Benefits of Sutter Health Affiliation
Q: What does SH give MGH in return?
A: Sutter Health guarantees that money is available to fund the approved operating and capital budgets of its affiliates, including MGH, which has joined the Sutter bond-financing group and adopted Sutter Health's financial policies.
This provides a financial 'safety net' that protects affiliates and ensures that they will continue to serve the health care needs of their communities. This means that regardless of local circumstances, the affiliate will continue to provide the best possible medical care.
Q: Does Marin General pay affiliate fees to SH?
A: Yes. The amounts vary each year. The rule of thumb is that most Sutter Health affiliates pay the same rate, a flat fee and 1.57 percent of expenses. The fees are used to provide affiliates with key systemwide services such as legal, strategic planning, risk management and facilities planning. The idea is that by using the entire system's financial clout, services will cost a lot less than if each hospital bought them separately.
Q: What is the Sutter Health Excess Cash Transfer program?
A: MGH and most other affiliates participate in Sutter Health's 'excess cash transfer' program. Both the Marin General Board of Directors and the Marin Healthcare District Board approved MGH's participation in the program in 1995.
The program works like this: affiliates retain up to 14 days of operating cash, keep certain other funds that are restricted for various reasons, and keep all donated money. Sutter Health could request and use any funds remaining. The funds would be used to pay for improvements throughout the system.
Q: What is the Sutter Health Obligated Group program?
A: The MGH Board and the Marin Healthcare District Board decided in 1995 that MGH would participate in the Sutter Health 'obligated group.' Wall Street views the 'obligated group', consisting of MGH and a majority of Sutter Health hospitals, as a single, large entity.
This means the obligated group provides the system with economic leverage that enhances its credit rating, reduces interest rates, and the costs to issue bonds. It also improves access to capital for the system and for hospitals like MGH because Sutter Health's assets back the group.
The strength of the obligated group approach is that it gives affiliates access to much needed capital at favorable interest rates. Without this, some affiliates that don't have strong balance sheets might be hard pressed to get money for major projects. Since Sutter Health and its affiliates obtain these benefits as a single system, the system is responsible for the debt.
In this sense, Sutter Health is really the sum of its parts. The obligation for the debt is spread over more than two dozen affiliates which minimizes the potential for a catastrophic event.
Q: What are the benefits of the Sutter Health System?
A: The benefits to MGH is the savings and benefits they receive for being part of the Sutter Health system. Besides the financial strength of Sutter Health, other benefits include savings in medical professional liability premiums and the purchasing of supplies and equipment, to name just a few.
Another important benefit is access to health plans and HMOs and the system's ability to help negotiate competitive reimbursement rates for services.
Q: How do patients benefit from the SH affiliation?
A: There are increased opportunities to participate in clinical research: MGH participates in many studies sponsored by the National Cancer Institute. This not only makes MGH competitive with universities, but also gives Marin County patients the opportunity to participate in research without leaving the County. Participation in some studies would not be possible if MGH was a single institution.
Improved patient care. Physicians and staff from throughout the system work together through a Clinical Leadership Council to share successful programs and to create new ones.