Providence, St. Joseph Health combine in new West Coast mega system

August 1, 2016

Providence St. Joseph Health puts muscle behind mental health

By JULIE MINDA and BETSY TAYLOR

Providence Health & Services and St. Joseph Health have combined to create Providence St. Joseph Health, one of the nation's largest Catholic nonprofit health care systems, the systems said on July 6. On the day of the announcement, the new system committed to an initial $100 million investment to be a catalyst for improved mental health care in the United States. (See sidebar, below.)

Dr. Rod Hochman, president and chief executive of Providence St. Joseph Health, said, "It really felt very, very natural for us to be together." He said the combination makes strategic sense, as both systems are West Coast health care systems, yet hadn't overlapped geographically. Both shared similar missions, visions and values; both were committed to health care innovation, providing excellent clinical care and service to their communities, he said.

Annette Walker, who is the new organization's divisional president of St. Joseph Health, said, "One of the things that excites me about this partnership is the commitment to positively impact the national health care scene in the United States. I think the opportunity we have to really use resources to help lead the change in health care in this country is just remarkable. Innovating and meeting community need is intrinsic to our legacy at St. Joseph Health, and it's been part of Providence's legacy, too." Both organizations have committed to honor their individual heritages. Groups from both health systems are exploring how their cultures will come together as one ministry of care.

Seven states
Providence St. Joseph Health will provide services in the seven states where the two systems provide care. Both legacy systems have hospitals and other facilities in California, and they'll continue to serve the other four states where Renton, Wash.-based Providence Health & Services operates — Washington, Montana, Oregon and Alaska — and the part of West Texas and eastern New Mexico served by Irvine, Calif.-based St. Joseph Health.

Heading into the combination, Providence Health & Services had total net operating revenue of about $14 billion annually. St. Joseph Health had revenues of $6.5 billion annually.

Hochman said the systems combined provide $1.3 billion in community benefit, and added that the legacy systems' commitment to poor and underserved communities is integral to the mission of the new entity.

Combination agreement
Walker described the deal as a combination agreement, saying the two came together in an equitable partnership. "Neither organization will buy the other, nor will either organization have control over the other. We have an equity of interest from the sponsor level, through the governance level and through management," Walker said.


Hochman

They've formed one obligated group to combine their assets and their tax-exempt debt, to allocate risk and to optimize their borrowing strategy.

Hochman said both Providence and St. Joseph systems were financially healthy entering the combined system and leaders at both systems believe the combination will make for an even stronger entity. Both were AA- bond rated organizations, according to information from Providence St. Joseph Health.

Leadership moving forward
The partnership brings together organizations with "like-minded founders," the Sisters of Providence and the Sisters of St. Joseph of Orange, Walker said. The Sisters of Providence began their health care work on the West Coast 160 years ago, and the Sisters of St. Joseph of Orange began caring for the sick there more about a century ago. Both begat sizeable health systems.

Public juridic person sponsorship of St. Joseph Health was established in 2006; Providence's public juridic person sponsorship was established in 2009. Those entities, Providence Ministries and St. Joseph Health Ministry, will co-sponsor Providence St. Joseph Health through a sponsors' council. Each public juridic person sponsor will have equal representation on the council. The reserved rights of the council include monitoring the application of the Ethical and Religious Directives for Catholic Health Care Services within Providence St. Joseph Health and its Catholic subsidiaries, according to documents related to the deal.


Walker

Providence St. Joseph Health is the new parent organization. Hochman's role as president and chief executive of Providence St. Joseph Health was previously announced during the planning for the new system. He had been president and chief executive of Providence Health & Services.

Walker, the divisional president of St. Joseph Health for Providence St. Joseph Health, had served as interim president and chief executive of St. Joseph Health since March when Deborah Proctor retired. As the organization's president and chief executive, Proctor was pivotal in putting the deal with Providence together, said Walker.

Executives from both Providence Health & Services and St. Joseph Health will play leadership roles moving forward. Hochman said jobs are not being eliminated. "The beauty of this partnership is that we didn't have to lose any jobs to create it," he said.

The board of directors of Providence St. Joseph Health will include seven members appointed by Providence and seven members appointed by St. Joseph Health.

The system headquarters for Providence St. Joseph Health is in Renton, with divisional headquarters in Renton and in Irvine.

In addition to the founding organizations of Providence Health & Services and St. Joseph Health, Providence St. Joseph Health also includes Covenant Health and Covenant Medical Group in Texas; Facey Medical Group, Hoag Memorial Hospital Presbyterian and St. Joseph Heritage Healthcare in California; Kadlec Regional Medical Center, Pacific Medical Centers and Swedish Health Services in Washington. The combination agreement also includes a high school and a college.

 

Providence St. Joseph Health commits to lead U.S. in mental health care, policy

Providence St. Joseph Health has made a $100 million start-up investment in its new Institute for Mental Health and Wellness, envisioned as a catalyst to improve the quality and affordability of mental health services, reduce the stigma of mental illness and increase access to effective care for societies' most vulnerable.

Dr. Rod Hochman, Providence St. Joseph Health's president and chief executive, said of the new institute, "We think it's groundbreaking for a health system. It really represents making a difference in the communities we serve. That was the thing I think sponsors, board and management felt most proud of in announcing the new health system."

Hochman said the mental health work will include assessment in the communities served by the new system to help ensure that mental health needs are being met and additional resources can be targeted to fill gaps.

The institute's work will include broad efforts to destigmatize mental illness and to advocate for policy change nationally. He referenced The Institute of Medicine's 2001 report, Crossing the Quality Chasm: A New Health System for the 21st Century that called for reforms to prevent patient deaths due to medical errors or safety issues. Hochman said the new institute will take a similar approach, studying the current crisis in mental health in the U.S. and recommending areas for improvement in the treatment of patients with depressive disorders, pediatric mental illness or major psychotic disorders and work to destigmatize the receipt of mental health services. Experts believe fear of stigma keeps many patients who could benefit from seeking treatments.

Annette Walker, divisional president of St. Joseph Health for Providence St. Joseph Health, said the sponsors of the systems told management: "If we come together, it is for something really important. Tell us what you can do together that you couldn't do separately." The Institute for Mental Health and Wellness is one answer to that challenge.

Walker said the commitment to mental health goes back to the roots of Catholic health care. "We have always seen health care as caring for the whole person — that means body, mind and spirit. And, it's always been at our core."

As a first step, Maureen Bisognano, the recently retired president and chief executive of the Institute for Healthcare Improvement, will chair a panel of experts who will convene to create a blueprint for improving mental health. The institute plans to work with both regional and national organizations to enact change, leaders said.

California Attorney General Kamala Harris' office, which approved the combination of Providence and St. Joseph Health with conditions in June, had said Providence St. Joseph Health would make an initial $30 million commitment in California — $10 million a year over three years — to a mental health initiative in that state. That investment is part of the system-wide $100 million investment, according to Walker.

In a release announcing the creation of the institute, Providence St. Joseph Health said fund distributions will be made through a grant process to Providence St. Joseph Health entities and other organizations within the communities it serves.

In its July announcement, the health system said the Institute for Mental Health and Wellness would begin operations immediately.

— JULIE MINDA and BETSY TAYLOR

 

Systems "come together to serve" in Providence St. Joseph Health combination

In this video clip, Sr. Juliana Casey, IHM, offers a reflection celebrating the first day of Providence St. Joseph Health. Her remarks were delivered July 6 at a blessing service held at Providence St. Joseph Hospital in Burbank, Calif. Sr. Casey is president of Providence Ministries, the public juridic person of Providence Health & Services, and she is a member of the new co-sponsors' council overseeing Providence St. Joseph Health.

Watch the video

 

Members of the Providence St. Joseph Health sponsors' council

All of the sponsor members of Providence Ministries and St. Joseph Health Ministry also will serve on the sponsors' council for Providence St. Joseph Health. Those members are:

Eleanor Brewer, St. Joseph Health Ministry

Sr. Anita Butler, SP, Providence Ministries

Sr. Juliana Casey, IHM, Providence Ministries

Johnny Cox, Providence Ministries

Bill Cox, Providence Ministries

Ned Dolejsi, St. Joseph Health Ministry

Jeff Flocken, St. Joseph Health Ministry

Sr. Katherine Gray, CSJ, St. Joseph Health Ministry

Sr. Suzanne Sassus, CSJ, St. Joseph Health Ministry

Barbara Savage, Providence Ministries

Sr. Barbara Schamber, SP, Providence Ministries

Sr. Mary Therese Sweeney, CSJ, St. Joseph Health Ministry

 

Providence St. Joseph Health Board of Directors

Each system also contributed equally to the combined board:

  • Richard Blair, chair, from the St. Joseph Health Board of Trustees
  • Dave Olsen, vice chair, from the Providence Health & Services Board of Directors
  • Dick P. Allen, previously a member of Hoag Memorial Hospital Presbyterian Board of Directors
  • Isiaah Crawford, from the Providence board
  • Sr. Lucille Dean, SP, interim president of the University of Great Falls, Great Falls, Mont., a ministry of Providence Health & Services
  • Sr. Diane Hejna, CSJ, from the St. Joseph board
  • Michael Holcomb, immediate past chair of the Providence board
  • Sr. Phyllis Hughes, RSM, from the Providence board
  • Thomas Kopfensteiner, from the St. Joseph board
  • Sallye Liner, from the Providence board
  • Mary E. Lyons, from the St. Joseph board
  • Walter Noce, Jr., from the St. Joseph board
  • Dr. Carolina Reyes, from the Providence board
  • Phoebe Yang, from the St. Joseph board
  • Dr. Rod Hochman, president and chief executive of Providence St. Joseph Health (Hochman is a voting member of the Providence St. Joseph Health board)

 

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