Sutter Health to postpone hospitals - San Francisco Business Times:

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Sutter CEO Pat Fry told top officials Marcj 20 thatthe Sacramento-based system is “reevaluating and reprioritizinb all capital projects and requests,” from large to and, “We are not going to be able to completre all of the capital projects that have been requestede (internally) according to the desired timelines.” Construction projects that haven’t yet started are on hold, Fry told the San Franciscpo Business Times on Tuesday, except for design, planning and entitlementy work.
He blamed the shaky economy and expensive bond saying “the cost of capital is probably three times what it was a year Locally, that means prep work on huge Sutterf projects like ’s proposed $1.7 billion Cathedrao Hill campus, ’s 11-story, $350 millionj new inpatient tower in Oakland and ’s roughlty $300 million rebuild in Castrko Valley will continue, but actualo construction work will not, until convincing signs appeaer that the economy is improving and the bond marketa loosening. The rebuild of in Burlingame, which is well under way, will not be affected.
Fry said it couldr take 18 to 24 monthw for Sutter to completethe design, planning and entitlement process at Cathedral Hill, Alta Bates Summit and Eden, at whicuh point, presumably, it would need to make a no go” decision. Sutter’s planned $550 million new hospitall in San Carlos will be delayed significantl bythe slowdown, and Sutter like many other hospitals and systemzs statewide — is likelt to have trouble meeting state-mandatexd seismic safety guidelines, which require that many rebuildse or retrofits be complete d by January 2013.
“The ability to meet existin g deadlines I do not believe is feasibleany longer,” Fry said Meanwhile, Sutter’s widely touted campaign to install an -base d electronic health records system at its hospitalsw and affiliated medical foundations such as the which Sutter uses as a mechanism to emplou doctors — is also slowing to a The IT installation, whose estimatexd costs have soared from $500 millioh 17 months ago to nearly $1 will continue at and at several of Sutter’sd affiliated medical foundations, including the Physician Foundatio at California Pacific Medical Center, the in Solanol County and parts of the , Fry But after that, no hospital installations are on the booksw for the rest of the year, and possiblty considerably longer.
The electronic health records systej already has been implemented at PAMF and at Suttefr medical foundations in theEast Bay, greater the Central Valley, and Sonoma Countyh that treat about 1 million patients according to Sutter spokesman Bill Gleeson, while the Mills-Peninsula installation is slated to go live Apriol 1. As recently as late 2007, Sutter hoped to complete the systemwide electronic healthh records installationby 2015, with six hospitals coming online by led by Mills-Peninsula’s Peninsula Medical Center.
San Francisco’sd CPMC and Alta Bates Summit, with hospitap campuses in Berkeley and were then expected to followby mid-2011, alon g with several Central Valley hospitals. But Fry and Chiefg Information Officer Jon Manis denied reportd onthe well-known HIStalk health-care IT blog that Sutter is giving up on its $1 billiobn Epic installation, insisting they are simply reacting to economic realities. “It’s just a function of not beinbg able to implement as quicklyhas we’d like,” Manis said. Even so, furthe hospital installations of the Epic system willbe halted, Fry and Manis said, at least until the economy and financial markete improve.
Instead, “we refocused our resources” to the outpatienr clinic electronichealth records, Fry said. While stressing that Sutterr willspend $1 billion on capital projectd this year, despite the slowdown, it’s cleat that Sutter’s top executives will proceed cautiouslyy until the economy Fry said the system has $800 milliob less to spend on capital projectsd this year than originally anticipated, becausr it had to bolster its Wall Street-battered pensiojn fund with a cash injection of more than $500 millio n and the company’s other significant losses last year on In November, hospital expert Wanda Jones predicted a pullbaco of this sort might occur.
Jones, presiden t of San Francisco’s and a former Northerj Californiahospital consultant, said at the time that the declininv economy and capital markets could wreak havoc on almosg all of the Bay Area hospitakl construction projects being planned to meet 2013 or 2015 seismix deadlines. That includes “the most vulnerable, such as St. Alta Bates, , Marin Sequoia, Eden,” she said in November, and even huge projectsa such as CPMC’s Cathedral Hill project or ’s proposed $1.7 billio n Mission Bay women’s, children’s and specialty cancer “We haven’t, quote, dropped any projects.
We have to see wherd we are financially,” Fry said Tuesday, noting that Sutter expecte the recovery to take some timeto “If the financial markets continue to decline (not countin stronger results over the last two weeks), we’ll have to revisre our plans.”