Sutter Health: Developing a Contracting Model to Support Lean Project

Sutter Health is a non-profit, community based healthcare and hospital system headquartered in Sacramento, California. The Sutter system serves more than one hundred communities in Northern California. From its historical roots of being a small community-based hospital in Sacramento, it has grown to be one of the largest healthcare providers in Northern California, caring for more patients than in any other network. Its affiliate-based system includes 27 acute care hospitals, over 3,400 physicians, 41,000 employees and recorded over 2.6 million outpatient visits in 2003. In 1994, after the Northridge earthquake caused significant damage to healthcare facilities in Southern California, The California Legislature enacted SB 1953 - the Hospital Facilities Seismic Safety Act. This requires significant structural seismic upgrades to be accomplished by January 1, 2013. In many cases, it is more cost-effective to replace existing facilities, rather than seismically retrofit. Sutter Health was facing a $5.5 billion design and construction undertaking to conclude by 2012. Senior management considered success to be traversing the risks associated with the program and reliably delivering the projects. Different governing and execution bodies were installed in place. Barrowing from practices that worked in the past was emphasized as well as innovating and adopting new practices. This led to the development and implementation of Lean Project Delivery. The paper outlines the features and shares the experiences.