The latest affiliation between a pair of Orange County hospital systems stems directly and indirectly from elements of federal healthcare reform that took effect last week.
Fountain Valley-based MemorialCare Health System and UC Irvine Health’s new joint effort is centered on opening clinics and other outpatient centers to deliver primary healthcare to a population of newly insured patients.
The new partners emphasized that the effort isn’t a merger and that UC Irvine Health and MemorialCare will remain separate health systems. California state law prevents a private nonprofit such as MemorialCare from merging with a public entity such as UC Irvine Health.
“This is not a merger cloaked under the word ‘affiliation,’ ” said Barry Arbuckle, MemorialCare’s chief executive.
The partnership with MemorialCare gives UC Irvine Health access to a large primary care network, as well as a training ground for its medical students.
The newly insured patients that the affiliation centers on represent a change in the market equation that’s expected with the launch of Covered California, the state-sponsored exchange that offers policies to the public from a number of insurers.
“In terms of primary care, prevention, wellness, all those critically important things … there’s going to be an influx of folks, and we’re going to really need primary care [doctors],” Arbuckle said. “And this [affiliation] allows us to continue to build out that primary care access.”
Arbuckle said newly insured patients are “a direct impact” of healthcare reform.
He said an indirect impact will come from the affiliation’s ability to fit into market-driven changes, such as tailored provider networks that businesses seek in order to control costs.
“We know there’s going to be expanded need—we want to be there to meet that need,” said Terry Belmont, chief executive of UC Irvine Medical Center, the cornerstone of UC Irvine Health’s properties.
MemorialCare, in the affiliation with UC Irvine Health, gets connected to what’s considered a world-class academic medical center.
Long Histories
The affiliation brings together a pair of nonprofits with long histories in the county.
UC Irvine Health is made up of the University of California, Irvine’s clinical, medical education and research enterprises, including the 412-bed UC Irvine Medical Center, a teaching hospital in Orange.
Fountain Valley-based MemorialCare’s properties include the 218-bed Orange Coast Memorial Medical Center, also in Fountain Valley, and Saddleback Memorial Medical Center, which has campuses in Laguna Hills and San Clemente with 325 beds between them.
The outpatient centers that are part of the affiliation will be in areas with a shortage of primary care doctors, according to MemorialCare.
They’ll bear the UC Irvine Health name and be staffed by UC Irvine Health-affiliated primary care doctors.
MemorialCare said the centers will provide individual and family health services, urgent care, preventive medicine, wellness and basic diagnostic services.
UC Irvine Health and MemorialCare are still discussing the number and locations of the centers. A statement from the systems, however, said that “if the interest demonstrated by the feedback we have received from physicians is any indicator, we should start developing these centers over the next month.”
Affiliation “becomes a good foundation, if you will, for population healthcare delivery,” Arbuckle said.
Population healthcare delivery involves managing a specific group’s healthcare services and is considered a major objective of healthcare reform.
“The most important [aspect] is we’re going to be able to expand our primary care network throughout Orange County,” Belmont said, adding that UC Irvine Health would also be able to take advantage of MemorialCare’s expertise in population health management, as well as its technology infrastructure.
The deal that brings the two organizations together was helped along by past relationships and a high level of trust between Arbuckle and Belmont, former colleagues at MemorialCare. Belmont is a former chief executive of MemorialCare’s Long Beach Memorial Medical Center.
“I know the capabilities of the organization; I know Barry’s capabilities,” Belmont said.
Arbuckle said MemorialCare’s boards, at the corporate and hospital levels, “look at a map and see how complementary the geography is of our markets and (that the partnership) literally [blankets] Orange County.”
Arbuckle and Belmont emphasized that the establishment earlier this year of Covenant Health Network doesn’t affect their affiliation.
Irvine-based Covenant is a partnership between Irvine-based St. Joseph Health, owner of St. Joseph Hospital-Orange; St. Jude Medical Center in Fullerton; and Mission Hospital, with campuses in Mission Viejo and Laguna Beach; and Hoag Memorial Hospital Presbyterian, with campuses in Newport Beach and Irvine.
Stand-alone hospitals such as UC Irvine Health are said to be seeking affiliations with others in order to compete because of healthcare reform’s emphasis on integrated care and a desire by payers and businesses for a wide geographical swath.
UCI Chancellor
UCI Chancellor Michael Drake, a physician by trade, supported the partnership and led the negotiations needed to create the affiliation, Belmont said.
Drake “has been with us every step of the way,” Belmont said.
Drake said he’s “very excited” by the new partnership.
“It furthers our mission to serve the people of our region by bringing better and more accessible healthcare to the communities around us,” he said.
Belmont said Dr. Ralph Clayman, dean of UC Irvine School of Medicine, also played a key role in forging the deal when it came to relationships.
When asked about what UC Irvine Health and MemorialCare have planned for future collaborations, Belmont said, “I think there’s tremendous potential, but I would just say at this point, ‘Stay tuned.’ ”
