Children’s Hospital of Orange County, one of the most beloved local institutions, has officially joined forces with Rady Children Hospital San Diego to create a new entity that will address a market of 2 million children.
The new healthcare system, now called Rady Children’s Health, officially opened Jan. 1. It won approval by the California Office of the Attorney General after a year of community hearings and other regulatory reviews.
Kimberly Chavalas Cripe, who has served as the president and chief executive of CHOC since 1997, and Patrick Frias, M.D., who was appointed president and CEO of Rady Children’s in 2018, will be co-CEOs of Rady Children’s Health.
“This merger marks a pivotal moment in our organizations’ rich histories and highlights our commitment to achieving unparalleled excellence in patient care, education, research and advocacy,” Cripe said in a statement. “Together, we are poised to make an even greater impact on the health and well-being of children for generations to come.”
The combination is the latest notable news for Orange County’s growing healthcare industry, where City of Hope, UCI Health and Hoag Memorial Hospital Presbyterian, among others, are spending billions of dollars to build hospitals and clinics.
CHOC reported $1.2 billion in revenue for the year ended Sept. 30, 2023, ranking it fourth on the Business Journal’s latest annual list of hospitals in Orange County. It also oversees CHOC at Mission Hospital in Mission Viejo, which reported another $108 million in revenue for the same period.
The combined entity, which will generate about $3 billion in annual revenue, will serve a total addressable market of around two million children.
CHOC and Rady Children’s will build on their respective affiliations with hospitals run by the University of California in Irvine and San Diego. Each hospital will maintain separate medical staff, local governing boards and onsite leadership.
The new system permits children with rare diseases to see specialists in each other’s system, recruit talented specialists in their fields and expand access to clinical trials.
The two hospitals have been working together for the past decade on a variety of projects.
“The whole focus is how do we better serve the families and the communities,” Chavalas Cripe told the Business Journal in a previous interview.
“The timing is right. It’s been a challenging period for healthcare overall. It’s an indication that more collaboration is needed.”
Merger of a Beloved Institution
CHOC, which was founded in 1964, is one of Orange County’s most beloved healthcare entities. Its 400 beds had about 90,340 patient days in its recent fiscal year. It also reported about 230,000 outpatient visits.
Rady, which was originally founded in 1954, is a 511-bed hospital that has grown to care for about 272,000 children and about $2 billion in annual revenue.
The hospital in 2006 changed its name to honor Ernest and Evelyn Rady, who have been actively involved in the hospital since the 1980s, with Ernest serving on its board of directors.
The San Diego Business Journal ranked Rady as its 10th wealthiest resident worth an estimated $900 million. Rady founded an insurance company called Westcorp that was bought by Wachovia in 2006 for $3.9 billion.
Frias was named a CEO of the year in 2022 by the San Diego Business Journal while Cripe, who has been CHOC’s CEO since 1997, was a 2000 winner of the Business Journal’s annual Women in Business Awards. The Business Journal in 2023 also honored Cripe as one of its 50 most influential people shaping the future of healthcare in Orange County.
Both hospitals are spearheading major construction projects.
CHOC is constructing a 330,000-square-foot facility tower costing an estimated $373 million at its Orange campus. It’s scheduled to open in phases beginning later this year. In 2023, Rady broke ground on the largest construction project in its nearly 70-year history: a seven-story, 500,000-square-foot Intensive Care Unit and Emergency Services Pavilion slated to open in 2027.
