Sutter Health, the operator of both Eden Medical Center and San Leandro Hospital, moved $156 million in equity transfers from its former affiliate Marin General Hospital between 2002-2009, according to a report in the North Bay Business Journal.
The company says it uses a common accounting procedure to pool the financial resources of all its affiliates to help underperforming hospitals prosper from revenues at better performing facilities. “Yes, money has been pooled,” a Sutter spokeswoman told the North Bay Business Journal. “That’s part of the Sutter practice. The other thing about the pool is that monies are invested and this really becomes a safety net for some Sutter hospitals that have really struggled."
Control of Marin General Hospital was recently returned to its local health district, but not before it balked at the amount of transfers moving out of the hospital into Sutter's coffers. Officials in Marin believe Sutter plundered the hospital's finances to eventually build a competing facility in nearby San Rafael. The district also contends Sutter disproportionately singled out Marin's profits during the same time. The scheduled transfer of Marin General June 30 to the local district board was negotiated in 2006.
The question of equity transfers has lingered in the East Bay too, where Sutter says the financial stability of San Leandro Hospital is untenable as it builds a new facility in nearby Castro Valley. Supporters of keeping the hospital open have long pointed to Sutter's reluctance to use the pooled reserves to help San Leandro Hospital. Sutter has said the facility suffers from a poor patient base and loses up to $600,000-a-month.