MGH and District Board Officials Sign Agreements

Court Enters Final Judgment

Today, Marin Superior Court Judge Michael Dufficy entered a Final Judgment based on a settlement agreement among the Marin Healthcare District, Marin General Hospital, Marin Community Health, Sutter Health, ending a lawsuit between Marin General Hospital and the Marin Healthcare District over the future of Marin General Hospital. The settlement will result in the transfer of control of the hospital, which is owned by the District and currently leased to Marin General Hospital, to the District by July 1, 2010 as well as a $30 million cash payment from Sutter Health to the District.

The Marin Healthcare District, a public body with five elected directors, owns the hospital’s facilities and land. In 1985, the District leased the hospital to Marin General Hospital, a non-profit corporation, for a 30-year term. Since that time, Marin General Hospital has operated the hospital. In 1996, through Marin Community Health, Marin General Hospital affiliated with Sutter Health, a not-for-profit health care system with 26 hospitals and eight medical foundations primarily in Northern California.

The settlement agreement and judgment follow many months of court-sanctioned negotiations and numerous public hearings. Officials from Marin General Hospital, Marin Community Health, Sutter Health and the Marin Healthcare District reached a tentative settlement in September and after public comment, Tuesday, the District approved the agreements that will end the litigation and will eventually transfer hospital operations to the District.

A transfer agreement specifies the terms of the transfer of hospital to the District some time between January 1, 2009 and July 1, 2010 - five to six years earlier than the original lease termination in 2015. Sutter Health will give a one-year notice of the actual transfer date to the District. At the transfer, the District will take over all operations of the hospital.

As part of the settlement, the District received a check for $250,000 as the first installment of up to $3 million in transition payments from Sutter Health to help the District begin planning for its new hospital.

Key elements of the agreements are:
  • The hospital organization and operations will be transferred to the District (following a 1 year notice by Sutter Health) as early as January 1, 2009, but no later than July 1, 2010.
  • All current hospital services will be maintained during the transition.
  • The District will assume full responsibility for costs associated with the State seismic requirements for any of its current property or new facilities, and may begin construction on the hospital grounds before the transfer date.
  • Sutter Health will complete nearly $15 million in major capital projects including acquiring a new CT scanner, replacement equipment for the cardiac catheterization laboratory and two new linear accelerators for cancer treatment.
  • Sutter Health will pay annual rent to the District, an additional $3 million for District transition planning costs, and a minimum of $30 million in cash at the end of the lease.
  • The District and Sutter Health are each free to develop their own respective hospitals, other medical services and affiliations under the terms of the settlement.
  • Employees and physicians will be free to decide where they want to work - at Marin General under the District operations, at another Sutter Health Affiliate, at other facilities, or at a combination of the above.
  • MGH employee pension benefits will be preserved.
“I am very pleased that we have reached these agreements,” reported John Severinghaus, M.D., Chair of the District Board, “This long battle has ended and the District will be taking back control of the hospital. We negotiated a very good settlement and the District Board members voting for this accord believe that this is truly the best thing we could do for the community. We can now focus on the task of building a new public medical center as it was originally intended to be.”

Sharon Jackson, Secretary of the District Board, who was on the negotiating committee with Severinghaus said, “We accomplished what many people thought would be impossible. We got virtually everything we hoped for and we will be getting back a quality hospital.” She added, “It’s time to move on and get those who support our hospital to unite and work together to build a new future.”

Frank Tavel, M.D., Chair of the Marin General Hospital Board of Directors, commented that the Board is gratified that a settlement has been reached “so that our patients, employees and physicians know that the litigation is settled and that future planning can begin. We’re committed to putting the past behind us and moving forward
with an orderly transition of the Hospital to the District so they can secure required public
support needed to build a new hospital.” He concluded, “The District will be getting back a greatly improved hospital. Sutter Health has expanded services, invested over $100 million into facilities and equipment, paid off $40 million of debt and has united the medical staff, employees, governance and management for quality patient care since 1996.”

Sutter Health President and CEO, Patrick Fry, stated that Sutter Health and its affiliates have served Marin County and the greater Bay Area for many years and will continue to do so. “We are strongly committed to working with community physicians in Marin County to provide healthcare facilities and services that will ensure their patients have access to high quality care,” said Fry. He added, “Novato Community Hospital is an outstanding example of the community support we enjoy in Marin and is a model of more to come.”

David Bradley, CEO of Marin Community Health and Marin General Hospital said, “We have worked diligently to build an excellent staff and quality inpatient and outpatient services in our community.” He underscored Fry’s comments and said “We are planning our future in Marin and we have a long-term commitment to Marin in concert with other Sutter Health affiliates.” Bradley emphasized, “While our plans are not final, Sutter Health remains committed to continuing to serve Marin as part of its health system.” Bradley added that all public and private health care providers in Marin County share a financial responsibility of providing care to uninsured patients needing emergency, trauma, maternity and psychiatric care. “We need a balanced county-wide planning process involving our own organization, the County, our colleagues at not-for-profit Kaiser Permanente and potential new entrants to the community - such as publicly-funded University of California San Francisco - to ensure that the cost of providing this care becomes a shared responsibility.”

Copies of the Settlement Agreement and the Transfer Agreement can be found on the District’s website at www.marinhealthcare.org

October 5, 2006