Report Recommends Hoag-St. Joe Network

A report for the state attorney general’s office has set a timeline for a decision on a request by Hoag Memorial Hospital Presbyterian and St. Joseph Health to establish an integrated regional healthcare network. It also shed light on a key reason for the move.  The report by El Segundo-based consultant Medical Development Specialists Inc. recommended an approval of the proposal with several conditions, including a continuation of women’s health services at Hoag for at least five years, with the exception of “direct abortions.”

Attorney General Kamala Harris is expected to make a decision on or before Feb. 4, according to state officials. Neither Hoag nor St. Joseph offered any reaction to the conditions laid out in the report.

“The public meeting and the conditions are a normal part of the process of any affiliation of this magnitude,” said Hoag spokesperson Nina Robinson. “Hoag, as the applicant, is working closely with St. Joseph on all matters, and we look forward to finalizing the details with the attorney general shortly.”
Representatives of St. Joseph Health did not respond to a request for comment.

The report also said Hoag—a $1 billion hospital system with campuses in Newport Beach and Irvine—initiated talks about the proposed healthcare network. It cited a need by Hoag to expand its service area; it also cited the ongoing effects of federal healthcare reform.  Healthcare reform was passed in 2010 but is still in the process of being implemented, bringing broad changes to how hospitals and doctors are being paid for their services.

“In response, many hospitals, health systems, physicians and others are forming partnerships and ‘integrated delivery systems’ to develop the resources and expertise to successfully adjust to these changes,” Medical Development said.

Bigger Partner
Orange-based St. Joseph Health is much bigger than Hoag in terms of revenue—with about $4.4 billion annually—as well as the number and geographic spread of its hospitals and other facilities. St. Joseph would bring St. Joseph Hospital-Orange, St. Jude Medical Center in Fullerton, Mission Hospital’s campuses in Mission Viejo and Laguna Beach, and St. Mary Medical Center in the High Desert community of Apple Valley into the proposed network.
“On its own, Hoag would not be successful in the long term unless it were part of a larger, more geographically dispersed system in Orange County, like Kaiser, [MemorialCare] Health System or [St. Joseph],” Medical Development said.  Hoag picked St. Joseph Health as its partner because “both are large, well respected and successful organizations in Orange County and are faith-based,” the report said.

The recommendations on women’s health services—an area of care that includes reproductive medicine among other treatments—come against a backdrop of commitments that St. Joseph Health would retain its Catholic identity and Hoag would maintain its Presbyterian ties.  Women’s health services offered at Hoag would be governed by a special committee as part of the proposed network.

St. Joseph Health has said its facilities will continue to comply with directives of the United States Conference of Catholic Bishops as part of the regional organization, which has a working title of Covenant Health Network but will likely get a new name before it starts.  The Roman Catholic Church generally opposes abortion and contraception.

Recommendations also call for the proposed network to present a three-year strategic and capital plan for population health management and care for the poor and vulnerable to Harris’ office. Providing better care for vulnerable and medically underserved populations is another reason for affiliating, according to the report. It mentioned that Orange County, unlike other highly populated counties in California, doesn’t have a government hospital and clinic network.  “Without an organized [county] system of care, the burden shifts to private healthcare providers,” Medical Development said, adding that Hoag and St. Joseph Health believe the new organization can strengthen the area’s healthcare safety net.

Business Structure
Medical Development said that although there was “confusion in general” about the specific business structure of the network, it did not interview anyone who was opposed to the affiliation or was aware of any significant opposition.  Hoag Chief Executive Richard Afable is scheduled to be the network’s initial president and chief executive. Afable will be an employee of St. Joseph Health, which will appoint four of seven seats on the new organization’s board.  The other three directors are going to be jointly selected by the Hoag Family Foundation and the Association of Presbyterian Members. 

To view the original Orange County Business Journal article, please click here​.