability.

Sutter's "financial health" is "good news for the patients and communities we serve..."

When a company's "financial health" results from price-gouging consumers, then it's not such good news for the public. According to Blue Shield, Sutter's prices are 80% higher than the statewide average. Recently, the California Public Employees Retirement System (CalPERS) dropped 13 Sutter hospitals from its health plan because Sutter refused to lower its astronomical prices. CalPERS President Sean Harrigan calls Sutter Health "the poster child of corporate greed" in the California health care industry.

"...we reinvest our earnings into better health care."

Like hospital systems across California, Sutter must rebuild its hospitals to comply with California's earthquake safety law. At the same time, Sutter is diverting hundreds of millions of patient-care dollars to Wall Street. During the past two years, Sutter funneled $665 million into its investment portfolio, which totaled $1.8 billion at the end of 2003.

Sutter also uses its "earnings" to fund million-dollar executive salaries as well as the company's relentless corporate expansion. Through mergers and acquisitions, the company has more than doubled in size during the past decade, and soon will take over 122-bed San Leandro Hospital.

"As a not-for-profit organization, Sutter Health has no stockholders. Our assets are used to support our charitable health care mission."

While Sutter's parent corporation is legally a nonprofit, Sutter operates dozens of for-profit subsidiaries, including an insurance company in the Cayman Islands. Tax records reveal that Sutter has transferred millions of dollars from its nonprofit hospitals to its for-profit subsidiaries. Also, Sutter has spent thousands of patient-care dollars to oppose legislation (Assembly Bill 1629) that would require hospitals to provide improved transparency and accountability for their use of health care monies. Sadly, Sutter seems determined to stop common-sense reforms that would allow the public to better understand where Sutter's profits are going.

JUNE 23, 2004

Yesterday, Sutter Health published the third in its series of expensive, full-page advertisements in the San Francisco Chronicle, the Sacramento Bee and other papers. The advertisements are part of Sutter's damage-control campaign prompted by mounting criticism of the company.

Charity Care:

• Sutter provides far less charity care than other hospitals. In 2002, Sutter hospitals spent only 0.6% of their revenues on charity care, roughly half the level provided by the average California nonprofit hospital.
• Last month, the Santa Cruz County Civil Grand Jury issued a "bruising report" that "criticizes Sutter Health for not providing its share of service to the poor," according to the Santa Cruz Sentinel. (Santa Cruz Sentinel, 5/19/04)
• According to a report prepared by the San Francisco Department of Public Health, Sutter's California Pacific Medical Center (CPMC) had the worst charity-care record of any hospital in San Francisco. In 2002, "nonprofit" CPMC received $61 million in tax breaks and made $135 million in profits, yet spent only $1.5 million on charity care - less than 0.2% of CPMC's revenues.
• Sutter's miserable provision of care to the uninsured has a direct impact on taxpayer-funded hospitals. When Sutter doesn't do its fair share of care for the uninsured, it forces more uninsured patients into overburdened and underfunded county health systems.

Treatment of the Uninsured:

• Billing records reveal that Sutter has victimized uninsured patients by charging them far more than insured patients for the exact same services. In fact, Sutter hospitals charged uninsured patients two to three times more than insured patients.
• When uninsured patients can't pay their bills, Sutter sends their bills to collection agencies that use aggressive debt collection strategies against them. Tactics include harassment, seizing money from patients' bank accounts, placing liens on their homes, and suing them. According to court records, Sutter's Sacramento hospitals and their collection agencies sued nearly 300 uninsured and underinsured patients in 2003 alone.
• Last month, the San Francisco Board of Supervisors passed a unanimous resolution condemning Sutter's overcharging of uninsured patients and its aggressive debt collection practices.

Community Benefits:

• Sutter claims that it provides hundreds of millions of dollars of "community benefits." What Sutter doesn't say is that most of these supposed "community benefits" are monies that were not even expended by Sutter and result from an accounting sleight-of-hand that experts say is intended to artificially inflate hospitals' claims about their services to the public. Other of Sutter's "community benefits" are of questionable value. According to Mother Jones magazine, members of the Santa Cruz County Grand Jury "were outraged to find that a local hospital owned by Sutter Health claims that offering day-spa treatments was one of its community benefits." (Mother Jones, May/June '04)

JUNE 21, 2004

On June 15th, Sutter Health published the second in a series of full-page advertisements in the San Francisco Chronicle, Sacramento Bee, San Francisco Business Times and other newspapers. Why the sudden flurry of expensive advertising?

Sutter Health faces intense criticism over its exorbitant prices and skyrocketing profits. Recently, the California Public Employees Retirement System (CalPERS) announced it will eliminate 13 Sutter hospitals – including California Pacific Medical Center and St. Luke’s Hospital – from its Blue Shield HMO network because Sutter’s prices are 80% higher than the statewide average. CalPERS is a state agency that purchases health coverage for 1.2 million state employees, retirees and their families. High prices like Sutter’s are contributing to skyrocketing health insurance costs.

Along with soaring prices, Sutter faces sharp criticism due to its booming profits. In 2003, “nonprofit” Sutter earned nearly a half billion dollars in profit – a profit rate nearly four times higher than the average American hospital system. In 2002, Sutter’s California Pacific Medical Center made $135 million in profits and transferred $105 million to its Sacramento parent corporation. CPMC’s 20% profit margin was seven times higher than the statewide average.

Stung by the criticism, Sutter has begun a misleading and expensive public relations campaign. Each full-page advertisement costs more than $20,000 of precious health care monies that should be used to meet vital community health needs.

In its recent advertisement, Sutter claims that its average prices are “right in line with those of other Northern California hospitals.” Sutter cites statistics from a study to support this assertion. Here are the facts:

• The study cited by Sutter was funded and directed by Sutter, and produced by Sutter’s own high-priced consulting firm.
• Blue Shield’s analysis of the actual prices that Sutter charged its patients revealed that Sutter’s prices are 60% higher than the Northern California average.
• The Federal Trade Commission has subpoenaed Sutter documents as part of an ongoing anti-trust investigation. Officials are investigating whether Sutter’s monopoly-like hold over East Bay hospitals is having harmful effects on consumers. Concerns have intensified with Sutter’s recently announced takeover of San Leandro Hospital. After the takeover, Sutter will control nearly 60% of the hospital business in an area stretching from Richmond to Hayward. In San Francisco, Sutter controls nearly 50% of the city’s private hospital beds.