Sonoma County isn't big enough for two full-service nonprofit hospitals, say officials at the 238-bed Sutter Medical Center of Santa Rosa and the 345-bed Santa Rosa Memorial Hospital. In a move that could affect healthcare throughout the North Bay, they issued a Jan. 8 "letter of intent" saying that by early 2008 Sutter will close the aging Chanate Road hospital it leases from Sonoma County and sell its Warwick Avenue facility to Memorial. "This community will best be served by one strong, financially stable, nonprofit acute-care hospital," says Sutter Medical Center spokesman Mitch Proaps. Under the tentative proposal, Sutter will focus on outpatient services. Memorial will add 80 new inpatient beds and absorb Sutter's patient load, taking over the contract to provide medical care for poor and uninsured Sonoma County residents. These dramatic changes are prompted by rapidly evolving (or devolving) healthcare costs and funding sources, along with soaring estimates for state-mandated seismic upgrades. Plus, the for-profit Kaiser Permanente--which only treats its dues-paying members, thus sidestepping the skyrocketing expense of caring for large numbers of indigent patients--attracts a large share of the "commercial" or paying portion of the local patient population. "The growth of Kaiser Permanente in this area has made it difficult for two hospitals to compete for less than half of the commercial market," Proaps explains. "I believe Kaiser has 70 percent of the commercial market, so basically our two hospitals were competing for 30 percent of the market." Closing the Chanate Road hospital will put 1,200 employees out of work. Sutter should honor its contract to operate the hospital until 2016, says union representative John Borsos of SEIU-United Healthcare Workers West. Closing Sutter "is a deal that was cut behind closed doors by a couple of multibillion-dollar corporations," Borsos asserts. "Any decisions on the future of the hospital should be done in the open." But there will be lots of opportunities for community input, Proaps says. In the letter of intent, the two organizations give themselves 90 days to work with the board of supervisors, conflict-of-interest lawyers in the state attorney general's office, hospital employees and community members to hammer out the specifics. "We think we have the framework of a unique plan, but there are still many details we need to address, with input from all parties," Proaps explains. One of those details will be the stress placed on regional healthcare facilities as Memorial absorbs Sutter's patients. Memorial is part of the St. Joseph Health System, which also operates Petaluma Valley Hospital in Petaluma and Queen of the Valley Hospital in Napa; Marin General Hospital is an affiliate of Sutter--a relationship that often appears to be on shaky ground.