When two Catholic health systems, Providence Health Services and St. Joseph Health, merged last July, they created a 50-hospital system based in Renton, Wash., with headquarters in Renton and Irvine.
The formula of one health organization, two systems, will be changing again—at the top, with the announcement of Richard Afable’s retirement. He’s president and chief executive officer of St. Joseph Hoag Health; and also executive vice president and regional senior executive of Providence St. Joseph Health in Southern California.
The 63-year-old healthcare veteran will remain in his current position until December. He’ll work with Mike Butler, president of operations at Providence St. Joseph to develop a transition plan for St. Joseph Hoag.
There are two separate boards of directors involved. Providence St. Joseph Health is comprised of 14 members, seven appointed by Providence and seven appointed by St. Joseph. Hoag has its own 15-member board.
Complex Combinations
Afable’s departure comes after two complex deals.
Hoag Memorial Presbyterian forged an alliance with St. Joseph Health in 2013—St. Joseph Hoag Health.
Providence Health Services and St. Joseph Health merged last year into Providence St. Joseph Health, which serves seven states. Providence is the dominant player in Alaska, Washington, Montana and Oregon, St. Joseph in Texas and New Mexico; Southern California is effectively split, Providence in Los Angeles County, and St. Joseph in Orange County.
St. Joseph’s OC presence is uniquely structured.
Irvine-based St. Joseph Hoag has seven hospitals: Hoag Hospital in Newport Beach and Irvine; Hoag Orthopedic Institute; Mission Hospital in Mission Viejo and Laguna Beach; St. Joseph Hospital in Orange; and St. Jude Medical Center in Fullerton.
“Scale and size is very important to healthcare, much like other industries,” said Afable, pointing out that the shift to a value-based care model means that healthcare providers are challenged with providing better care and being paid less.
The collaboration with Hoag joined resources, networks and expanded geographical coverage and influence. Some industry observers said at the time that Hoag got scale and St. Joseph improved its balance sheet.
“A huge sense of gratitude to Rick. He was a transformative leader,” said Hoag Chief Executive Robert Braithwaite.
He added that the partnership talk stemmed from an incident when former St. Joseph Chief Executive Deborah Proctor happened to be flying to the same place on the same plane with Afable. “They started talking about integrating more closely to implement changes in the community, and they did.”
Hoag remains an affiliate “not owned or merged into Providence St. Joseph,” according to Braithwaite. He said Hoag reports its financial results along with Providence St. Joseph, but “we are a separate legal entity with a separate board of directors [who] have responsibility independent of Providence St. Joseph.”
There are no updates as to what degree Hoag can maintain its autonomy, or whether there will be greater unification within the Providence St. Joseph system.
Achievements
Afable said healthcare cannot exist without innovation. He singled out the creation of Hoag Orthopedic, St. Joseph Hoag Wellness Corners and new health plan product Select.
“[Innovation is] an area of great comfort and importance for me. Leaders today, especially in healthcare, need to have the courage to be innovative and bold in order to serve the need of patients,” he said.
Hoag Orthopedic is a physician-owned hospital opened just before the deadline set forth by the Affordable Care Act in 2010. It’s a for-profit joint venture between the nonprofit community hospital Hoag and originally 35 orthopedic surgeons from two different orthopedic groups.
He said the board came to agree that it’s important for the hospital and physicians to be aligned as a source of care to improve patient experience and outcomes.
The institute, comprised of a hospital and two ambulatory surgery centers was featured in Harvard Business Review.
As for the wellness corners, Afable said it’s “bold and innovative for hospitals to care for wellness and not sickness.” St. Joseph Hoag initially designed the wellness centers to serve a single employer and its employees. The program has now expanded to the community, including the opening of a 1,000-square-foot facility inside LA Fitness Irvine-Crossroads.
St. Joseph Hoag has six wellness centers in OC, including for storage product maker Western Digital Corp. and medical device maker Masimo Corp.
The health system also formed a joint venture with Cigna in January 2016 to offer OC employers HMO health plans branded St. Joseph Hoag Health Select, and an exclusive provider organization EPO—the health system’s version of PPO—branded St. Joseph Hoag Flex.
Future of Healthcare
Afable has been a part of the OC healthcare community for the past 12 years, including eight years as chief executive of Hoag, and said it was a privilege to participate in the journey that went from a single-hospital system to a six-hospital system to now being a part of a 50-hospital system. And he garnered respect beyond Southern California. Modern Healthcare listed Afable among the 100 Most Influential People in Healthcare.
Michael Mussallem is the chief executive of Edwards Life Sciences and a friend of Afable. Mussallem said Afable’s early years as a doctor served him well in his later roles as an executive.
“He’s a deep thinker,” Mussallem said. “Rick has a grasp on the whole healthcare delivery system that not many people have.”
Afable’s take on the U.S. healthcare structure is that “the whole method by which healthcare is paid for is in flux right now … not only because of Washington, D.C., and not only because of Sacramento, but also because employers and employees are questioning the method of payment and how insurance does or does not work [as well as] individual payment and individual responsibility … and how does prevention and wellness fit into healthcare.”
For one, with a shift to promote the interests and choices of consumers in healthcare—employers are increasingly passing costs to consumers as they shop around for more and better services.
“Providing good care matters,” said Afable.
He said he’s “retiring but not stopping.” The one-time internist and gerontologist plans to devote his time to mental health advocacy upon leaving his executive post and is forming a coalition of public and private leaders. He’s the chairman-elect of the California Hospital Association, the largest state hospital association in the country. He’ll serve as chairman of the Hospital Association of Southern California next year.
