Sutter eyeing Stanislaus Surgical Hospital partnership [The Modesto Bee]

June 25--MODESTO -- Sacramento-based Sutter Health is in negotiations to acquire majority ownership of Stanislaus Surgical Hospital of Modesto.

In a joint statement Monday, the organizations said they're in exclusive talks that could lead to a partnership. Sutter is a nonprofit health system that's affiliated with Memorial Medical Center and the Sutter Gould Medical Foundation clinics in Stanislaus and San Joaquin counties.

Sutter could acquire a controlling interest in the privately owned Stanislaus Surgical Hospital LLC, which has a specialty hospital with a 23-bed inpatient unit at East Orangeburg Avenue and Oakdale Road, and other facilities in Modesto.

The statement says the two entities are in a due diligence process, and no agreements have been reached. The hospital has 150 full- and part-time employees and a medical staff of more than 200 surgeons.

Dr. Les Konkin, a surgeon and board chairman for Stanislaus Surgical LLC, said in the statement that the hospital has been charting a new direction for the past two years. "We welcome the opportunity for in-depth discussions with Sutter Health in the best interest of our patients, employees and surgeons," he said.

David Benn, president of Sutter Health Central Valley Region, said the discussions with Stanislaus Surgical "are in alignment with our health care vision for the future." He suggested that the hospital could be part of the network of facilities for patients who enroll in Sutter-sponsored health insurance plans offered in the fall.

To purchase a share of the business, laws would require the nonprofit Sutter to have majority ownership or management control of Stanislaus Surgical, and "that is what the parties have been discussing," said Catherine Larsen, Central Valley spokeswoman for Sutter.

A group of doctors established Stanislaus Surgical as a surgery center in 1984. It was licensed as a specialty care hospital in 2000, offering a personalized style of care and order-off-the-menu food serv-ice for patients.

Mike Lipomi served as chief executive officer for 21 years. The partnership also has wound management services at 1565 Cummins Drive, a surgery center and pain clinic at 1335 Coffee Road, and an imaging center at 1239 McHenry Ave.

Shares divvied

In 2006, TruMedical Partners of Texas said it had purchased 50 percent of the stock in Stanislaus Surgical. Today, the company known as RMI owns 38 percent of the hospital and other shares are owned by local investors, including physicians and business people, said J. Michael Gallagher, a Stanislaus Surgical board member.

Gallagher said an update on the negotiations is not expected for several months.

With the advent of health care reform and financial woes tied to the recession, the area's health care leaders have staked out new positions in the Northern San Joaquin Valley. Tenet Healthcare, the owner of Doctors Medical Center of Modesto and Doctors Hospital of Manteca, is buying the church-owned Emanuel Medical Center in Turlock for a reported $131 million.

In the fall, Sutter Gould said it would build a new medical office in Turlock and later announced the purchase of Eaton Medical Office in Tracy. Earlier this month, Sacramento-based Sutter Health unveiled details of managed-care health plans that it will offer in Stanislaus and San Joaquin counties.

Sutter-affiliated Memorial Medical Center, citing struggles with lower patient admissions and a decline in insurance payments, laid off 114 employees in January. The hospital gave pink slips to 39 business office employees in April as Sutter consolidated purchasing, billing and human resources functions at a Roseville center.

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