Hospital competition cools off Hospital competition cools off (February 11, 2004)

The announcement last week that the operator of Sequoia Hospital, Catholic Healthcare West (CHW), has decided to rebuild or retrofit its Alameda de las Pulgas campus rather than building an entirely new structure near central Redwood City is a welcome sign that the race for hospital supremacy in the south county is beginning to cool off.

To meet state seismic code, the hospital must either retrofit its aging buildings by 2013 or build a new facility, at the Alameda site or at a new location. Until last week's announcement, Sequoia had been in what seemed to be frantic competition with the Palo Alto Medical Foundation to be the first to open a new hospital near central Redwood City. The Sutter Health-affiliated PAMF, which already operates a huge clinic in Palo Alto and another in Redwood Shores, surprised the San Mateo County medical community when it announced last spring that it planned to build a 100-bed hospital in San Carlos.

But after the PAMF announcement, it became clear that the board of the nonprofit entity that owns Sequoia, called Sequoia Health Services (five members from the elected Sequoia Healthcare District board and five from the private, nonprofit CHW), was uncertain how to meet the challenge. After a series of missteps in lining up a site in Redwood City, there apparently are few options now for Sequoia to quickly find and purchase a site and get a new hospital open before PAMF's announced completion date of 2008.

So now CHW, at least, has announced its intention to remain on the Alameda site in some form, although a final decision will have to come from the Sequoia Health Services board. In earlier studies, the board had passed over the options of rebuilding or remodeling on the site, saying it feared the medical staff would abandon the hospital if patient care and the ability to perform normal medical care were compromised during construction.

CHW's concern about losing staff was justified: Dr. Vincent Gaudiani and other members of Sequoia's renowned cardiology program have agreed to practice at PAMF when the new hospital opens. If the team, whose revenue currently represents more than 60 percent of Sequoia's business, is not replaced, it would mean a substantial financial loss for the hospital.

The critical questions for the Sequoia board and other health planners is whether another hospital is needed at all in the south county, especially when PAMF and Kaiser Permanente are moving rapidly to create new medical facilities with several hundred hospital beds in the area without any public financing. With such a heavy investment of private funds, the Sequoia Healthcare District board and CHW should be exceedingly cautious before any public funds are committed.

Time is flying, and even if Sequoia decides to stay at its Alameda site, it will be under heavy pressure to make a decision on whether to rebuild soon. For while a deadline of 2013 sounds as if it's a long way off, nine years is barely adequate time to plan and rebuild a hospital, even in the best of circumstances.

The next order of business for Sequoia and CHW is to conduct a market study of health-care needs in southern San Mateo County. By knowing what services will be needed after PAMF opens its doors in 2008, Sequoia officials can make an informed decision about how the hospital can serve the community in the years to come.

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