Two of Orange County’s largest health systems agreed to end an acrimonious feud by splitting ways after nearly a decade.
Providence and Hoag Memorial Hospital Presbyterian have “amicably” ended their partnership, according to a Jan. 10 statement.
“Although we are formally parting ways, we will have other opportunities to work together on behalf of the community,” Providence President of Operations Erik Wexler said in a statement. “We look forward to future collaborations with our colleagues at Hoag, whom we continue to hold in high regard.”
Thus ends a decade long joint venture that fell apart for a variety of reasons, including issues of local autonomy and complaints about the Catholic-backed Providence’s position on abortions.
“This move opens up new avenues of collaboration in the future, as each institution brings its unique strengths to bear in service of patient health,” Hoag Memorial Hospital Presbyterian Chief Executive Robert Braithwaite said in a statement.
“We appreciate the relationships we built over the last several years with the Providence and St. Joseph teams.”
It was not disclosed if Hoag was required to pay Providence a fee to end the partnership. Local healthcare execs not involved with the two organizations have told the Business Journal that a settlement running in the millions of dollars was likely the case.
OC’s Biggest Hospitals
Providence’s hospitals in Orange, Fullerton and Mission Viejo generated a combined $2 billion for the year ended Sept. 30, 2020, according to the Business Journal’s annual list of Hospitals.
Hoag reported $1.1 billion in revenue for the same period, making it the second biggest hospital on the Business Journal’s annual list published last February. It treats north of 30,000 inpatients and 480,000 outpatients annually.
The agreement between the two began in 2012 when St. Joseph Health, then a nonprofit healthcare group based in Irvine, entered an agreement with Hoag under an affiliation known as the Covenant Health Network (CHN).
The venture was designed to boost the combined purchasing power and costs savings of two of Orange County’s largest healthcare systems.
“Covenant is a promise, a sacred promise to work collaboratively and together to accomplish certain common goals,” Richard Afable, Hoag’s CEO in 2012, said at the time the deal was struck.
However, St. Joseph in 2016 was acquired by Providence, whose history dates to 1856 when it was founded by Mother Joseph and four Sisters of Providence.
Representatives of Newport Beach-based Hoag said they felt they were being “swallowed up” by the larger Providence. Renton, Wash.-based Providence is the nation’s 10th largest health system with 52 hospitals, including 11 in Southern California.
“Hoag must be able to keep local resources and decision-making in Orange County to address all the health needs of community members for years to come,” Braithwaite said in 2020.
The two sides tried to negotiate a new deal. However, Hoag in May 2020 filed a lawsuit with the Orange County Superior Court to end the venture.
“CHN, the vehicle for achieving population health, is now an empty shell with no assets or employees,” the lawsuit said. “CHN’s sole purpose seems to be to keep Hoag within the Providence health system as a captive affiliate.”
According to Hoag, the affiliation with the Catholic system “[impaired its] ability to serve its Mission, including meeting the needs of the community.”
In March 2021, California’s then Attorney General Xavier Becerra investigated Providence over allegations made by women’s health specialists at Hoag Memorial Hospital Newport Beach, according to a Los Angeles Times report. Providence had been accused of applying religious care restrictions on Hoag, including a ban on “direct abortions,” the report said.
A trial originally scheduled for April has been canceled.
Following the separation, Hoag said it plans to develop a “full range” of reproductive health services in Orange County.
Hoag will focus on deploying fertility medicine, family planning services, maternal female medicine (MFM), and specialized care services “throughout its enterprises.”
In addition, Hoag will recruit “nationally-recognized and expert clinicians” in the fields of comprehensive women’s health to form Hoag Women’s Medical Group under the Hoag Specialty Clinic, the health system said.
“In a time when reproductive rights are under attack, we have to take every reasonable step we can to protect and expand reproductive healthcare in California,” Attorney General Rob Bonta said last week. “The separation of Hoag from Providence will allow two strong health systems to continue to operate, while allowing Hoag to expand access to essential reproductive care in the area.”