St. Joseph’s Hospital and Medical Center in Phoenix and Phoenix Children’s Hospital said they are negotiating an alliance. The deal would include transferring most of St. Joseph’s pediatric services to 344-bed Phoenix Children’s and uniting much of the pediatric medical staff by mid-2011. The transfer would coincide with the opening of Phoenix Children’s new 11-story hospital tower. Under a nonbinding memorandum of understanding, 738-bed St. Joseph’s, a Catholic Healthcare West facility, would retain its neonatal intensive-care unit and continue to serve pediatric patients in its trauma center. St. Joseph’s would become a minority member of Phoenix Children’s with limited representation on the board of directors. “This landmark alliance takes advantage of our combined expertise on behalf of the children and families we serve and will confirm Phoenix Children’s as one of the nation’s top-tier children’s hospitals in the nation,” said Robert Meyer, president and CEO for Phoenix Children’s, in a written statement.
Children’s Hospital and Research Center is undergoing a restructuring after sustaining more than $80 million in losses over the past four years. Some 71% of patients are covered by Medicaid, up from about 60% in 2008, and California has one of the lowest Medicaid reimbursement rates in the country. Medicaid reimbursement ranges from 30 cents to 10 cents for every dollar of care provided by the hospital, officials said. Last year, the 190-bed not-for-profit hospital lost $26 million. In response, hospital officials are developing a three-year plan to be completed soon. Under consideration are workforce reductions, service streamlining, renegotiating contracts and partnering with community clinics to deliver some care. “The pediatric healthcare reimbursement