Expect hospitals to take a leading role in shaping Orange County’s 2013 healthcare news.
One of the biggest stories is the planned creation of a new company that will bring two bellwether institutions—Hoag Memorial Hospital Presbyterian, which has campuses in Newport Beach and Irvine, and Orange-based St. Joseph Health—together to operate an integrated regional healthcare network.
Approval for the plan is pending with the California attorney general’s office.
St. Joseph and Hoag are coming together for several reasons, including what Hoag Chief Executive Richard Afable has said is a tendency for businesses to seek out networks to provide healthcare to their workers.
The new network also plans to develop various “centers of excellence” for cancer treatment, neurosciences, orthopedic surgery and heart surgery.
Hoag and St. Joseph officials have emphasized that the new network is not a merger and that they will retain their own cultures and operations independent of the new company. An example: women’s reproductive services will be separated out and governed by a special committee. Such a board satisfies requirements of the Roman Catholic Church, which opposes abortion and contraception in general, and has oversight of St. Joseph Health.
MemorialCare Health System, a Fountain Valley non-profit with three hospital campuses in OC, is set to establish a new health plan. The initiative—dubbed Seaside Health Plan—targets patients covered by Medi-Cal and California Children’s Services.
Children’s Hospital of Orange County in Orange will open its $560 million South Tower in the spring. The tower’s features include a dedicated pediatric emergency room—the first of its kind in OC.
Kaiser Permanente will go into the first full operating year of its $461 million hospital complex on La Palma Avenue in Anaheim. The Oakland-based not-for-profit operates the county’s largest health maintenance organization with almost 460,000 members.
Not all likely news-makers are hospitals.
Edwards Lifesciences Corp., the Irvine-based heart valve maker, continues to draw attention for its Edwards Sapien family of less-invasive heart valves. The products are expected to post global sales of $710 million to $790 million in 2013, dominated by U.S. sales of the devices.
Irvine-based drug maker Allergan Inc. could sell off its slow-growing weight-loss device business. It also will be looking for possible deals in high-growth market sectors.
Meantime, healthcare costs in OC are expected to rise 6.5% in 2013, according to a survey from Chicago-based consulting firm Aon Hewitt Inc., which has a Newport Beach office.
PERSON TO WATCH: RICHARD AFABLE
The longtime chief executive of Hoag Memorial Hospital Presbyterian, which has campuses in Newport Beach and Irvine, is expected to take on a new job in 2013.
Afable is set to be president and chief executive of a new integrated regional healthcare network being established by Hoag and Orange-based St. Joseph Health.
Approval from California Attorney General Kamala Harris’ office is required for Hoag and St. Joseph to establish the new network, which has the working title of Cov-enant Health Network. A decision by the office is expected in early February.
Afable said he plans to continue to be Hoag’s president and chief executive “until which time we hear from the attorney general.”
“Assuming the attorney general gives us a favorable decision and will allow the relationship to go forward, it has been decided at this point by both organizations that I will take the initial role of president and chief executive,” Afable said.
The Hoag Memorial board is expected to conduct a search for a new Hoag chief executive as part of its transition process.
—Vita Reed
COMPANY TO WATCH: ALLERGAN INC.
Orange County’s biggest company, by market cap, will emphasize high-growth businesses in the New Year.
Those include its flagship Botox neurotoxin and other products targeting cash-pay patients.
The Irvine-based company could sell its Lap-Band weight loss business in 2013. Lap-Band has seen sales declines for the past five quarters.
“Allergan’s all about lots of growth, and clearly Lap-Band has been growing in the wrong direction for the last two or so years,” Chief Executive David Pyott told the Business Journal in November. “Strategically, we have to have product lines that have growth.”
It’s expected that any auction of the Lap-Band business would draw both strategic and financial bidders.
Meantime, Allergan could also be an acquirer in 2013. It heads into January with more than $1 billion in available cash for deals.
—Vita Reed
