The founders of Hoag Memorial Hospital Presbyterian filed a lawsuit last week to dissolve Covenant Health Network (CHN), the vehicle for the organization’s affiliation with Providence Health to promote population health initiatives in Orange County.
Hoag, a nonprofit regional healthcare delivery network based in Orange County, California, has been affiliated with St. Joseph Health, a nonprofit health system based in Irvine, California, since 2012. In 2016, St. Joseph merged with Providence Health, a nonprofit health system based in Renton, Washington. The new combined system, Providence-St. Joseph Health, reported over $25 billion in total operating revenues at the end of 2019.
Hoag, which operates two hospitals in southern California, has net assets of nearly $2.2 billion, according to the organization’s most recent 990 form.
Despite the enthusiasm surrounding CHN, Robert Braithwaite, President and CEO of Hoag, tells HealthLeaders the effort “struggled for a number of years with fits and starts.”
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Braithwaite says Hoag anticipated scaling up CHN’s population health efforts in Orange County as a result of the merger but added that it also introduced a “more diffuse” business structure with “more bureaucratic” challenges.
“There are good people [at Providence] but it was becoming apparent to us that they have more of a national presence,” Braithwaite says. “They’re one of the biggest health systems in the United States and they do have more of a regional or national lens, compared to that of Hoag, which is more concentrated on southern California, specifically Orange County.”
Those issues prompted the legal action by Hoag to end an affiliation that has lasted eight years, as the hospital aims to “reclaim its independence.”
In the filing, Hoag claims that the CHN executive staff had “formally abandoned” the organization in 2017.
Hoag leadership analyzed the struggles surrounding CHN and determined in June 2019 that the initiative was “not right for this community,” according to Braithwaite. He says Hoag reached out to Providence to ask for a realignment of the CHN arrangement, noting that the current arrangement was “not fulfilling the measure of its creation.”
Negotiations with Providence lasted until March 2020, before Hoag proceeded with a mediation process, according to Braithwaite. He says that process, which took place Thursday, April 30, failed and led to the complaint filed on Friday, May 1, to dissolve CHN.
In the filing, Hoag claims that Providence executives told the board earlier this year that population health was “no longer relevant.”
Braithwaite tells HealthLeaders that he hopes the timeline for dissolving the affiliation is “expeditious,” but added that Hoag will continue to operate as a controlled subsidiary of Providence until a resolution is reached.
Source: HealthLeaders Media
