Sonoma Valley Hospital
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The New Community Hospital

September 1, 2015

The past several years have been challenging ones for small hospitals as disruptive trends in health care have forced community hospitals to rethink their role to remain viable. I believe we’ve made remarkable progress here in Sonoma, using our small size to nimbly adapt to these new realities. In the process, we’ve become much more responsive to our patients and community while creating greater financial stability.

I truly believe that Sonoma Valley Hospital has emerged from this difficult period not only stronger, but has become a model for a new breed of community hospital. I see four qualities that define this New Community Hospital model: fiscal responsiveness, improved quality of care, stronger partnerships, and success meeting local needs. Let’s look at each more closely.

Fiscal Responsiveness

As I mentioned, our small size is an advantage when it comes to financial management. Not only is it easier to streamline a small hospital, we can respond more quickly to ever-changing payer compensation.

The Affordable Care Act has dramatically changed our payer mix. Medi-Cal now represents over 20 percent of our volume, up from 7 percent less than two years ago, while our commercial payer mix has dropped from 24 to 20 percent.

It’s important to point out that Medicare patients continue to comprise around half of our payer mix, and CMS’s changing compensation policies have had a tremendous financial impact. The reality is that we’re essentially a governmental hospital with around 75 percent of our current revenue coming from government payers. The good news is that we’ve learned to adapt, and this discipline is also helping us in other areas.

A positive development is the new cost accounting system we implemented in the past year that is light years ahead of most other community hospitals, and even many larger ones. I know it sounds odd to become excited over cost accounting, but for us it’s a game-changer. The new system has provided us with greater insight into the component costs of patient care and improved accuracy in tracking revenue, helping us identify contribution margins for every service we offer. It’s also been highly valuable with insurer negotiations.

Improved Quality of Care

A defining characteristic of the New Community Hospital is the continuous pursuit of improved care by strengthening quality and safety procedures within the hospital, and enlisting staff to reduce defects in care delivery. Our efforts in recent years have placed SVH in the top tier nationally in many areas of quality, safety and patient satisfaction. This year, we also placed among the top 10 percent of hospitals nationally for patient satisfaction, a key contributor to quality care.

In part, this is due to the Culture of Health we’ve created. Culture is gaining momentum as a competitive advantage for hospitals and is an important differentiator of the New Community Hospital. A strong Culture of Health drives shared values, beliefs and attitudes throughout the organization to inspire and improve the health of patients, staff and the community.

This Culture of Health has positively impacted community perceptions toward the hospital, while increasing staff satisfaction and loyalty, and reducing staff turnover.

Stronger Partnerships

Our hospital could not succeed without a strong partnership with local physicians. We now have 40 physicians, including many specialists, and can meet most of our community’s medical needs right here in Sonoma. In the past year, we opened a timeshare office to draw more expertise, and which now houses specialists in orthopedics, spine, bariatrics, urology and ENT.

Because a community hospital cannot provide every service, strategic relationships are critical to the success of the New Community Hospital. In the past few years, we’ve continued to expand our relationships with regional providers and insurers. Recently, we’ve worked with our long-term partner, Marin General Hospital, to expand cardiac care in Sonoma. Our relationships with Western Health Advantage and Scan Health Care have increased community access to our services, notably with employers and seniors.

Meeting Local Needs

At SVH, we remain focused on serving the health needs of our district. It’s why building a new Emergency Department and Surgery Center was a big priority. It’s one that has paid off, as we’ve seen a steady increase in ED use since we opened the doors. It’s also why we continue to expand outpatient services with an eye to those important services lacking in our community.

The trends in health care today require us to go beyond acute care, the traditional role of community hospitals, which is why the New Community Hospital emphasizes wellness as well as healing. I’ve discussed Population Health in a recent blog, but it bears repeating. Population Health addresses the need to improve the health of a defined population while better managing the costs of that care. All payers, and notably CMS, increasingly decline to pay for hospital visits considered avoidable while linking quality with efficiency in care. It’s also a factor in the move to capitation.

But health care ultimately succeeds on the personal level, and in that context, Population Health clearly is the right thing to do, especially for a community hospital like ours with a somewhat geographically isolated population which greatly depends on us.

Looking Ahead

In a sense, the New Community Hospital increasingly is becoming a hospital without walls. Serving our community no longer means just bringing patients into our facility. It also requires that we go into their homes and places of employment. We must take responsibility for improving community health for the reasons I’ve given.

Ultimately, the New Community Hospital is an organization providing high quality patient care in a financially stable, up-to-date facility while leading community health and enjoying broad community support.

This is our vision and, increasingly, our reality here in the Sonoma Valley. We are tremendously excited by our recent progress and look forward to sharing news of some exciting new developments in the months ahead.

In good health.


Kelly Mather

President and Chief Executive Officer

Sonoma Valley Hospital



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