Adventist Health, St. Joseph Health plan to jointly run North Coast operations

Driven by federal regulation changes emphasizing quality care and increasing record keeping, Adventist Health and St. Joseph Health are creating a joint management company to oversee their Northern California operations for clinics and facilities in Humboldt, Mendocino, Sonoma, Lake, Napa and Solano counties.

The new management company will be based in Santa Rosa and the proposed transaction is set to close sometime later this year the organizations announced April 23.

The two health care providers operate North Bay facilities which include St. Helena hospital, Queen of the Valley in Napa, and Santa Rosa Memorial, The arrangement does not include the other 15 Adventist Health hospitals in the western United States or the other 46 Providence St. Joseph Health hospitals located throughout the western United States and Texas.

Under this affiliation, which is subject to regulatory review, Adventist Health and St. Joseph Health will retain existing hospital names, licenses, capital assets and employees.

The new management company will oversee all facility operations of both health care providers, and report to a board of directors comprised of 50 percent St. Joseph members and 50 percent Adventist members.

The two faith-based health care providers say their aim is to provide more efficient services for patients. Those patients will be able to visit either provider’s facilities. Electronic records of patients will be shared, the organizations stated.

Part of the reason for the change is the Affordable Care Act (ACA). Last year, it mandated changes in the model through which health care organizations are reimbursed by Medicare, said Jeff Eller, Adventist Health president of the Northern California region.

The reporting to the federal government for Medicare reimbursement has shifted from a fee-for-service model, which incentivize payment for a volume of services, to value-based models, which reimburse based on quality-of-care. The changes mean more documentation of the quality of care provided in order to get reimbursed. A Business Journal story in July reported how the changes in the health care system.

“We (St. Joe’s and Adventist Health) created a conversation (with St. Joe’s) around this several years ago. How do we move away from a fee-for-service model to reduce costs and improve efficiencies,” Eller said.

Providence St. Joseph Health, St. Joseph’s parent company, is a Renton, Wash.-based not-for-profit system, which has 51 hospitals and more than 800 facilities across seven states as well as its own health plan. It recently embarked on a new direction that involves new partnerships and extending its ambulatory or outpatient services network, divesting non-core assets and bolstering its digital capabilities, among other initiatives.

“Our investments are consistent with the needs of the community. In general, all health care providers are in communication. They see who would make better partners and have different dialogs at different times,” said Kevin Klockenga, St. Joseph Health Northern California region president and CEO. Health care in general is moving in the direction of the more profitable ambulatory-based care, he said.

Providence St. Joe plans to add to its ambulatory network, where its revenue rose significantly in 2017 amid relatively flat inpatient admissions. Outpatient admissions and surgeries grown while inpatient admissions have slightly dropped.

Under the deal with Adventist, North Coast facilities, services and clinics associated with Adventist Health - Howard Memorial in Willits, Adventist Health Ukiah Valley, Adventist Health Clear Lake, Adventist Health St. Helena and Adventist Health Vallejo Center for Behavioral Health - would come under the operating agreement with the Home Health services and facilities, services and clinics associated with St. Joseph Hospital Eureka, Redwood Memorial Hospital, Santa Rosa Memorial Hospital, Napa’s Queen of the Valley Hospital and the St. Joseph Home Care Network.

“The goal is to have the right care in the right place, thus expanding the network of care,” Klockenga said.

Providence St. Joseph Health is a Catholic health system which in total serves seven states, with 111,000 employees. Providence St. Joseph Health includes St. Joseph Health, Providence Health & Services, Covenant Health in west Texas, Facey Medical Foundation in Los Angeles, Hoag Memorial Presbyterian in Orange County, Calif., Kadlec in Southeast Washington, Pacific Medical Centers in Seattle, and Swedish Health Services in Seattle.

Adventist Health is a faith-based, nonprofit integrated health system. Its serves more than 75 communities on the West Coast and Hawaii, with more than 24,600 employees and operating 19 hospitals, more than 280 clinics (hospital-based, rural health and physician clinics), 13 home care agencies, seven hospice agencies and four joint-venture retirement centers.

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