Within the span of 12 years, Dr. Alvin Cheung went from being a career pharmacist to the driving force behind the proposed California Northstate University Medical Center.
Cheung became the CEO and founder of California Northstate University after a 30-year career at Kaiser Permanente. Over the last decade, Cheung helped open three colleges at the university and is now spearheading efforts to develop a 10-story, $750 million teaching hospital in Elk Grove. The project is poised to make a big impact in the burgeoning city, which currently doesn't have a hospital.
In December, the day before Cheung publicly announced plans for the medical center, he submitted an application to the city of Elk Grove for a 450,000-square-foot, 250-bed hospital. The proposed site is 11 acres near Interstate 5 and Elk Grove Boulevard adjacent to California Northstate’s campus at 9700 West Taron Blvd. The application shows a three-phase project, including a three-story outpatient clinic and a four-story medical office building, both at 140,000 square feet. The third phase calls for a five-story dormitory on the southern portion of the site, adjacent to the university's College of Medicine and a three-story administrative building. University officials say they hope to finish construction of the teaching hospital by 2022.
While the hospital will be a for-profit institution, it will be open to the public, Cheung told the Business Journal.
As a for-profit hospital, it would be the first of its kind in Sacramento’s health care market, though nationally about 21 percent of all hospitals operate on a for-profit basis, according to data from the Kaiser Family Foundation.
“All the great things we need in life are done by people who provide a service to their population in their community,” Cheung said, when asked about the hospital’s for-profit status. Cheung would serve as CEO of the hospital.
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New player in town
The Sacramento region's health care market is competitive. The area's three largest private-sector employers are Kaiser, Sutter Health and Dignity Health. Sutter, with 24 hospitals and 5,500 affiliated physicians throughout Northern California, is headquartered in Sacramento. And University of California Davis, ranked by U.S. News & World Report as the 10th-best medical school for primary care, operates the region's largest medical center.
California Northstate will have to differentiate itself in the market and, to survive, it will have to bring in substantial patient volumes, said health industry attorney Lawrence Garcia, with Kronick Moskovitz Tiedemann & Girard.
California Northstate's best hope, he said, may be to serve patients whose health care is paid for by Medi-Cal, California's Medicaid program.
“The biggest growth patient demographic is Medi-Cal … if you have a training program and you want to have a training volume,” Garcia said.
Medi-Cal covers about 420,000 Sacramento County residents. With new state initiatives on the way to cover undocumented immigrants and other uninsured groups, that group is poised to grow.
