Hoag Affiliation with Providence St. Joseph Health

May 11, 2020 Erik G. Wexler
Laguna Beach, California

From the desk of Erik G. Wexler, Chief Executive, PSJH Southern California, and CEO, Covenant Health Network

To all Southern California Caregivers, Medical Staff, Board Members and Donors,
As many of you know, Hoag Memorial Hospital Presbyterian joined St. Joseph Health eight years ago during a time of immense struggle for Hoag with the departure of the largest physician network (IPA) and management services organization (MSO) affiliated with the hospital. St. Joseph Health welcomed Hoag into a family of wonderful hospitals, the Heritage Medical Group and services outside the walls of our hospitals with the intent on strengthening Hoag and the entire Orange County and High Desert health system in unity. During the years that followed, Heritage Medical Group and Hoag stabilized and grew the medical foundation physicians dedicated to Hoag to more than 100 clinicians.
Today, Orange County is blessed to have strong, nationally recognized medical centers working together to advance the health of the community. Our family of organizations, including Hoag, St. Jude, St. Joseph and Mission, have all been recognized as some of the top hospitals in the country by the U.S. News & World Report, Healthgrades, the Women’s Choice Awards for America’s Best Hospitals and the American Nurses Credentialing Center. Along with our Orange County hospitals, Hoag (through the affiliation) has grown to serve more of the community and has recovered from its distress prior to the affiliation with St. Joseph Health. During the past eight years, we have appreciated the affiliation, collaboration and good-faith efforts to serve our community in a unified manner. Examples of this progress include:
  • Through alignment with Heritage Healthcare, Hoag’s managed care patients now have access to more than 2,000 health care providers.
  • Providence deployed Epic, a leading electronic medical record system, to Hoag which has enhanced care delivery and provides patients with electronic access to their medical records.
  • Providence and Hoag came together to help establish and make significant investments in BeWell Orange County, a partnership focused on addressing the mental health and substance abuse disorders in Orange County. 
  • Providence invested in the Hoag Orthopedic Institute and created a partnership for orthopedic ambulatory surgery centers across Orange County, providing more access to patients who need orthopedic care.  
  • Providence, Hoag Medical Group and Heritage Medical Group leadership participate in a collaborative work group that meets regularly to provide increased access to patients in Orange County and to coordinate care for the advancement of population health.
  • During the current COVID-19 crisis, Providence made it possible for Hoag to participate in the experimental drug Remdesivir clinical trial, extending a potentially promising treatment to Hoag patients.
Those who courageously brought the organizations together eight years ago have truly advanced care to the community, reduced duplication of services and allowed for Hoag and all of our ministries to advance. While independence from our local affiliation may feel easier and not require collaboration, the work we do together is not only for our individual institutions, it is for the greater good and the communities that we serve. The overwhelming facts establish that there have been significant accomplishments and much more we can do together for those we serve. During this unprecedented and extraordinary time of health crisis, economic challenge and community need, collaboration is more important now than ever. We have always appreciated the leadership at Hoag and its affiliation with our health system in Orange County and High Desert and hope this matter comes to a speedy conclusion for all.
Below is a Q&A that I hope will be helpful:
Q: Hoag says they have been trying to realign the relationship for the last year. Is this true, and why have they asked for separation now?
A: In July of 2019, Hoag presented us with a request to realign the relationship. This came as a surprise given all the accomplishments and years of work to advance Hoag and the combined entities in Orange County and High Desert. Each year, the strategic plan and budgets are presented to the Hoag board for Orange County and High Desert and each plan has been unanimously approved by the Hoag board (including the 2020 strategy and budgets presented in January 2020). When the request for realignment was made in July 2019, we agreed to review it and attempted during many months to find a pathway for Hoag that would not pull apart our years of collaboration, which would slow the advancement of health care improvement for our community.
Q: Why did Hoag ask the courts to rule on this affiliation?
A: Our organizations were in the midst of a mutually agreed-upon dispute resolution process with a former federal judge serving as mediator. Before the date on which the organizations had agreed in writing not to pursue any legal proceedings, and in the midst of the mediator’s efforts, Hoag violated this agreement and attempted to file its lawsuit. We are disappointed that Hoag chose to violate the agreed-upon process by sending the lawsuit to court before the final mediation date. Why Hoag chose to take this action in the midst of a pandemic is perplexing. Due to the national health crisis, the Orange County courts are understandably not yet open for normal non-essential business, and the lawsuit has yet to be acknowledged by the court.
Q: Has the affiliation helped Hoag over the years?
A: Yes. Hoag lost its largest physician network and management services organization almost 10 years ago and Heritage Medical Group helped Hoag reestablish a dedicated group of physicians (now numbering more than 100 in the Hoag Medical Group) through recruitment, support services and managed care contracting. Hoag has participated in Providence Clinical Institutes, collaboratively developing and deploying best practice clinical protocols to its hospitals. Providence installed and activated Epic at Hoag, one of the nation’s leading electronic medical record systems, allowing for best of class information systems within its facility and providing digital access for its patients to their medical records. Providence provided the seed money to establish Mind OC, a coordinated ecosystem to support mental health in Orange County, and then Hoag and Providence collectively made significant financial and administrative investment (with others) to form the organization. Prior to the affiliation, Hoag and the St. Joseph Health entities were not aligned in the provision of orthopedic services. Providence invested in the Hoag Orthopedic Institute and created an exclusive relationship to develop an ambulatory platform to expand this care to the community, and even into Los Angeles County. And during the COVID-19 pandemic, Providence’s platform and resources enabled it to be a participant in the Remdesivir clinical trial, and Providence was able to open this trial to Hoag for patients being treated at its facility.
Q: Hoag claims that we have abandoned our efforts around population health. Is this true?
A: No. We continue our years-long efforts to advance population health. In fact, the progress described in the summary above are only very recent examples of these efforts (all within the past 36 months). Additionally, the Orange County and High Desert strategic plan that was presented and approved by the Hoag board in January, specifically outlines objectives that will improve population health. Hoag has claimed that Providence has abandoned population health. In fact, Erik Wexler commented at a recent Hoag board meeting that the term “population health” is one that has been used for many years and believes that it is more contemporary to refer to this as becoming a “value-based care provider.” This terminology not only speaks to the essentiality of keeping the population healthy, but also doing so in a way that allows for less financial impact on the patient and society, improved patient experience and bringing care closer to home.
Q: Have women’s services been impacted at Hoag since the affiliation?
A: Women’s services at Hoag have, in fact, improved during the years. Hoag has been the recipient of the Women’s Choice Award for Heart Care and Obstetrics for the past six years. Along with our other Orange County hospitals, Hoag has received this award for meeting the standards carefully outlined by this outside organization. Based on the requirements of the attorney general in the affiliation agreements, Hoag is not bound by the Ethical and Religious Directives for Catholic Healthcare and therefore, has no impact on Hoag’s ability to provide services it chooses to offer.
Q: Why does Hoag feel it was “swallowed up” by Providence?
A: This statement by them is hard to explain. Hoag and our Orange County and High Desert entities are part of a California corporation called Covenant Health Network (CHN). Erik Wexler is the CEO of CHN and his executive team serves as the leadership. Three members of the Hoag board serve on the CHN board of eight people. CHN approves the annual strategic plan, which has been unanimously approved year after year, including by the Hoag board. Strategic or capital requests by Hoag to the CHN board have NEVER been denied. Due to the manner in which the affiliation works, Hoag has its own discretion whether to use clinical protocols, supply chain contracts, or other system scale initiatives. Nothing has ever been forced upon Hoag, only ideas that have been offered for consideration. For example, Providence participates with a group purchasing organization called Vizient for all the massive amounts of supplies purchased at our ministries. At a higher cost, Hoag has chosen not to use Vizient and instead uses Premier Inc. GPO. This of course is its decision to make, and an example of Hoag being allowed to make its own choices.
Q: Since the Providence merger with St. Joseph Health, has Hoag asked to disaffiliate?
A: No, quite the opposite. During the past three years, at the request of Hoag, there have been a number of amendments to the affiliation agreements. For example, Hoag requested that the Hoag Medical Group that was developed with Heritage Medical Group, be allowed to move out of that combined structure and into its own structure. When Providence agreed to do this for Hoag, along with the various other amendments during the past three years, the amendment reaffirmed Hoag’s intent to remain within Providence and CHN. Each time Hoag signed these agreements, they validated the original intent of the affiliation – that it would be in perpetuity.
Q: When all the air clears from COVID-19 and the request of Hoag to disaffiliate is considered, what does CHN and Providence want to happen?
A: We have long appreciated the affiliation with Hoag and its leadership. We have much to celebrate and convey to the community for our efforts together. There is much more that can be accomplished, and several of those opportunities have been under discussion. It is still too early to know where this will end up, and CHN and Providence have actively engaged in discussion and a formal dispute resolution process. What we can say is that we are not only here to serve the individual needs of our hospitals, leadership and boards, we are ultimately here to serve the greater good of health and wellness for our community. That is a much greater calling than simply allowing for ease of decision-making as individual institutions who may in the end cause duplication of services, not fully take advantage of the very best in clinical protocols and create difficulty for patient coordination of care across entities. Whatever we all do, it must be for those we serve at the most important moment of their lives when health and well-being are at risk.
Q: What happens next? Will the lawsuit move forward?
A: The affiliation remains in place and all of the requirements of the affiliation continue. CHN and Providence remain willing to continue the dialogue with Hoag to find a meaningful resolution that protects healthcare in our community. If Hoag persists with its lawsuit, it could be a year or longer before the matter is resolved. In the meantime, we will continue to serve our patients with compassion and with continued appreciation for Hoag as an affiliate of our organization.
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