Sutter Health Forms New Joint Venture to Operate and Develop Surgery Centers

SACRAMENTO, Calif., June 8, 2007 - Sutter Health announced today that it has entered into a joint venture relationship to own, manage and develop additional ambulatory surgery centers in Placer and Sacramento counties. The joint venture will consist of a newly-formed surgery center company which will be owned and operated by Sutter Health and HealthSouth and will include local physicians as limited partners. Four local ambulatory surgery centers that are currently part of HealthSouth's surgery division will be contributed to the joint venture.

The HealthSouth surgery division expects to be acquired by TPG, a private investment firm based in Fort Worth, Texas with significant health care expertise. Following the close of the acquisition by TPG, the new stand-alone surgical services company will be called Surgical Care Affiliates, and will be one of the largest freestanding operators of ambulatory surgery centers and surgical hospitals in the country, with 140 centers in 35 states.

HealthSouth, in exchange for contributing its majority ownership in the four existing surgery centers, will receive 49 percent ownership of the joint venture; Sutter Health will own the remaining 51 percent of the LLC. Financial details were not disclosed.

The four surgery centers that will be owned and managed by the LLC include Fort Sutter Surgery Center and Sutter Alhambra Surgery Center, both within a block of Sutter General Hospital in Sacramento; Sutter River City Surgery Center on Scripps Drive in Sacramento; and Sutter Auburn Surgery Center, located three blocks from Sutter Auburn Faith Hospital.

"This initiative is part of Sutter Health's multi-billion-dollar investment in preserving and expanding the health care infrastructure of Northern California," said Peter S. Anderson, Sutter Health's senior vice president of strategy and business development. "We are excited to join with the physicians and nurses who have made these centers so successful, and we look forward to enhancing the sites for the future, including a modest expansion of the Fort Sutter Surgery Center to improve efficiency. The newly formed company will develop additional surgical facilities in Sacramento and Placer counties if there is sufficient community need."

Also in Sacramento, the new Sutter Medical Foundation building, which is currently under construction at Sutter Medical Center, Sacramento's expanding campus, will include an ambulatory surgery center with six operating rooms.

"Like never before, the trend is to perform more elective surgeries outside the walls of the hospital," said Tom Blinn, CEO of ambulatory care services in the Sutter Health Sacramento Sierra Region. "In ambulatory settings we have the opportunity to provide high-quality, convenient, lower-cost surgical care to our patients who for many surgical procedures don't need to enter the hospital."

"Hospital operating rooms are frequently operating at capacity because of the growing population and busy emergency departments, making it more difficult for physicians to schedule surgeries,” explained Tom Gagen, CEO of acute care services for Sutter Health's Sacramento Sierra Region. "Our physicians want Ors that are convenient to use and that are highly responsive to their needs. This will go a long way toward meeting their space needs."

The three Sacramento surgery centers will provide additional operating room capacity to absorb a growing number of outpatient surgical cases and make room for additional inpatient cases at Sutter Medical Center. In addition, The Auburn Surgery Center, as part of the joint venture, will provide an outpatient surgery option for physicians and patients at Sutter Auburn Faith Hospital, he added.

Sutter Health was a pioneer in the early development of surgery centers in the 1980s. There are about 5,000 ambulatory surgery centers nationwide.

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Contact
Karen Garner
Sutter Health
(916) 286-8297 | garnerk@sutterhealth.org

Bill Gleeson
Sutter Health
(916) 286-6772

Kristi Gilmore
HealthSouth Corporation
(205) 970-7824 | kristi.gilmore@healthsouth.com


The HealthSouth surgery division expects to be acquired by TPG, a leading private equity fund. The new company, which will be named Surgical Care Affiliates and expected to be based in Birmingham, Alabama, has over 6,000 employees and provides a broad array of specialty surgical services to over 3,000 physician partners across the country. With 32 locations in California, the company will be the largest operator of ambulatory surgery centers in the state.