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May 21, 2004

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Palo Alto Online

Publication Date: Friday, May 21, 2004

Palo Alto Medical Foundation chooses San Carlos for new center Palo Alto Medical Foundation chooses San Carlos for new center (May 21, 2004)

Facility will include first major hospital for medical group

by Jocelyn Dong

The Palo Alto Medical Foundation will build a $300 million hospital and clinic in San Carlos -- an ambitious project that officials said won't diminish services to patients at the Palo Alto clinic.

The San Carlos medical center will include the nonprofit's first major hospital, with 110 beds, putting it in competition with Sequoia Hospital in Redwood City and Kaiser Permanente Redwood City.

Until recently, almost all services provided by the foundation have been outpatient, aside from a 30-bed maternity and surgery hospital in Santa Cruz.

At 475,000 square feet, the project will be larger than the 305,000-square-foot Palo Alto facility on El Camino Real, which was completed in 1999 and cost $130 million.

For all the recent concern about a doctor shortage on the Peninsula, Dr. David Druker, president and CEO of the medical foundation, brushed aside fears that the 150-physician San Carlos center would either be understaffed or stretch the nonprofit's staffing at other locations.

"I don't anticipate any difficulty," he said, citing statistics that 30-40 physicians join the medical group every year.

He estimated that 15-20 doctors from the Palo Alto clinic might move to the San Carlos center, which is scheduled for completion in five years.

No public money will be required to fund the project, Druker said. Instead, Sutter Health, which is affiliated with the Palo Alto Medical Foundation, will float tax-exempt bonds repayable over 20-30 years.

"That will be the lion's share," he said.

In addition, the organization's revenues have been running at about 3 percent above the foundation's annual $600 million budget. Those profits, plus private fund raising, will make up the balance, Druker said.

The proposed San Carlos center, to be located just off U.S. Highway 101 at 301 Industrial Road, will displace a company with roots in Palo Alto that will return here in about two years. Communication and Power Industries/Eimac, which makes vacuum electron tubes, was previously part of Varian Associates.

The company already has a location in the Stanford Research Park and expects to move its 280 employees there, according to Eimac President Mike Cheng.

The foundation's search for a new Peninsula location began 18 months ago and also included Redwood City. San Carlos won out because of the property's size -- 18.5 acres -- and its location, foundation officials said.

Senior staff writer Jocelyn Dong can be reached at

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