Rideout Hospital seeks affiliation

person of the Rideout board of directors, and CEO Gino Patrizio.

They could not say exactly what an affiliation would entail or with which groups they are talking, but the pair said in a Thursday interview that the board has been considering such a partnership for about a decade. It is now a high priority, they said, due to the changing landscape of the health care industry.

During the interview, the Appeal-Democrat mentioned the names of several groups that have been rumored to have made presentations to the board – including UC Davis, Dignity Health, Adventist Health, and Sutter North Medical Group – but Nall and Patrizio said they could neither confirm nor deny talks with any groups due to confidentiality agreements and ongoing negotiations.

Nall said she joined the board in 2009 and there had been discussion about affiliation starting a couple years before that.

“Health care is changing, not just locally, but across the nation,” Nall said. “Over the last 10 years, health care acquisitions have been growing in number at a rapid pace. As the health care industry changes and evolves, we have to change and evolve with it.”

Patrizio said the search for an affiliation isn’t a sign that a hospital is financially stressed. In fact, he said Rideout Health is on solid financial footing at the moment, which will help with the search for an affiliate.

“We can negotiate from a strong position,” he said. “We’re not asking to be saved. We have a lot to offer, things like market share, substantial brick and mortar, staff, and a vertically integrated care network.”

Even with solid financials, Patrizio said, stand-alone hospitals are more rapidly becoming things of the past. Challenges in the business make alignment necessary.

“Risks exist in the world of business, and there are some specific concerns for health care,” Patrizio said. “When we talk about changes to the industry in the future, there are a number of headwinds that reflect coming changes.”

Challenges he said an affiliation with a larger hospital group would help with include:

A nationwide shortage of physicians and specialized employees makes recruitment more challenging for a stand-alone operation.

Payer negotiations, or the rates of reimbursement from insurance companies and health programs, can outstrip a stand-alone hospital’s resources.

Maintaining an equal or greater amount of services for a growing population becomes a feat in itself, he said.

IT infrastructure rapidly becomes outdated if not constantly updated, adding to a plethora of annual cost increases.

Patrizio said all of those are risks for hospitals like Rideout Memorial.

“There are things that you can improve on due to leveraging scale,” Patrizio said. “Having a larger scale basically allows for more buying power. These are things we cannot replicate without more resources.”

It was not clear what an affiliation with a larger health care provider would specifically mean for Rideout Health, in terms of whether the deal would be a full-on purchase of the hospital or set up more like a partnership between two groups. But Nall said the board will make sure the hospital’s primary mission – providing quality health care to the local population – is not compromised before signing any type of agreement.

“Our focus is on our patients and making sure that the health care services they need the most are available here, locally,” Nall said. “We cannot say how it will look at this time, but one of our top priorities – other than our patients, community, employees and physicians – is that the board will provide local input.”

They said that a partnership would mean more services available.

Patrizio said an affiliation doesn’t mean every type of specialized service will be brought to the area, but it would expand the network of health care resources unlike what is available today.

“Given the size of our community, and size of our organization, there will be highly-specialized care we just won’t be able to provide,” Patrizio said. “But by integrating with a larger network, we will be able to create a stable and predictable network of services for a continuity of care.”

The debt accrued by the organization from a recently opened wing of Rideout Regional Medical Center might also be part of the deal with an affiliate, Patrizio said. While Rideout Health paid the majority of the $260 million for the new wing in cash, about one-third was lent to the organization.

Patrizio said that debt, which is approximately $86.6 million, would be taken over by an affiliate.

Both Nall and Patrizio said they recognized that for a hospital that has been around for more than 110 years and has approximately 2,000 employees – making it one of the largest employers in the area – any type of change can be cause for concern.

Nall said the board is making sure preservation of the workforce is a top priority in negotiations. She said the hospital intends on keeping a “stable workforce” but said it’s too early to know what that will entail.

Retaining employees is difficult in the health care industry, Nall said, but it’s something Rideout Health does well.

“There is a benchmark in our industry for employee turnover and we are well under that,” she said. “That says a lot about the loyalty of our employees and the administrative team we have.”

As the population ages, so do physicians, which is why recruitment will be a big factor moving forward. But Nall said an affiliation with a larger partner could be the “tipping point” in attracting qualified doctors to the area.

Not only do they hope to retain a good deal of local control and local services, but Patrizio said they were sure that other hallmark programs of Rideout Health – such as the cancer center, the foundation, local clinics and emergency room services – would not be compromised.

He said services like the Rideout Cancer Center only stand to improve with a new partnership, and the Rideout Foundation will remain important.

“Regardless of what Rideout grows into, there will always be a role for local philanthropy,” Patrizio said. “We will always make good on our promise that money raised locally will be used locally.”

The organization brought in a consulting firm, KaufmanHall, to help with the search, as well as negotiations with potential affiliates. Patrizio said the consulting firm is providing professional, specialized guidance to Rideout’s board throughout the process.

Being a private, nonprofit organization, Rideout’s board of directors is the sole fiduciary, meaning they have the legal obligation to conduct the entire process of searching for an affiliate and making a decision.

“The negotiation process is a timely one, but we have to make sure that everything negotiated and decided upon has to be true to our mission,” Nall said.

They said Rideout Health officials will not announce who the partnership is with until the deal is finalized. And also said that it is not likely that Rideout Health will change course and remain a standalone institution.

“I think once this whole thing comes to fruition, you will see what the board sees, which is that it will take this hospital and the health care we provide to a whole new level,” Nall said. “We will be able to do things we couldn’t have done on our own.”

After being restarted Friday, the Hyatt Power Plant at Lake Oroville was shut down Saturday morning for the next day or two, according to Department of Water Resources.

DWR said the plant was shut down to deepen the channel in the diversion pool so it can soon operate at full capacity, releasing up to 14,000 cubic feet per second.

“Crews working night and day have removed 216,000 cubic yards of debris,” DWR said. “Lake Oroville is not expected to rise above 860 feet elevation while flows are halted.”

DWR said it does not expect the wet weekend weather to halt additional debris removal or to create a lake elevation concern.

DWR will continue to monitor the weather forecast.

The National Weather Service in Sacramento on Saturday said thunderstorms could cause brief moderate to heavy precipitation and locally gusty winds today.

A cold storm will impact Northern California through Monday. Valley rain and significant mountain snow will impact weekend travel. Mountain travelers will be impacted by winter-like conditions, with the heaviest snow tonight.

Snow levels will drop in elevation today bringing a more widespread impact.

Long stretches of mountain roads will be impacted due to low snow levels and several feet of snow accumulation at pass levels. Slight chance of thunderstorms possible today.