Charting A Stable And Sustainable Future

Jul 9, 2014 | From the SVH CEO | 0 comments

We recently updated the Hospital’s strategic plan, which has proven to be a valuable tool for helping the board and administration set goals and measure our progress in realizing them.

While the Hospital’s emphasis has remained constant in recent years – focusing on facility improvement, financial stability and services offered, for the most part – the annual exercise has proven useful in expanding our thinking as we consider the role a district hospital must play to remain viable in the future. Especially as we consider that new and sustainable sources of revenue are needed to replace diminishing income from traditional inpatient services.

The challenges we faced in 2010 when we created our first strategic plan have only become more pressing:

  • Government rules and reimbursement practices continue to tighten and place pressure on Hospital revenues. Medicare and Medi-Cal reimbursements are below cost.
  • Commercial, fee-for-service margins continue to decline as insurers follow the government’s lead.

Both of these trends continue with no easing of regulatory requirements that could reduce Hospital expenses. The reality is, SVH is expected to provide the same level of service, or even more in some cases, for decreasing revenue. We don’t expect this to change significantly in the next few years.

The good news is we’re making excellent progress in adapting to the realities of health care today. I believe we’re well on our way toward not only creating a more stable Hospital, but also redesigning the community hospital model in ways that make it more sustainable in the future.

There are three reasons for my optimism, which are outlined in the strategic plan:

We now have a modern Hospital that is better equipped to serve the Sonoma Valley. Because of the generous support of our community and their willingness to support a parcel tax and make significant philanthropic contributions, we’ve been able to make critical upgrades to the facility, address deferred maintenance issues, and build a state-of-the-art Emergency Department and Surgery Center, for which we’re already seeing positive results. Since opening the new wing in February, we’re already seeing an increase in the number of ER visits and surgeries.

We continue to expand the IT infrastructure and plan additional upgrades to the facility. It’s clear that community and philanthropic support are required to sustain the Hospital financially, and we’re confident that the Hospital’s Foundation will continue to secure the philanthropic support needed for capital improvements and new equipment.

We have become more competitive in our region. We have good market share in a number of areas including Emergency, Medicine, Gynecology, Inpatient Rehabilitation/Skilled Nursing, Outpatient Rehabilitation, Home Health Care and Diagnostic, and we’re seeing growth and recovery in Orthopedics and Gastroenterology.    

Service quality has also improved. We’re now above the national average and in the highest quartile for patient satisfaction. This year, Consumer Reports recognized SVH as one of the 15 safest hospitals in the country. This performance reflects that fact that we have worked to improve the culture within the Hospital, and high staff satisfaction scores show we’re succeeding.

Part of sharpening our competitiveness involves capitalizing on the industry shift from inpatient to outpatient services. SVH inpatient cases decreased by almost nine percent between 2010 and 2013, in part due to certain procedures moving from inpatient to outpatient. Gross outpatient revenue increased by around 50 percent in that period, and outpatient surgical market share grew from 27 percent to 32 percent.

Finally, we are actively expanding some services outside of our immediate market. Our Home Health Care service, renamed Healing At Home, is now serving patients in Marin, Napa and Santa Rosa. We also are beginning to promote orthopedic and bariatric surgery beyond the Sonoma Valley.

We are better prepared to function in the health care environment that is emerging. The market is moving toward a capitation model which, once realized, holds the possibility of higher margins, improved cash flow and incentives for improving community health. We’re also seeing advances in medical treatment, technology and health care practices that eventually will help to offset current pressure on revenues.

As part of our strategic plan, we have created tighter integration with physician and hospital networks to reduce service costs and protect market share, such as our relationships with Prima Medical Group, Meritage Medical Network and Marin General Hospital.

We’re also placing greater emphasis on community health, using the Healing Hospital model, in part because of the implementation of capitation models. The community hospital that wishes to remain viable in the future needs to take a proactive role in improving the health of the community, and not just providing emergency and acute care.

We’re currently working with our local partners, such as the Sonoma Valley Health Roundtable, to support community health initiatives. We have an employee wellness program that has not only improved the health of hospital staff, with a corresponding reduction in our own health costs, but also provides a model that is drawing interest from employers in our community. This is important as we need to encourage local companies to offer their employees health plans that provide access to our services.

Given all that we’ve accomplished in recent years, along with our plan for the near-term, I believe that SVH is well-positioned to succeed in the evolving health care landscape that small hospitals find themselves in today.

The new strategic plan and copies of previous plans can be found on the hospital website at

In good health,


Kelly Mather
President and Chief Executive Officer
Sonoma Valley Hospital