With the clock ticking, Affiliated Computer Services last week kicked off efforts to convert Marin General Hospital to an entirely new information technology system.

The Marin Healthcare District can't continue to use the hospital's existing system because it belongs to Sutter Health. The new system, both hardware and software, must be fully operational the day the district assumes control.

"We have to be ready to send out a bill when a patient gets discharged the first day," said Lee Domanico, the district's executive director.

The district has signed a $55 million contract with ACS that calls for the company to deliver the new system and maintain it through 2017. ACS has agreed not to begin charging the district for its services until it takes control of the hospital. That is important, because the district will be short of cash until it gains access to hospital revenue.

ACS is subcontracting with San Francisco-based McKesson Corp., which will supply its Paragon software system.

"It includes clinical information systems, financial information systems, a human resource system - all fully integrated," Domanico said. After the district takes over, ACS will also add an electronic medical records system.

Domanico doesn't expect the district to experience the same kind of problems that the county of Marin has had installing its new financial software. The county's $18.6 million system cost $2.3 million more than expected, and county employees have struggled with it over the past few years.

"That was a little different," Domanico said. "We are buying software and systems that are already on the market being successfully used at other hospitals. It's not like we're developing a brand new system unique to Marin General."

Domanico said Marin General's existing computer system is an old version of Eclipsys software.

"It's five releases old so it's not current technology," Domanico said. "This will be state of the art, current technology."

Sutter operates a small data center at the Marin General campus but does most of its data processing at a facility in Sacramento, Domanico said. When the transfer occurs, ACS will do the bulk of data processing at one of its out-of-state centers, perhaps in Dearborne, Mich. or Portland, Ore. It is still uncertain whether ACS will continue to use the smaller data center at Marin General or open another local center.

Domanico said he doesn't know how many information technology employees Sutter has based in Marin, or who might be displaced by the transition. Kathryn Graham, a spokeswoman for Sutter Health, said, "We are not going to be commenting on transition planning."

David Joiner, a senior vice president with ACS, said his company will need to hire employees to staff the local data center, although he doesn't know yet how many.

"We're actually going to have an increased operation at your local hospital when it comes to information technology," Joiner said. He said ACS will also be installing new computer terminals and other hardware as part of the transition.

ACS has also signed a $12 million contract with the district to set up and operate the hospital's business office for the first three years. Currently, about 29 people work at Sutter's business office in Terra Linda, Domanico said. That office serves both Novato Community Hospital and Marin General.

The district must establish a new business office because under terms of the district's settlement agreement with Sutter, Sutter will use existing Marin General employees to collect accounts payable for 45 days after the transition. Domanico projects that over the three-year term of the business office contract, ACS will realize a $2.6 million cost savings compared with Marin General's current costs for these services.