Providence Health & Services, St. Joseph Health intend to combine systems

August 15, 2015

By JULIE MINDA and BETSY TAYLOR

Providence Health & Services and St. Joseph Health, two of the nation's largest Catholic health systems, both with a concentration of facilities in West Coast states, said on July 31 they've signed a letter of intent to form a single, combined health care system.

Providence Health & Services and St. Joseph Health said in a joint news release that their discussions are in the early stages, that specific details about the partnership have not been finalized, and that those discussions likely will take several months. Dr. Rod Hochman, president and chief executive of Providence Health & Services, would be the president and chief executive of the new organization, which has yet to be named. Deborah Proctor, St. Joseph Health president and chief executive, in February had announced her plans to retire at the end of this year and now will retire when the deal closes.

Providence Health & Services has 3,579 employed physicians. St. Joseph Health has more than 3,000 physicians in its network, including those in medical groups and physician networks. The St. Joseph Heritage Medical Group employs 2,600 of those physicians. (With limited exceptions, California law prohibits hospitals from directly employing doctors, but hospitals can set up contractual arrangements, including through medical foundations like St. Joseph Heritage, to employ physicians.)

According to information from Susan Solomon, St. Joseph Health vice president of marketing and communications, all of the entities within both health systems would be involved in the partnership, which Solomon said is not a purchase. The organizations intend to combine assets under a single obligated group, she said. The obligated group structure is a business arrangement that nonprofits can use to create one entity for consolidation of financials, for borrowing and for assuming liability for debt.


Hochman

Proctor

The two systems say their holdings complement one another. Providence Health & Services does not have any hospitals in communities served by a St. Joseph Health hospital, but some of their service areas are geographically proximate and the partnership would fill in the map. Both systems have a presence in both Northern and Southern California — both systems have a concentration of facilities in the greater Los Angeles area.

Hochman said in the release the missions of the two health care systems "are aligned to improve the quality of care, increase access and make care more affordable for everyone." Proctor said in the release she believes the organizations "truly have the potential of being better together, delivering outstanding clinical care and providing a compassionate presence in all the communities we serve."

Solomon said both Providence Health & Services and St. Joseph Health are strong organizations. She said the partnership is driven by a desire to come together to advance a common mission to provide outstanding care and a compassionate presence — and not by any imperative to reduce operating costs.

The systems share similar heritages, according to the release. The founders of Providence Health & Services, the Sisters of Providence, traveled from Montreal, Canada, to Fort Vancouver in Washington, to provide health care in the Northwest about 160 years ago, going on to serve Alaska, California, Montana, Oregon and Washington. Currently, a public juridic person called Providence Ministries sponsors Providence Health & Services. Today, the system provides $848 million in community benefit and charity care.

The women religious who founded St. Joseph Health, the Sisters of St. Joseph of Orange, began meeting the needs of Northern California 103 years ago and went on to provide health care elsewhere in the state, as well as communities in Texas and New Mexico. A public juridic person called St. Joseph Health Ministry sponsors the system. St. Joseph Health currently provides $416 million of charity care annually.

Both systems include non-Catholic health care affiliates that share a mission to care for all, especially the poor and vulnerable, and that have maintained their original faith tradition or secular status, the systems said.

Providence has formed a secular organization called Western HealthConnect, which enables the health system to affiliate with nonreligious organizations, with each partner retaining its own separate 501(c)(3) tax status. Providence has affiliated with Seattle-based Swedish Health Services; Seattle-based Pacific Medical Centers; and Richland, Wash.-based Kadlec Health System under Western HealthConnect.

St. Joseph Health has affiliated with Hoag Memorial Hospital Presbyterian of Newport Beach, Calif. — a Presbyterian system — through a Southern California hospital network called St. Joseph Hoag Health. There are five St. Joseph Health hospitals and two Hoag hospitals in that network. Solomon said this network and Western HealthConnect would be included in the partnership.

 

Copyright © 2015 by the Catholic Health Association of the United States
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