Were St. Louis, Mo.-based Ascension Healthcare and Renton, Wash.-based Providence St. Joseph Health to merge, the health systems would be the largest U.S. owner of hospitals, with 191 across 27 states and the District of Columbia between them—topping Nashville-based HCA Healthcare Inc., which has 177 hospitals in 20 states and the United Kingdom.
Last month Ascension and Providence halted talks about a possible merger.
“We both have some pretty significant plans for this year, and we both decided maybe right now is not the right time,” Providence Chief Executive Rod Hochman said. He said the earliest the two might resume discussion would be at year-end.
Providence’s 51-hospital Southern California network is comprised of 14 hospitals in Los Angeles, Orange and San Bernardino counties. The regional entity, the second largest after Kaiser Permanente, is headquartered in Irvine and led by Erik Wexler, former chief executive of Providence Health & Services Los Angeles Region.
3-Pronged Plan
Hochman said Providence is focused on enhancing patient accessibility to care, empowering providers via quality standardization, and growing technology.
The continued shift of care from traditional hospital settings, driven in part by lowered reimbursement rates resulting from healthcare reform, means hospitals are rethinking the types of care that can be given at locations that don’t require a hospital’s high-cost infrastructure.
“We are already adjusting what needs to be done in hospitals and what needs to be done in outpatient [centers],” said Hochman, who acknowledged it’s inevitable that more care will move to the home. Increasingly more surgical procedures, such as knee and hip replacement surgeries, are done in ambulatory surgical centers, with recovery at home. Providence has 829 clinics across seven states.
“We provide service where you want it and how you want it,” he said.
The health system offers same-day house calls and telehealth services, which are doctor visits via a phone, tablet or laptop.
It’s also placing greater emphasis on standardization. Hochman said there are certain things in healthcare that are specific to a locality, such as caring for a region’s demographic, but that there are also things such as best practices in clinical care that “should be done the same way across all [hospitals].”
Providence Southern California chief Wexler appointed a chief clinical effectiveness officer when he announced a new executive team that will assist him in overseeing the region. Andre Vovan, a 2017 Business Journal Innovator of the Year award winner, will help improve healthcare quality and patient safety. He developed a sepsis protocol and system that’s now in place throughout Providence’s network of hospitals.
Providence also plans to tackle mental wellness and genomics. It named Dr. Lee Hood chief scientific officer in 2016, with the goal of growing personalized medicine.
Technology
Hochman said Providence is spending a lot of money on technology, though he declined to provide an exact number. He said technology has the potential to do much to improve healthcare.
Executive Vice President and Chief Digital Officer Aaron Martin oversees the health system’s digital strategy and $150 million venture fund, which invests in early-stage technology. He told the Business Journal in a February interview that Providence invested and later spun out Seattle-based Xealth. The digital platform allows doctors to prescribe nondrugs, such as digital content, apps and videos, and to monitor patient compliance.
Another tool is Circle, which caters to expectant and new mothers. It provides clinically approved answers to frequently asked questions about pregnancy and newborns, personalized to-do lists, and access to local and online resources. Martin said the tool will include pediatric care next year and will soon address the spectrum of women’s health.
“The female of a household controls 90% of healthcare spending. She is our customer—there’s not anyone a close second to her,” he said.
Xealth and Circle are implemented in the health system’s Seattle and Portland markets, and will expand to Southern California this year. Wexler said the Circle app will be introduced across OC in the fall.
“We are working to provide care when, where and how our consumers and patients want to receive it,” he said, adding that Providence is focused on addressing big health challenges, such as mental health.
The health system has committed $100 million in grants and contracts to mental health and wellness initiatives at hospitals in its network, forming new national foundation Well Being Trust to administer the grants. It announced in July that it injected the first round of $10 million out of $30 million in California to support initiatives, such as a school-based adolescent mental health system and outpatient crisis stabilization.
Providence’s plans to expand technology are evident in executive appointments. Martin, who joined the system in 2014, was a high-level executive at Amazon who led two startups the e-commerce giant acquired: a self-publisher and a print-on-demand division. Last year, the health system appointed Venkat Bhamidipati executive vice president and chief financial officer. Bhamidipati previously served as managing director for business development and growth strategy at Microsoft.
“If you look at our organization, many of our leaders may have not had a healthcare background. I think we pluck some of the best and the brightest of healthcare and technology people,” Hochman said, “and when you have people in two separate circles working together, that’s when magic happens.”
Providence, whose nonprofit hospital chain includes Hoag, St. Joseph and Mission Hospital in OC, reported an operating loss of $255 million in 2016 on a pro forma basis, the first year of the St. Joseph merger. Last year, the first full year as a combined entity, it improved results to a small operating profit of $3 million, according to its audited financials.
It grew revenue by 5%, driven by an increase in outpatient activity, and held the line on costs, up 3%. The belt-tightening included 210 systemwide job cuts last summer, 32 of which were administrative positions at St. Joseph in Irvine.
