County of Santa Cruzsccounty01.co.santa-cruz.ca.us/bds/Govstream/BDSvData/... · 2008. 4. 8. · COUNTY ADMINISTRATIVE OFFICE. 701 OCEAN STREET, SUITE 520, SANTA CRUZ, CA 95060-4073

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County of Santa Cruz COUNTY ADMINISTRATIVE OFFICE

701 OCEAN STREET, SUITE 520, SANTA CRUZ, CA 95060-4073

(831) 454-2100 FAX: (831) 454-3420 TDD: (831) 454-2123

SUSAN MAURIELLO, J.D., COUNTY ADMINISTRATIVE OFFICER

April 1, 2008 AGENDA: April 8, 2008

BOARD OF SUPERVISORS County of Santa Cruz 701 Ocean Street Santa Cruz, California 95060

TEFRA HEARING FOR SUTTER HEALTH

Dear Members of the Board:

The purpose of this letter is to set a TEFRA hearing for April 29, 2008 as requested by Sutter Health and the California Statewide Communities Development Authority (California Communities). California Communities is a joint powers authority of which the County is a mem ber. The material which follows provides background on California Communities, TEFRA hearings and the applications of Sutter Health to California Communities for the issuance of tax exempt debt.

Sutter Health has proposed a tax exempt bond issue to finance various capital projects within the unincorporated area and the cities of Watsonville and Santa Cruz. California Communities has requested your Board’s assistance in facilitating the bond issue by:

1. setting what is known as a “TEFRA” public hearing for April 29, 2008 for the proposed financing; and

2. at the conclusion of the public hearing adopting a resolution, which approves the issuance of tax exempt debt by California Communities, for the proposed financing.

It should be noted that the proposed hearing is for facilities located in the unincorporated area and the cities of Santa Cruz and Watsonville. The city managers of both cities have sent a letter to this office requesting that the County hold the TEFRA hearing for the projects located in their

T SERVING THE COMMUNITY - WORKING FOR THE FUTURE

0050

BOARD OF SUPERVISORS TEFRA HEARING FOR SUTTER HEALTH

AGENDA: April 8, 2008 Page 2

cities (Attachment 1). Bond counsel for Sutter Health has indicated that for the purposes of federal tax law the fact that some of the facilities to be financed are in the cities does not matter because the facilities are also located in the County. Based on the request of the cities and the assurances of Sutter’s Bond Counsel, we are recommending that the County’s hearing notice and the hearing include the city projects as well as the projects located in the unincorporated area.

California Statewide Communities Development Authority (California Communities)

The California Statewide Communities Development Authority is a joint powers authority which is jointly sponsored by the California State Association of Counties and California League of Cities. One of the primary purposes of California Communities is to serve as a conduit issuer for tax exempt financing for a variety of purposes including the issuance of tax exempt debt by non profit agencies. Pursuant to the terms of the joint powers agreement, California Communities may not approve a financing unless the governing body of the member jurisdiction in which the project is located approves the financing. The County of Santa Cruz became a member of California Communities in 1995 for the purpose of assisting Sutter Health with the original permanent financing for the Sutter Maternity and Surgery Center of Santa Cruz.

The TEFRA Hearing

Federal tax law requires that the proposed financing be approved by a government unit having jurisdiction over the area in which the facility to be financed is located. This requirement is satisfied if the government unit having jurisdiction over the area in which the facility to be financed is located (1) holds a public hearing, and (2) at the conclusion of the public hearing adopts the TEFRA Resolution approving the financing to be undertaken through California Communities. The public hearing is known as a TEFRA hearing because the requirement for such a hearing was originally placed in the Tax Code by the Tax, Equity and Financial Responsibility Act (TEFRA).

No County Responsibility or Liability

California Communities has indicated that the financings in question are structured so that California Communities is the issuer of the tax exempt debt and the County has no legal or financial responsibility or any liability of any kind in the transaction. California Communities has agreed to reimburse the County for its costs up to $10,000 and the County’s Bond Counsel will review the proposed transactions and will be available at the requested TEFRA public hearings to answer any questions your Board may have regarding the procedure being used for the Sutter and the Hanuman financings.

Sutter Health Financing

The Sutter Health financing provides funds for facilities in multiple counties and the use of California Communities as the required local agency and issuer facilitates a single comprehensive financing for all of the facilities.

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Attachment 2 of this letter is a copy of California Communities’ request to the County and Sutter Health’s application to California Communities. The aggregate principal amount of proposed Sutter financing totals $300,000,000 and approximately $52.15 million of the aggregate amount is for projects located in Santa Cruz County. The financing for the unincorporated area involves tenant improvements to leased space at 2850 Commercial Crossing, the acquisition of an access parcel on Commercial Way and permanent financing for the previously acquired drive in site adjacent to the existing Sutter Maternity and Surgery Center. Attachment 3 of this letter is a letter from the Santa Cruz Medical Foundation regarding the public benefits associated with the Medical Foundation and Sutter Health presence in Santa Cruz.

On March 21, 2008 this office and the Health Services Agency met with Larry deGhetaldi, M.D., the President of the Santa Cruz Division of the Palo Alto Medical Foundation and CEO of Sutter Santa Cruz and Jerry Burke of California Communities. At that time we requested that in exchange for the County conferring tax exempt status on Sutter’s financing, that Sutter and the Santa Cruz Medical Foundation agree that in addition to continuing their existing commitments, they would: (1) maintain their accelerated contribution to Healthy Kids until such time as the drive in property is developed; (2) provide access for Medi-Cruz patients to the new outpatient oncology services that will be available at 2850 Commercial Crossing; and (3) provide a re- opener to the existing Access to Care Agreement so that the agreement can be updated when the array of new services which will be proposed for the drive in site is known. This defers negotiations regarding the new community benefits associated with the drive in site until such time as Sutter and the County can have a meaningful planning process concerning the services that will be available through Sutter’s expansion.

Conclusion and Recommendations

In conclusion, representatives of Sutter Health and California Communities will be available on April 29, 2008 to answer questions about the proposed financings. The County’s Bond Counsel will also be available to answer such questions as your Board may have regarding the procedure being used for the financings and the resolutions which the County is being asked to adopt following the recommended public hearing.

At this time it is RECOMMENDED that your Board set a public hearing for April 29, 2008 at 9:00 AM, or as soon thereafter as the matter can be heard, concerning the issuance of tax exempt obligations in an amount not to exceed $300,000,000 by the California Statewide Communities Development Authority for the benefit of Sutter Health and direct the Clerk of the Board to publish the notice in Attachment 4 fourteen days in advance of the hearing and direct this office to return with the appropriate agreement with Sutter Health as generally outlined above.

Very truly yours,

Z3-W-J Susan A. Mauriello County Administrative Officer

0052



Attachments

cc: Health Services Agency County Counsel Santa Cruz City Manager Watsonville City Manager Rutan and Tucker Sutter Health

Larry deGhetaIdi, M.D. Santa Cruz Medical Foundation 2025 Soquel Avenue Santa Cruz, CA 95062

California Com m u n ities Michael LaPierre 2033 North Main Street, Suite 700 Walnut Creek, California 94596

Orrick , Herrington & Sutcliffe Sean Mick 400 Capitol Mall, Suite 3000 Sacramento, CA 9581 4-4497

0053

Attachment 1

Letters of City Managers

0 0 5 4 C I T Y O F

O F T H E C I T Y (p ;;;+ ,&

809 Cengr Street, Room 10, Santa Cruz, CA 95060 (831) 420-5010 Fax:

M A N A G E R

(831) 420-501 1 www.ci.santa-cruz.ca.us

March 21,2008

Ms. Susan A. Mauriello County Administrative 0 ffic er

701 Ocean Avenue, Room 520 Santa Cruz, CA 95060

csan:y of SZEtSz cmz

RE: TEFRA Hearing for Sutter Hospital

Dear Ms. Mauriello:

It is my understanding that Sutter Hospital has applied for bond financing to the California Statewide Communities Development Authority. As a part of that process a local public hearing, referred to as a TEFRA hearing, must be held. Further it is my understanding that funds are to be expended at sites located in the City of Santa Cruz, the City of Watsonville, and two sites in the unincorporated area of Santa Cruz County.

In order to expedite the hearing process and ensure governmental efficiency, I would request that the County hold the TEFRA hearing that includes the site located in the City of Santa Cruz.

It is my understanding that this hearing does not affect any land use decisions on the part of the City of Santa Cruz.

If you have any questions, please feel free to call me. I can be reached at (831) 420-5010.

"- / ,

City Manager

cc: Larry deGhetaldi, M.D.

P:\CMAD\Word( Wpfiles)\SUZANNEU'\CM\LETTERUvlauriello TEFRA Hearing.doc

B

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F

March 25,2008

Ms. Susaii A. Mauriello County Administrative Officer County of Saiita CI-UZ 701 Ocean Avenue, Room 520 Santa Cmz, CA 95060

Re: TEFRA Hearing for Sutter Hospital

Dear Ms. Mauriello:

It is my understanding that Suttcr Hospital has applied for bond fiiiaiicing to the California Statewide Conmuni ties Development Authority. As a part of that process a local public heating, refewcd to as a T E F M hearing must be held. Further it is my understanding that funds are to bc cxpended at sites located in the City of Santa Crriz, the City of Watsonville, and two sites in the unincorporated areas o l Santa Cmz County.

In oxder to expedite the hearing process and insure goveimieiital efficiency, I would request that the County hold the TEFRA hearing that includes the site located in the City of Watsonville,

'It is iiiy understanding that this hearing does not affect any land use decisions on the part of the City of Watsonville.

If you have any questions, please feel free to call me 768.3010.

Carlos J. Palacios City Manager

P.0. BOX 50000 WATSCINVILLE, CA 95077-5000

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Attachment 2

Public Hearing Request of California Communities and Application of Sutter Health

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CALIFORCIOIIA COMMUNITIES

Birildirtg Contiiitinities, Iiives/itig iii Local Govermerrf Sirice 2988 JOINT POWERS AUTHORITY

March 31,2008

V U EMAIL and REGULAR MAIL

Mr. Pat Busch Assistant CAO County of Santa Cruz 701 Ocean Sweet, Room 520 Smta Cruz, CA 95060

Re: REVISED Public Hearinp Reauest fox Sutter Health

Dear Pat:

As discussed, Sutter Health (the “lipplicant”) has submitted to the California Statewide Communities Development Authority (die ‘fiuthotity’’) an application (the Yipplication”) for the financing of certain medical facilities (the ‘Troject”) through the issuance of bx-exempt obligations in an aggregate principal amount not tu exceed $300.0 d o n . Approximately $52.15 million of aggregate bond principal amount is to be used for: various Projects located throughout the County of Santa Cruz at 2025 Soquel Avenue, 2850 Commercial Crossing, 550 South Green Valley Road, 2260 Soquel Drive, and 1920 Commercial Way. The purpose of this letter is to request the assistance of the County of Santa Cruz in conducting on Tuesdax AD^ 29. 2008 a public healing with respect to the proposed financing.

As you are aware, the Authority is a joint exercise of powers authority consisting of numerous California cities, counties and special distticts, including the County of Santa Cruz. The Authority pursuant to its Amended md Restated Joint Exetcise of Powers Agreement is authorized to assist in the financing of facilities for non-profit organizations. In ordew to initiate such a financing, die member participant of the Authority in which the proposed facilities will be located must (i) conduct a public hearing and (ii> appxove the Authoritfs issuance of indebtedness. Therefore, although the Authority w i l l be the issuer of the tax-exempt revenue obligatiuns for the Applicant, the financing cannot proceed without the County of Santa Cruz’s appromi1 of the financing.

I have attached for your review a copy of the Application filed with the Authoriq You \vdl be receiving shortly a letter from Diane Potter of Orrick, Herdngton 8c Sutcliffe, serving as bond counsel, describing the public henring process and the requirements under state and federal lirnrs, including the Tax Equity and Fiscal Responsibility Act (IEFRA).

2033 North Mahi Street, Suite 700 Walnut Creek, California 94596 800.635.3993 925.933.9229 Fax 925.933.8457 infoQcacoirununities.org ~v~vw.cacomtizunities.org

http://infoQcacoirununities.org

-2 -

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March 3 I , 2008

‘lXs letter dl include for puu xcview the form of Notice of Public Hearing and the form of Board of Supervisors Resolution evidencing that the County has approved of the financing.

Thank you fof yow assistance in this matter. Please let me know if you require any additional information concembg the scheduling of such public hearing or if I can be of any other assistance.

very truly yours,

Enclosures

Michael LaPierre

cc: Diane Potter, Orrick, Herrington & Sutcfiffe ([email protected])

Sean Mick, Orrick, Hefrington & Sutcliffe (sd&@cmickcorn)

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501 (c)(3) Nonprofit Bond Application

APPLICANT INFORMATION

Application Number:

Name of Borrower:

Primary Contact:

Title:

Street Address:

City:

Telephone Number:

Fax Number:

E-mail:

Type of Entity:

Date Organized: 1996

2008031

Sutter Health

Svend Ryge

Vice President and Treasurer

345 California Street Suite: 2000

San Francisco State: CA Zip Code: 94104

(415) 296-1886

na

[email protected]

r For-profit Corporation fl Non-profit Corporation

f, Municipality Partnership

r- Other (specify):

PROJECT INFORMATION

Type of Project: n Small Issue Public Benefit Project

I CIinic Hospital Assisted Living Health Care: Continuing Care r Skilled Nursing TI Other (specify):

Education: K-12 Colfeges/Universities

Other: Museu rn/Cul t ural Other (specify):

Droject/Facili€y Name: See Attachment E (Total Prbjects: 9) Street Address: City: State: Zip Code:

Is Project located in unincorporated part of the County? County:

Has the city or county in which the project is located been contacted? If so, please provide name, title, telephone number and e-mail address of the person contacted:

Contact Name: See Attachment E Title: Phone Number: Ext. Fax Number: E-mail:

Page 1 of 3

mailto:[email protected]

0060


FINANCING INFORMATION

Principal Amount:

Tax-exempt Amount:

Taxable Amount:

$300,000,000

$300,000,000

$0

Proposed Closing Date: 04/18/2008

Maturity: 40 Years Interest Rate Mode: Fixed

Type of Offering: Public Offering

Denominations: $5,000

f- Private Placement

Type of Financing: $: Acquisition of Existing Facility f$ New Construction

$y Refunding

E Variable

Credit Enhancement: f l None Letter of Credit

Bond Insurance r Other (specify):

Name of Credit Enhancement Provider or Private Placement Purchaser: N/A

Expected Rating: Unrated

Moody’s Aa3

Fp: S & P A A -

Fitch

PRlNCiPAL FINANCE TEAM INFORMATlON

UNDERWRITERPLACEMENT AGENT BOND COUNSEL

Firm: Morgan Stanley Fin: Orrick, Herrington & Sutcliffe

Contact: John Landers Contact: Diane Potter

Address: 555 California Street, S u b 2200 Address: 400 Capitol Mall, Suite 3000 San Francisco, CA 94104 Sacramento, CA 95814

Telephone: (415) 576-2071

Fax: (415) 591-4581

Telephone: (916) 329-7985

Fax: (916) 329-4900

E-mail: [email protected] E-mail: [email protected]

Page 2 of 3



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PRINCIPAL FINANCE TEAM INFORMATION (continued)

FINANCIAL ADVISOR REBATE ANALYST

Firm: N/A Firm: TED

Contact: Contact:

Address: Address;

Telephone:

Fax:

E-mail:

Telephone:

Fax:

E-mail:

ADDiTlONAL INFORMATION REQUIRED

Please provide the following information as additional attachments:

Attac hrnent

A

B

C

D

E

F

G

H

1

J

Description of Information

$5,000 non-refundable* application fee payable to "California Communities.".

Detailed Applicant History.

Description of project or each facility to be financed or refinanced.

Comprehensive summary of project public benefits. Please click on this link to down load the CSCDA 501 (c?!3)~0np rofit Healthcare Finance Benefit Guidelines.

Address of each facility to be financed or refinanced.

Evidence of credit enhancement or intent to purchase bonds.

List of outstanding tax-exempt debt.

Financial statements for last complete fiscal year.

Project Costs (Sources and Uses of Proceeds).

Interested Parties List.

*Refundable only If financing not approved. Small Issue Program application fee is $2,500.

MAILING ADDRESS California Communities

2033 N. Main St., Suite 700 Walnut Creek, CA 94596

Page 3 of 3

A $5,000 non-refundable application fee

The $5,000 application fee is being sent under separate cover.

B Detailed applicant history

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Sutter Health C‘Sutter Health”), n California nonprofit public benefit corporation, is the “parent” of the Sutter Health System (conprised of Sutter Health and its affiliated health care organizations) (the “System”), which operates primarily in Northern California. The System provides a broad range of health care services, including acute, subacute, Iong-tem, home health and outpatient care, as well as physician delivery systems. These services are provided through an integrated health care delivery system that has the ability to deliver a full range of health care products and services to the commmities it services.

The mission of the System is to enhance the well-being of people in the communities the System serves through a not-for-profit commitment to compassion and excellence in health care services. The system’s vision is to be a recognized leader in transfoming health care to meet the needs of the 21“ centuty. At both local and regional levels, the System’s goal is to be the preferred provider to its patients and custonieis, the best place to work and practice and a role model of community citizenship.

Sutter Health’s affiliated physician organizations, hospitals, home care and other programs provide many services to those in need of care, regardless of their ability to pay. The System’s cotrununity benefit activities include providing care for which the System was not paid or was undei-paid and the unpaid costs of providing health screenings, free cTitiics and other health-related services, educating the community with various seminars and performing medical research.

As of September 30,2007, the system includes the following health care facilities and providers:

Twenty-seven acute care’ hospital facilities (two of which are acute psychiatric hospitals), representing 25 licenses, and three skilled nursing facilities (including one free-standing facility). The Obligated Group included a total of 4,988 licensed beds and 4,4G7 beds in service.

Seven nonprofit medical foundations with approxitiiately 1,730 physicians

a Nine home health care providers I

a One wholly-owned management service organization (“MSO’’) providing support to medical groups and five aligned independent practice associations (the ‘‘Aligned I PAS”)

I Sutter Health 2008 CSCDA Application

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To further the development of its integrated deliveiy system, Sutter Health works closely with its affiIiated physician organizations in the planning and implementation of joint business strategies. In addition, Stitter Health in~oIves physician leaders in its governance, management and decision ma king processes. Sutter Health also is active in the develoyinent, support and operation of the MSO, which provides services to affiliated medical groups and the Aligned IPAs.

The Obligated Group is the central financing vehicle and credit for the System. The Obligated Group includes 26 nonprofit corporations that either own or leas and operate 25 acute care hospital facilities (one of \.vhich is an acute psychiatric hospital), representing 23 licenses, and three skilled nursing facilities (including one free-standing facility), as well as four nonprofit medical foundations. Only Members of the Obligated Group are obligated to make payments with respect to the Bonds.

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Attachment C - Project Description Sutter Health

2008 Pian of Bond Financing

GOuld MFP2 - Stockton - ASC Address: 2525 Hammer Lane, Stockton, CA

sf Amb,Surgery Cnfr on the Stockton campus nd 8mbdatOty surgery servcles for the community

Start Date:

Completion Date:

2545 Hammer Lane, Stockton, CA D escrlptlon: Three story, 59,000 sf Medical Office Clinic on the Stockton campus to provlde medical services to ihe community Main Contractor: Harblson Mahony Higgins Bullders (HMH) Start Date: 8/1/2007

Descrlption: 132,000 sf Medical Office Clinic, steel moment frame vrith setsrntc dampers as replacement facility to the existing building to provide medical servcies Main Contractor: CT. Brayton & Sons, Inc. Start Date: 6/1/2004

SCMF MFP - Cllnfc Expansion, Remodel Mafn Cllnfc,Specialty Services 81 Land

Main Clinic Address: 2026 Soquel Ave, Santa Cruz, CA 06-15/07-24 Banklng

CommerIeaI Crossing Med Office Clinlc

Watsonvllte Med Offfce Clinic Expansion 550 So. Green Valley Road, WatsonviUe, CA 95076 .-

0065

Attachment C - Project Description Sutter Health

2008 PIan of Bond Flnanclng

Sutter Health’s Community Benefit Commitment Sutter Health’s findamentd mission is to enhance the health and wellbeing of the

people in the communities we serve through compassion and excellence. This broad vision of health care motivates us to do more than care for patients-our charge is improving the health of our cornmunities. Sutter Health’s affiliated physician organizations, hospitals, home care and other programs provide many services to those in need of care, regardless of their ability to pay. MoIe than half of those served by Sutter are Medicare and Medi-Cal patients.

As one of ?he leading nonprofit health care providers in California, Sutter is committed to the precept that the community benefits derived from nonprofit hospitals and health systems are important assets for the citizens of California. Sutter Health takes its role as stewards of these assets very seriously and held accountable by the numerous communities Sutter affiliates serve.

One measure of accountability is filfilling umnet needs in the community. Though our affiliates, Sutter Health provides a wide range of vital services to meet untnet patient and community needs. The range of services is 8s heterogeneous as the communities we serve in California. Community benefit and improving the health of our cornmities is at the core of our mission, our values, our vision and ow strategic planning principles.

Traditional charity care covers health care services provided to persons who meet certain criteria and cannot afford to pay. Sutter Health had write-offs of charges for charity care services to their patients that totaled $286 million in 2006 and $226 million in 2005. The folfowing is a sununary of Sutter’s estimated costs of providing services to the poor and broader corninunity (unaudited):

3 Sutter Health 2008 ,CSCDA Application

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D Comprehensive summary of project public benefits

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Services for the poor and undersewed (in millions)

2006 2005 Traditional Charity Care $73 $59 Unpaid costs of pubiic programs: Medi-Cal $308 $344 Other public programs $32 $22 Other benefits for the poor and underserved $13 $8 Total quantifiable benefits for the poor and $426 $433 underserved

Nonbilled services $21 $12 Education and research $27 $22 Cash and in-kind donations $7 $1 -l Other communitv benefits $2 $1

$46 Total quantifiable benefits for the broader $57 community TOTAL $483 $479

Services €or the poor and underserved include services provided to persons who cannot afford health care because of inadequate resources andor are uninsured or underinsured, as weil as the unpaid costs of public programs treating Medi-Cal and indigent beneficiaries. Costs are computed based on a relationship of costs to charges. It also includes the cost of other services for indigent populations, and cash donations on behalf of the poor and needy.

Benefits for the broader community include unpaid costs of providing the following services: 'health screenings and other health-related services, training health professionals, educating the community with various seminars and classes, the cost of performing medical research and the costs associated with providing free clinics and community services. Also included are contributions Sutter makes to community agencies to fund charitable activities.

In 2006, Sutter Health stopped reporting the unpaid costs of treating Medicare patients as community benefit, Sutter Health made this change to be in afignnient with new, voluntary national community benefit reporting standards.

4 Sutter Health 2008 CSCDA Application

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Community Benefit Overview Pa10 AIto Medical Foundation, Santa Cruz Region Economic and Health

Care Benefits of Proposed Projects

Bac kgroiind

Santa Cruz County finds itself in an unusual position in the emerging health care landscape: There is a unique history of public private-partnerships and a comittllent among various health care organizations to serve the health care needs of its community. Snnta Cruz County has the highest hospital Center for Medicare and Medicaid Services (CMS) wage index in the nation and fins tlie lowest physician Medicare payments in California. Amid a national shortage in primary care physicians, these factors have contributed to an unstable physician workforce over the past decade. Young physicians leaving their residencies are saddled with unprecedented levels of student debt and cannot absorb tlie mortgage and/or medical practice debt incurred by moving to this community. The 2007-2008 Santa Cruz County Gmnd Jury Report will focus on this issue. Santa Cruz County’s health care infkastructure has largely been negatively influenced by its close proximity to Santa Clara County, ivhere physicians practice in a more attractive economic environment alongside academic medical centers.

In 2009, CMS will inandate that all pliysicians migrate to eprescribing for all Medicare beneficiaries. CMS and other payers expect that all physicians will invest in electronic health records and in the types of quality and patient safety programs currently only offered in muftispecialty medical groups. Young physicians, especially in California, are no lotiger opting for solo or small, single-specialty practices but are almost universally choosing multispecialty group practices. They are increasingly choosing those group practices that offer comprehensive and integrated medical sewices: that is, complete with hospital services, radiological imaging, laboratory, home health, and a full range of physician specialty services. The capital demands on physicians and their atnbulatory practices are large, Health care trends and physician expectations require larger medical facilities and campuses that encompass state-of-the-art imaging services, comprehensive labor-ato~y capacities, sophisticated IT and patient web portal technology, and close proximity to specialty colleagues.

Palo Alto Medical Foundation Description

The Palo Alto Medical Foundation (PAW) for Health Care, Research and Education is one of the most respected health care institutions in the United States. PAMF’s 850 affiliated physicians and 3,500 employees serve more than 550,000 patients throughout the Bay Area. The 50 1 (c) (3) not-for-profit foundation is an affiliate of Sutter Health.

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Sutter is a not-for-profit support company based in Sacramento with more than 30 not-for- profit affiliates throughout Northern California with 35,000 employees and 7,000 a ffi 1 ia ted physicians.

PAMF has thee divisions: the Health Care Division, Education Division and Research Division. PAMF consists of four regions: Palo Alto (with locations in Fremont, Los Altos, Menlo Park, Palo Alto, Portola Valley and Redwood City); Palomares (with locations in Castro Valley, Dublin and Livermore); Camino (with locations in Mountain View, San Jose and Sunnyvale); and Santa Cruz (with locations in Aptos, Smta Cruz, Scotts Valley, Soquel and Watsonville). It currently includes two licensed acute care facilities and one accredited home health agency in addition to its outpatient facilities.

PAMF’s Education Division provides health education through health-promotion classes, support groups and community outreach. The mission of PAMF’s Research Division is to be a center of excellence for biomedical, clinical, health policy and public health research, and research training, to improve health and health care in our community and globally.

In Snnta Cmz County, PAMF has brought more fhan 80 physicians to this community since its local predecessor, the Santa Cruz Medical Clinic, affiliated with P A W in 1995. The Santa Cruz region of PAMF currently has almost 140 physicians, and in the next 10 years we expect to recruit and retain over 40 additional physicians. P m ’ s comnitnleiit to its communities is evident throughout the four counties where it is present: in Alameda County, where physician growth and facility development is underway in Dublin and Castro Valley as well as in Fremont; in San Mateo County, where it intends tu invest $600 million in an innovative medical campus in San Carlos; and in Santa Clam County, where more than 600 physicians provide nationally recognized, high-quality care to over 500,000 patients.

Physician Recrtiitiug

As a multispecialty group practice, PAMF provides the incentives to attract and retain the best physicians and provide the highest-quality niedical care to the co~nmunity. PAMF is recruiting approximately IO0 new physicians for our locations every year to help meet patient demand. These successhl recruiting efforts come at a time when throughout the geographic footprint of PAMF, residents have experienced a decline in access to convenient health care services, the local population coiitinues to age and many physicians near retirement.

The PAMF model for health care provides the best and preferential optiori for the majority of physicians entering practice today. It provides fieedom from the unwanted deniands of business management, offers a collegial and supportive practice environment and facilitates the highest standard of clinical quality.

Young doctors coming out of medical school and residency find they are poorly prepared fur business management, including contracting with insurers, complying with state and

federal 1awS-g Mmh ~ ~ a ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ n ~ 6 ~ ~ ~ S r s c o BayArea a&fhqg i & l i e M ~ B a y ~ ~ ~ , q # ~ i o i & in solo independent and mall group practice are unable to negotiate adequate payment contracts with insurers. PAMF has sufficient revenues to provide the highest quality of care, as well as provide a physician income suEcient to attract new young doctois and their families. The PAMF organizational structure fiees physicians &om business-management tasks and enables them to focus wholly upon providing the very best in medical care for their patients.

From their experience in medical school and residency, physicians are accustomed to and value a collegial and supportive practice environment with daily contact with multiple physician colleagues, ease of referrals and regular medical education and quality itnprovement, Physicians find these attributes at PAMF.

Clinical quality is the pre-eminent issue for all physicians. A multispecialty group practice such as PAMF is the best setting to provide the resources necessary to assure quality - such as compute*ed health records and computerized order entiy, decision support, quality review processes and systeiiis, regular conferences and peer review, the most modem facilities, and the most up-to-date diagnostic and therapeutic equipment.

Ecoiioniic Development Benefits to the Community

The expansion and improvement of PAMF’s facilities in Santa Cruz County will enhance the economic development potential of the comtnunity:

0 Attracting and retaining a high-quality physician workforce. Each new physician brings the need for four additional health care professionals. 0

Expansion of our physician semices will provide added employment opportunities for local residents.

Creating new construction jobs. e Sales tax revenues &om PAMF employees, patients and visitors for local restaurants, drug stores, clothing stores, general merchandisers, gasoline stations, food stores and hotels.

Health Care Benefits to the Community

PAMF has a history of providing health care benefits to the cotnmunity at large. PAMF will continue this at the expanded medical campus in Santa Cruz:

Attracting the best and brightest physicians to the community to help meet the

Providing access to all in the comnunity to state-of-the-art diagnostic and aging population’s growing health care needs.

therapeutic equipment. e

Providing a state-of-the-art community hospital with expanded services, open to all.

0070

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e Offering sub-specialist consultation services to community physicians and their

. Providing an advanced electronic health record that allows physicians immediate patients.

access to patient information, and PAMFOnline, which alfoivs patients to view key components of their health records, make appointments and prescription renewals, access test results, communicate electronically with physicians and more.

services to the uninsured and underinsured residents of this community through our partnerships with the County of Santa Cruz and other independent safety-net clinics. In 2007, the focal PAMF hospital, Sutter Maternity & Surgery Center, outperfotmed the state average in charity care by inore than 200%. It ranks among the highest performing California hospitals in this measure and has done so without an emergency room.

college and vocational training programs in nursing and radiology. Our executives hold a number o f advisory committee positions. Our facilities also serve its training sites for these programs and others. PAMF and its parent organization, Sutter Health, provide educational opportunities and financial aid to its employees for their personal advancement and to create a positive work environment to ensure the retention and advancement of its employees.

throughout the county.

for enhanced access to high-quality health care: primaty care, specialty care, diagnostic services, acute care and home care. The additional propei-ty for the development of an integrated medicai campus will provide the community, in the future, with easy access to a11 their health care needs in one location. The centralization of specialty care on one campus will allow for cost-effective operations, and the decentralization of primary care will provide easier access for patients.

#

0 Continuing and expanding on our historical support for the specialty and hospital

0 PAMF already contributes direct financial support to the local community

0 Many of our physicians volunteer their time in health-related programs

The expanded and improved PAMF facilities in Santa Cruz County will allow

0

are offered for a nominal fee. All classes are provided fiee of charge to patients referred fioin the Safety Ne€ Clinics and County Health Services Administration. Other programs include the annual Senior Health Fair, offering free health screenings, educational lectures and materials; the annual Prostate Cancer Awareness progiam, with fiee screenings; and many other outreach and community support activities such as United Way, March of Dimes and the Susan

PAMF offers many free health care classes to the comtnunity, and many others

G. Kornen Breast Cancer Foundation. 0 The Santa Cniz region of PAMF has supported the adoption of Health Information Technology (HIT) both within its organization and within the community, in particular with safety-net providers. We have been an active supporter of the Health Improvement Partnership’s Diabetes Collaborative around establishment of a cormn~inity- wide Diabetes Mellitus Dashboard and have provided direct financial support of the development of an electronic health record within Salud Pam de La Gente. We contributed $200,000 in a grant to be

0 0 7 2

managed by Community Foundation of Santa Cxuz County to ensure the adoption of HIT within the safety-net infiitstructure in Santa Cruz County. In addition to participating in many comnunity-benefit activities as outlined above, the Santa Cruz region of PAMF accepts Medicare, Mdi-Cal and MediCruz.

2007 Conimunify Benefit aud Charity Care Benefits in PAMF’s Santa Crirz Region

In 2007, the Santa Cxuz region of PAMF provided the following charity care, Medi-Cal and county indigent care, and community benefit contributions:

Cost of charity care $1,337,000 Uncompensated cost of care, Mdi-Cal and county indigent 4,562, f 27 Community contributions (in-kind, services and education) 1,430,446 Community contributions (direct cash donations) 225,8 10

.

PAMF served 5,687 Medi-Cal patients in 2007 in its outpatient facilities in the Santa Cmz region, and 1,200 Medi-Cal, MediCruz and indigent patients in its hospital.

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8 501 (c)(3) Nonprofit Bond Application Application Number: 2008031 - Sutter Health Name of Borrower: Sutter Health

Attach men t E

FACILITY #'l) Sutter Gould Medical Foundation Project Street Address: 2525 Hammer Lane city: Stockton State: CA Zip Code: 95209 County: San Joaquin

Is Project lO~at8d in unincorporated part of the County? No Has the city or county in which the project is located been contacted? If so, please provide name, title, telephone number and e-rnail address of the person contacted:

Contact Name: Title: Telephone: Ext. Fax: E-mail:

FACILITY #2) Suttet Gould Medicaf Foundation Project Street Address: City: Stockton State: CA Zip Code: 95209 County: San Joaquin Is Project located in unincorporated part of the County? No Has the city or county in which the project is located been contacted? If so, please provide name, title, telephone number and e-rnail address of the person contacted:

2545 Hammer Lane


FACILITY #3) Sutter GouId Medical Foundation Project Street Address: 600 Coffee Road City: Modesto State: CA Zip Code: 95355 county : Stanislaus Is Project located in unincorporated part of the County? No Has the city or county in which the project is located been contacted? If so, please provide name, title, telephone number and e-mail address of the person contacted:

Contact Name: Title:

Fax: Telephone: Ext.

E-mail:

Page 4 of 3

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501 (c)(3) Nonprofit Bond Application Application Number: 2008031 - Sutter Health Name of Borrower: Sutter Health

Attach me nt E FACILITY #4) Palo Alto Medical Foundation Santa Cruz Project Street Address: 2025 Soquel Avenue

City: Santa Cmz State: CA Zip Code: 95062 County: Santa Crur Is Project located in unincorporated part of the County? No Has the city or county In which the project is located been contacted? If so, please provide name, title, telephone number and e-mail address of the person contacted:

Contact Name: Title: Telephone: Ext. fax: E-mail:

FACILITY #5) Palo Alto Medical Foundation Project Street Address: 301 Industrial Road City: San Carlos State: CA Zip Code: 94070 County: San Mateo

Is Project located in unincorporated part of the County? No Has the cky or county in which the project is located been contacted? If so, please provide name, title, telephone number and e-mail address of the person contacted:


FACILITY #6) Commerical Crosshg Medical Oflice Clinic Project Street Address: 28SO Commercial Crossing

City: Santa Cruz State: CA Zip Code: 95065 County: Santa Cruz Is Project focated in unincorporated part of the County? Yes Was the city or county in which the project is located been contacted? !f so;please provide name, title, telephone number and e-mall address of the person contacted:


Page 2 o f 3

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501 (c)(3) Nonprofit Bond Application Application Number: 2008031 - Sutter Health Name of Borrower: Sutter Health

Attachment E

FAClLtTY #7) Watsonvilfe Medical Office Clinic Expansion Project Street Address: 550 South Green Valfey Road City: Watsonville State: CA Zip Code: 95076 County: Santa Cruz

Is Project located in unincorporated part of the County? No Has the city or county in which the project Is located been contacted? If so, please provide name, title, telephone number and e-rnail address of the person contacted:



E-mail:

FACILITY #8) 2260 Soquel Drive - Land Acquisition Project Street Address: 2260 Soquel Drive City: Santa Cruz State: CA Zfp Code: 95062 County: Santa Cruz Is Project located in unincorporated part of the County? Yes Has the city or county in which the project is located been contacted? If so, please provide name, title, telephone number and e-mail address of the person contacted:



E-mail:

FACILITY #9) 1920 Commercial Way Access Parcel Project Street Address: 1920 Commerclal Way City: Santa CNZ State: CA Zip Code: 95065 County: Santa CNZ Is Project located in unincorporated part of the County? Yes Has the city or county in which the project is located been contacted? If so, please provide name, title, telephone number and e-mail address of the person contacted:

Contact Name: Title: Tefephone: Ext. Fax: E-mail:

Page 3 of 3

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E Address of each facility to be flnanced or refinanced -- s a ffi-wt s

Foundation 2525 Hammer Lane, Stockton, California, 95209 (Stockton)

Sutter Gould Medical (Stockton)

2545 Hammer Lane,

(Modesto)

Palo Alto Medical Foundation (Santa Cruz)

Cruz, California, 95062

F Evidence of credit enhancement or intent to purchase bonds

Sutter Health is currently rated Aa3/AA- by Moody's and S&P. '


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G List of outstanding tax-exempt debt

City of Modesto 1993A 3.905 CaNfornla Statewide Communities Development Authority 1993A 61 -405 California Health Facfllttes Financlng Authority 1997A 10.640 Citv of Modesto 19976 13.475

65.105 California Health Facilities Financing Authority California Health Facilities Financing Authority 1998A 175,000 California Health Facilities Financing Authority 1999A 128.985 California Statewide Communities Development Authority 1999B 106.1 25 California Health Facilities Financina Authoritv 2OOOA 52.000

1997C

California Statewide Communities Development Authority 2002A 55.650 California Statewide Communities Development Authority 20028 156.435

California Statewide Communities Development Authority 20038 47.91 0 6 1.450 California Statewide Communities DeveloDment Authoritv

California Statewide Communities Development Authority 2003A 47.930

2004A 61.450 Ca I ifornia Statewide Corn mun ities Development Authority 2004B

California Statewide Communities Development Authority 2004C 45.175 California Statewide Communities Development Authority 2004D 42.575 California Statewide Communities DeveIoprnent Authority 2005A 224.460 California Statewide Communities DeveloPment Aufhoritv 20058 23.715 Ca I iforn ia Statewide Com muni ties Deve lopm ent Authority 23.71 5 Catifornia Health Facilities Financing Authority 2007A 756.410 California Health Facilities Financing AuthorHy 20078 105.575 California Health Facilities Financing Authority 2007C 45.025

2005C

H Financial statements for last complete fiscal year

Please refer to Appendix A for Sutter Health and Affiliates’ Audited Consolidated Financial Statements for the fiscal year ended December 3 1,2006.


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I Project Costs (Sources and Uses of Proceeds)

The table below is preliminary and subject to change. Sutter Health expects to pay costs of issuance and underwriters’ discount from equity funds. Sutter Health does not expect to pay any upfront credit enhancement premium. Sutter Health may or may not apply bond proceeds to bond reserve funds.

Sources: Par Amount 300,00O, 000 Original Issue Premium/Discount

3 00 ,O 00,000 Total Sources:

Uses: Sutter Gould (2525 Hammer Lane) Sutfer Gould (2545 Hammer Lane)

8,800,000 23,000,000

Sutter Gould (600 Coffee Road) 32,000,000 PAMF Santa Cruz 64.900.000 PAMF San Carlos 1 35,000,000 Bond Reserve Funds 36,300,000

Total Uses: 300,000,000

J Interested Parties List

Please refer to Appendix B for the interested parties list for this financing.

7 Sutter Health 2008 CSCDA Appfication

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Sutter Health Series 2008 Financing Interested Parties List

(as of February 17,2008)

Sutter Health Sutter Health 2200 River Plaza Drive Sacramento, CA 95833 General Number: (9 1 G) 286-6670

(916) 286-6672

reedr@sut terhealth.org Fax: (916) 286-6671

Sat1 Francisco: (415) 296-1896

Robert D. Reed, Senior Vice President and Chief Financial Officer Leslie Salisbury, Finance Department Supervisor & SH Executive Fleet Manager (916) 286-6672

Gary Loveridge, Esq., Senior Vice President and General CouuseI* Yolanda Gornez, Adtninistrative Assistant ([email protected])

Andie Ksidakis, Esq., Vice President and Deputy General Counsel* Jenni Reid, LegaI Secretary ([email protected])

Beth Edwards, Esq., Associate Counsel* Judy O'Brien, Administrative Assistant ([email protected])

Nadder Mirscpassi, Assistant Treasurer and Director of Treasury Operations*

Greg Gonzales, Treasury Analyst"

Sutter Health 345 California Street, Suite 2000 San Francisco, CA 94104

Sverid Ryge, Vice President and Treasurer"

Khar Kameda, Director of Capital Finance*

(916) 286-6701 loverig@sutterheal th .org

Fax: (916) 286-6781

(916) 286-6703 ksidaka@su tterhealth .org

Fax: (91 6 ) 503-6742

(916) 286-6708

Fax: (91 6) 286-6781 edwarde@sutterheal th .org

(916) 286-6679 mirsepn@utterheal t h .org

Fax: (916) 286-6668

(916) 286-6676 gonzalg 1 @sutterhealth, org

Fax: (916) 286-6668

(4 IS) 296- 1 886 [email protected]

(41 5) 296- 1836 karnedcl k@su t t erhealtb.org

Fax: (415) 296-1812

* To receive bond docuu~eents

http://terhealth.org


http://erhealtb.org

Sutter Health Counsel McDonougli, Holland & Allen 55s Capitol Mall, 9th Floor Sacramento, CA 95814

Cathy Deubel Satenko, Esq.*

Cindy Condos, Esq.*

Etizabeth Pullen, Paralegal*

Renee Ernst, Administrative Assistant

Issuer of Series 2008 Bonds

California Statewide Communities Development Authority (CSCDA) 2033 North Main Street, Suite 700 ?Valnut Creek, CA 94596

Gerald (Jerry) Burke

Mike LaPierre

Bond Counsel Orrick, Herririgton & Sutcliffe 400 Capitol Mall, Suite 3000 Sacramento, CA 95814-4407

John R. Myers, Esq.*

Diane Potter, Esq.*

Sean Mick, Senior Project Manager'

* To receive bond docunients

General Number: (916) 444-3900

(916) 444-3900 [email protected]


F a : (916) 444-5818

(916) 444-3900

Fax: (9 16) 444-8334 [email protected]

(9 16) 444-3900 [email protected]

(925) 933-9229 ext. 21 1 jburke(@cacommunities.com

(925) 833-9229 ext. 2 12 in1 ayierre@cacommunit ies. corn

Fax: (925) 933-8457

(9 16) 329-7903 jmyers@orric kxom


(9 16) 320-4930 smick@orric k.corn

Fax: (916) 329-4900

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mailto:jburke(@cacommunities.com


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Orrick, Herringtoti & Sutcliffe 405 Howard Street San Francisco, CA 94105

Richard Moore, Esq. (Tas Matters)

Senior Manager (Series 2008 Bonds) Remarketing Agent (Series 2002A, 2004, and 20076 Bonds) Morgan Stanley 555 California Street, Suite 2 130 San Francisco, CA 94J04

John Q. Landers, Jr., Managing Director*

Jonathan Ma, Associate*

Kathleen Ainor, Administrative Assistant

Co-Manager (Series 2008 Bonds) Remarketing Agent (Series 2007C Bonds) Banc of America Securities 600 Montgomery Street, Suite 1800 San Francisco, CA 941 11

C. Gordon Howie, Managing Director*

Ed Wohlieb, Vice President*

Mimi Park, Vice President*

Co-Manager (Series 2008 Bonds)

Sutter Securities, Inc. 555 California Street, Suite 3330 San Francisco, CA 94104

Joseph M. DuCote, Senior Managing Director*

David Smith*

* To receive bond documents


(4 1 5 ) 576-207 1

Fax: (415) 591-4581 john.landers@morganstanley .corn

(4 15) 576-2675 jonathan.ma@mnorganstaniey .corn

Fax: (415) 591-4658

(4 15) 576-2090 kathIeen.ainor@morganstanley .corn

Fax (415) 591-4749


(4 15) 622-2947 ed.wohIleb@bankofamerica .corn

(4 15) 622-0296 mi mi [email protected]

(4 15) 352-6388 jducote@blooniberg .net

(415) 352-6300 dsmit h@sut ters f.com




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U nderwri te rs’ Counse I SidIey Austin LLP 555 California Street, Suite 2000 San Francisco, CA 94 104

Gerald J. McGovem, Esq.*

Robyn Helmlinger, Esq.*

Michelle DuIik, Esq.*

Rating Agencies Moody’s Investors Service OJE Front Street, Suite 1900 Sari Francisco, CA 941 11

Brad Spielman, Vice President

Moody’s Irrvestors Service 99 Church Street .

New York, NY 10007

Lisa Mattin, Senior Vice President

Mark Pascaris, Analyst

Standard lk Poor’s One Market, Steuart Tower, 15* Floor San Francisco, CA 94105-1000

Geraldine Poon, Associate

* To rcccive bond docirmenls

(415) 772-1215 gmcgovern@sidley .corn

(415) 772-1217 rhelmIinger@sidIey .corn

Fax: (415) 772-7400

(415) 772-7497 induli [email protected] Fax: (415) 772-7400

(415) 274-1719 brad .spielman@moo dys-corn



Fax: (212) 267-1410






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Trustee for Series 2004, Serles 2007, and Series 2008 Bonds Wells Fargo Bank Corporate Trust Services

333 Market Street, 1 8'h Floor San Francisco, CA 94105

MAC #: A0119-181

Cecil Bobey

Wells Fargo Counsel Wells Fargo Bank

239 S. Main Street, loth Floor Salt Lake City, UT 84 I 1 1

MAC #: U1228-104

David Blackner, Senior Counsel, Law Department

Trustee for Series 2002A Bonds

The Bank of New York 550 Kearny Street, Suite 600 San Francisco, CA 94 108-2527

Milly Canessa, Assistant Vice President

Printer Imagemas ter 1 174 Oak Valley Drive Ann Arbor, MI 48 108

Marianne Hanus / Jennifer Braun

(415) 371-3357 cecil.bobeyO~~ellsfargo.co1~


Fax: (801) 246-5230

(4 15) 263-2420 mcaIiessa@batikofny .corn

(734) 821-2525 E-mail for Documents: [email protected]

E-mail for Labels: [email protected] Fax: (734) 821-2501

* To receive bond docuinents



Attachment 3

Letter of Larry deGhetaldi, M.D. and President of the Santa Cruz Division of the Palo Alto Medical Foundation and Sutter Santa Cruz CEO

0085 1

March 24,2008

Ellen Pirie, Chair Board of Supervisors County of Santa Cruz 701 Ocean Street, Rm. 500 Santa Cruz, CA 95060

Susan Mauriello County Administrative Officer County of Santa Cruz 701 Ocean Street, Rm. 520 Santa Cruz, CA 95060

Dear Chairperson Pirie, the Board of Supervisors, and Ms. Mauriello,

The Access to Medical Care Agreement (ATMC) is celebrating its fifteenth year of enhancing access to care in Santa Cruz County. The attached letter of understanding served in 2001 as a springboard for the Sutter Health/Palo Alto Medical Foundation affiliates, the Sutter Maternity & Surgery Center, the VNA of Santa Cruz, and the Santa Cruz Division of PAMF (PAMF-Santa Cruz) to enhance their contributions to our community in many new and innovative ways. I would like to take this opportunity to update the Board of Supervisors on PAMF-Santa Cruz' contributions and would like to comment on the emerging issues facing our community against the backdrop of significant challenges in the broader health care landscape.

It is important to note that the ATMC agreement, which was originally reached between Sutter Health and the County of Santa Cruz, is now also applicable to Dominican Hospital and Watsonville Community Hospital. While the terms of the agreement apply only to the three licensed acute care facilities within our county and it does extend indirectly to the medical staffs of all three hospitals. Hospitals cannot deliver care without their medical staffs: EMTALA and emergency call coverage and back up expose the physician community to the same kinds of charity care and uncompensated care burdens facing our hospitals. However, the ATMC agreement neither applies to the non-hospital PAMF Santa Cruz affiliates nor to the general medical staffs of the three community hospitals.

Our (PAMF-Santa Cruz) strategy in community benefit arises from the belief that through ongoing conversations with the community at large we can best determine how to meet the needs of the community. We have learned a great deal by listening carefully to the community. The primary conversations have taken place with representatives from the County and the various safety net providers within our community. When the ATMC agreement and the attached 2001 letter were signed, the Health Improvement Partnership (HIP) within our county did not yet exist. Proactive communications and the County's leadership served as the catalyst for HIP. We look forward to continuing to collaborate with all the Santa Cruz County health care organizations who are members of HIP in its innovative, and uniquely "Santa Cruz" ability to foster public-private health care partnerships to respond to the specific health care issues and concerns that affect our entire community.

Building on these relationships and the attached 2001 Letter of Understanding, I would like to highlight what we feel are the most significant needs and opportunities for us to continue to build on this very positive 15 year history of community service.

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A. Charity and Bad Debt Care:

The Sutter Maternity & Surgery Center (the Hospital) has been able to increase the volume of care provided to charity patients through the ATMC program (coordinated by County HAS supervisor Rod Johnson on behalf of all the safety net clinics), Medi-Cruz referrals and referrals from its own Medical staff. This is a wonderful achievement and one that is very helpful to the community and many acutely ill patients. This is the central objective of the Agreement. The Hospital also adopted and has maintained a new charity care policy that clarifies eligibility criteria up to 350% of federal poverty without a share of cost and up to 400% with a sliding share of cost. This new policy substantially increased the number of charity care patients served by the Hospital and has reduced the incidence for patients of going through the bad debt process.

Santa Cruz County is blessed to have four well-managed Federally Qualified Health Centers (FQHCs). The primary need for support from the non -FQHC health care community is for access to specialty services, affordable imaging services, and elective or serni-emergent surgical procedures. The Hospital, in partnership with the PAMF-Santa Cruz physicians, has met those needs to a considerable degree over the past seven years. The attached chart (OSHPD data through 2006 and SH audited charity care from the Hospital) demonstrates the effect on charity care performance at the Hospital.

Hospital services linked to the qualified and skilled specialists from PAMF-Santa Cruz have provided the highest quality of services in a variety of clinical specialties needed by the safety net clinics. These include Orthopedics, General Surgery, Ob/Gyn, Gastroenterology, Urology, Neurology, Neurosurgery, HIV specialists, ENT, etc. The partnership of new specialists linked to the access to care program plus the hospital services has resulted in hundreds of patients per year receiving needed care.

1 2.50% 1

2.00%

1.50% ~

1 .W%

0.50%

Santa Cruz Hospital Charity Data . 6

OSHPD Data through 2006 SWECzwiT - Sutler HeiiTm Kudited W e

i‘ rl

t

1

T - - ~ - - - 7 i- ~ - _ _ _ I____

~

2002 2003 2004 2005 2006 2007 _ _ _ ~ 2001

j -+ Dominican Watsonville i ~ . Su&r -t StGe-Av ~

B. High Risk Pregnancy Obstetrical Services:

This program has proven to be successful for not only the women referred to the PAMF-SC Obstetricians but each newborn has been offered a medical home receiving state of the art Pediatric care from one of many PAMF-SC Pediatricians. These services remain available to these children

til age 18 regardless of payer class. The significant social benefit for providing comprehensive stetria and Pediatric services for these high-risk families is immeasurable.

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3

C. Community Benefit Programs & Health Education Services:

The ATMC agreement also provides for a hospital to augment charity/ bad debt care by making cash donations or carrying out in-kind community benefit activities. PAMF Santa Cruz has responded by offering a series of health care forums and patient educational opportunities free of charge. The need for Electronic Health Records and the imperative to develop information systems that communicate across organizational divides is a national mandate. PAMF is among the national leaders in the adoption of Information Technology to improve patient care, chronic disease management, and community health. These enhancements, including a direct cash grant to Salad Para La Gente, have been widely shared with our community. Our continued financial and clinical training support to the Cabrillo Nursing program (and other Cabrillo health care workforce training programs) has helped ease the critical shortage of Registered Nurses in our community.

D. Radiology Services:

PAMF Santa Cruz has provided access to complex radiology services beyond the scope of the safety net clinics. Previously these services were only available from hospitals charging 75% (+) of posted charges. Now these services are available to County clinic patients on Medi-Cruz at discounted rates. This is an extremely valuable service which has helped with access to MRIs, ultrasound, nuclear medicine, CT scans, and other digital radiology diagnostic services.

E. Physician Relocation ProgradSpecialis t Access & Hospital Care:

Each year the County and the safety net clinics have identified critically needed specialists and services and have worked with the Hospital to recruit them and develop new services and new service lines at PAMF-Santa Cruz. One of the most critical needs is access to medical oncology services which will allow Medi-Cruz and Medical patients’to have a less expensive option for access to cancer care. This has been one of the most costly services for the County and the Medical program. The Santa Cruz Division of PAMF is in the process of developing a medical oncology program with an associated ambulatory infusion center located at 2850 Commercial Crossing. Two board certified medical oncologists are scheduled to staff this department by the third quarter of 2008. Michael Wu, M.D. has already joined PAMF- SC Division as an Access to Care physician. A second ATMC medical oncologist, Glenn Wong, D.O., is under contract to join in August of 2008. Medical oncology and infusion services, as a new service line for PAMF-SC, will allow the PAMF-SC to broaden its outreach to indigent and safety net clinic patients under the ATMC agreement.

Many of the ATMC physicians brought to this community since 2001 have continued to provide needed services to poor and underserved patients after the term of their relocation contract has expired. Additionally, many of these physicians, notably in Neurology and Neurosurgery, provide in-patient services almost exclusively at Dominican Hospital. Collaborative efforts that have arisen from this agreement have led directly to enhancements in care delivery at Dominican Hospital as evidenced by the DH Hospitalist Program and the Stroke Center accreditation received by that hospital

G. Expanded Healthy FarnilieslHealthy Kids Donations:

Thousands of Santa Cruz residents are being dis-enrolled from Medi-Cal and Health Families due to the federal mandate that proof of legal residency be provided on a quarterly basis. The waiting list for children in need of health care services through the Santa Cruz County local Healthy Kids initiative has grown with nearly 400 children now on a waiting list. For the past several years the Sutter Maternity & Surgery Center has donated in excess of $100,000 annually to Healthy Families and Healthy Kids Insurance premiums for low income children as part of its Access to Medical Care program. In addition, as long as the former Sky-View drive- in site has an operating “flea market”, in conjunction with Goodwill, Industries, the proceeds from the lease to Goodwill (currently $125,000 annually) will continue to be donated to Healthy Kids until such time as the flea market site is no

w

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longer available due to construction or when the relationship with Goodwill Industries ceases. Statewide surveys have shown that in the few CA counties (including Santa Cruz) with Healthy Kids programs rates of hospitalization of children have dropped significantly. Health insurance for our children is a good investment in our community. It lowers cost and enhances the quality of life of our children.

H. Medi-Cruz Credits:

Currently the County serves medically needy, uninsured, and low-income patients with County- financed health care under the Medi-Cruz program. Some patients who need short-stay medical or surgical services are referred to the Sutter Maternity & Surgery Center and their care is reimbursed by the County at a negotiated rate. The County utilizes a combination of State Realignment funds and County general funds to support this obligation under Section 17000 of the Welfare and Institutions Code to provide medical services for the poor.

Medi-Cruz patients authorized by the County to receive services at the Hospital will be provided the first $50,000 annually of those services at no cost to the patient or Medi-Cruz program (2001 Letter of Agreement). Sutter has fulfilled its obligation to provide up to $50,000 in free care based on the rate of reimbursement that is specified in the County/ Hospital contract for the services rendered. Sutter has continued to expand this contribution in line with availability of growing revenues such that it has now forgiven approximately $350,000 in actual costs (not charges). This is an extremely valuable service to the County which fits within the core mission of access to care for poor and underserved Santa Cruz County residents. While the original terms of this agreement anticipated an annual contribution of $50,000 for hospital services to Medi-Cruz, over the past two years the Hospital has voluntarily increased these non-billed services to $100,000. These savings are completely passed onto the Medi-Cruz program allowing the County to invest in other health care services for the poor and uninsured citizens of our community.

Summary:

Santa Cruz County is faced with high hospital costs and irrationally low payments to physicians. PAMF- SC has responded to the growing shortage of health care workers, including primary care and specialty physicians, in very innovative ways. Notable expansions under the Access to Medical Care Agreement during 2008 will be medical oncology/infusion services and a doubling of our direct cash support to the goal of insuring all of Santa Cruz County’s children.

Universal coverage for our nation’s children is an achievable goal. It should continue to be a locakounty goal until either state or federal programs find the political resolve to address this need. We are proud that we have led the local private sector in financial contributions to this end.

Much has been written recently about the “Death of Primary Care” in the U.S. The Santa Cruz Grand Jury will release its report on this issue later this spring. Enhancing the ability of our safety net clinics to serve the primary care needs of our poor and underinsured citizens through advancements in Electronic Health Record capacity and by providing access for needed imaging, specialty physician services, and elective hospital services is an essential part of that strategy.

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g $3,500 C (D

$3,000

$2,500

$2,000

$1,500

$1,000

$500

$- 2001 2002 2003 2004 2005 2006 2007

_. - -

~- - - Target Linear ..__ __ (Total) - - +a Linear - - (Target) - - - ~

Sincerely,

Larry deGhetaldi, M.D. President - Santa Cruz Division Palo Alto Medical Foundation Sutter Santa Cruz CEO

Cc: Rama Khalsa, Ph.D. Pat Bush Jerry Burke, California Statewide Communities Development Authority

0090 6

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0 0 9 2 8

0 0 9 3 9

0094 10

0 0 9 5

1 1

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Attachment 4

Notice of Public Hearing

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NOTICE OF PUBLIC HEARING

Notice is hereby given that on April 29, 2008 a public hearing as required by Section 147(f) of the Internal Revenue Code (the “Code”) will be held by the County of Santa Cruz (the “County”) with respect to the proposed issuance by the California Statewide Communities Development Authority of its revenue bonds in one or more series or issues and issued from time to time in an amount not to exceed $300,000,000 (the “Bonds”). The proceeds of the Bonds will be used by Sutter Health (the “Corporation”) or certain of its affiliates to finance or refinance the cost of acquisition, construction, improvement, equipping, renovation, rehabilitation, remodeling and other capital projects (i) on or about the campus (or proposed campus) of the health facility operated or to be operated by Palo Alto Medical Foundation and located at or near 2025 Soquel Ave., Santa Cruz, CA; 2850 Commercial Crossing, 2260 Soquel Avenue, and 1920 Commercial Way, each in unincorporated Santa Cruz County, CA; and 550 S. Green Valley Rd., Watsonville, CA, and (ii) of the health facilities of the Corporation and other of its affiliates located elsewhere in California. The facilities listed above are owned by the Corporation or the affiliate listed above, each a nonprofit public benefit corporation as described in Section 501(c)(3) of the Code.

The hearing will commence at 9:OO a.m., local time, or as soon thereafter as the matter can be heard and will be held at the Board of Supervisors Chambers, 701 Ocean St., Rm. 525, Santa Cruz, CA. Interested persons wishing to express their views on the issuance of the Bonds or on the nature and location of the health facilities proposed to be financed or refinanced may attend the public hearing or, prior to the time of the hearing, submit written comments.

Additional information concerning the above matter may be obtained from and written comments should be addressed to the Clerk of the Board, County of Santa Cruz, 701 Ocean St., Santa Cruz, CA, CA 95060.

April 9,2008.

[MUST BE PUBLISHED 14 DAYS PRIOR TO HEARING IN SANTA CRUZ SENTINEL]