Northern California medical venture by St. Joseph Health, Adventist Health passes regulatory deadline

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After announcing in April 2018 their intent to become a joint operating company, St. Joseph Health Northern California and Adventist Health are still awaiting final approval from the state attorney general and Federal Trade Commission.

The anticipated deadline from the Attorney General's Office was Sept. 30, but that date has come and gone. The new, and still subject-to-change deadline is Oct. 31, according to a spokeswoman.

In August, the state agency capsulized for the Business Journal what the process entails:

“The office is … in the process of evaluating the expert reports and community feedback, and considering all the statutory and regulatory factors, including but not limited to, whether the transaction is in the public interest.”

“Even though we are still waiting to hear from the California Attorney General with a response, we remain hopeful that the formation of a joint operating company is approved,” Jeff Eller, president, Adventist Health Northern California region, said in an email statement. “It has taken longer than anticipated, however, we respect the process and are confident that this will help our communities to access the care they need in the future.”

Kevin Klockenga, executive vice president and CEO of St. Joseph Health System-Northern California Region, expressed the same optimism, though he declined to state a date as to when he thinks the joint operation will be approved and finalized. Instead, he hopes it will be by year’s end.

“We’re still working through the regulatory process both with the FTC and Attorney General,” he said. There have been earlier deadlines prior to September, which isn’t necessarily unusual because of the back-and-forth questions and answers the agencies have as they work toward a decision, Klockenga explained.

Some of the types of questions Klockenga said he’s been responding to revolve around how St. Joseph Health and Adventist Health plan to operate the joint operating company, and what efficiencies they foresee the new entity being able to create for their respective communities.

For the FTC’s part, the agency does not comment on proposed mergers or joint ventures, said spokeswoman Betsy Lordan, adding it also does not confirm whether it is conducting an investigation.

Adventist Health and St. Joseph Health operate North Bay facilities, including St. Helena hospital, Queen of the Valley and Santa Rosa Memorial. They plan to integrate their clinical work and services in Northern California. The joint operating company will include clinics and facilities in Humboldt, Mendocino, Sonoma, Lake, Napa and Solano counties, according to previous reporting by the Business Journal.

According to St. Joseph Health, Klockenga will be president and CEO of the joint operating company. St. Joseph Health employees will remain employees of their St. Joseph Health ministry, and Adventist Health employees will still work for Adventist Health.

In addition, St. Joseph stated, the new joint operating company will be governed by a 10-member board: five appointed by Adventist Health and five appointed by St. Joseph Health. The initial chair of the board will be Bill Wing, president of Adventist Health.

JD Healthcare, Inc. was retained to prepare health care impact statements for the Office of the California Attorney General to assess the potential impact of the proposed Master Formation Agreement. It released a 120-page report in June.

Staff Writer Cheryl Sarfaty covers tourism, hospitality, health care and education. Reach her at cheryl.sarfaty@busjrnl.com or 707-521-4259.

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