Report: Del Norte Healthcare District Meeting with Sutter Coast Hospital Board of Directors

The following report was approved by the Del Norte Healthcare District Board:



Inside the Hospital Board Room—With Unexpected Guests from Sutter Health

Sutter Health's conduct in Crescent City is key to understanding how it created a healthcare monopoly in northern California Last month, after offering to work with Sutter Coast Hospital to provide quality, affordable healthcare, Dr. Kevin Caldwell and I met with the hospital Board of Directors. The meeting was positive. When I asked the hospital Board who they represent--Sutter Health or our community--several Board members stated they represent the community. The Sutter Health executives on the Board--hospital CEO Mitch Hanna and regional CEO Grant Davies--did not answer the question. The question of representation is key to understanding the conflict which Sutter Health brought to our community, and to the creation of Sutter's monopoly. What is good for Sutter Health is not always good for communities. A brief history: In 2011, behind closed doors, Sutter Health tried to take ownership of Sutter Coast Hospital. Is transferring hospital ownership to Sutter Health good for our community? In 2013, in an effort to collect more fees from Medicare patients, Sutter Health tried to downsize Sutter Coast into a Critical Access facility. Are higher fees and fewer beds good for our community? Sutter Health claimed transfer of ownership and Critical Access were a financial necessity. One Sutter executive threatened to close the hospital if Sutter's plans were not enacted (I still have the audio recording and meeting record). But after Sutter Coast posted millions in profits, without transfer of ownership or Critical Access, Sutter's dire financial claims were proven false. Dr. Caldwell and I asked the hospital Board to reassure the community that transfer of ownership and Critical Access are off the table.  Now for the unexpected guests at our recent meeting: After the introductions of everyone present. I noticed a speaker phone in front of my chair, but no one had announced their presence. I asked if anyone was on the line. To my surprise, two attorneys from Sutter Health were listening in. I asked the Sutter Health attorneys who they represented--Sutter Health or Sutter Coast Hospital. The attorneys declined to answer, stating it was Sutter Health policy to not disclose the nature of their legal representation to private parties. But Dr. Caldwell and I are not "private parties." We are members of a California Special District, elected to represent our constituents, attending the meeting in an official capacity. I believe the Sutter attorneys did not want to discuss their legal representation because Sutter Health's attorneys played an important role in the creation of their healthcare monopoly. Normally, one attorney does not advise two parties during a change of property ownership. Nevertheless, during Sutter Health's statewide hospital merger known as "Regionalization," Sutter Health attorneys advised hospital Boards to transfer hospital ownership to Sutter Health. Sutter Coast Hospital (a separate corporation from Sutter Health) did not have its own independent lawyer. Without their own attorney, how could a community Board make an informed decision about hospital ownership? In 2012, I was a Board member of Sutter Coast Hospital. At that time, a Sutter Health attorney confirmed he represented Sutter Health--not Sutter Coast Hospital.  I was troubled by the fact that Sutter Health was using its executives and attorneys to convince the Sutter Coast Board to dissolve itself and transfer hospital ownership to Sutter Health's regional corporation. I thought Sutter Coast should have its own attorney, as described in the hospital bylaws. Nevertheless, Sutter Health was using its salaried attorney-executive to transfer ownership of Sutter Coast to Sutter Health.  It appears Sutter Health used its own attorneys to transfer ownership and control of its statewide affiliated hospitals to Sutter Health's regional corporations. Sutter Health's merger coincided with higher prices to consumers and vast increases in executive pay. Are higher prices and higher executive pay good for communities? Today, thanks to thousands of local residents who opposed Sutter's Regionalization plan, Sutter Coast remains the only locally owned and governed hospital in the Sutter Health system.  Feel free to forward this letter to interested parties, and post on social media. We will keep you up to date with future newsletters, and please visit our website at delnortehealthcare.org. Sincerely, Gregory J. Duncan, M.D. Chair, Del Norte Healthcare District