St. Joseph’s op­er­a­tions slip in first year of af­fil­i­a­tion

Modern Healthcare - - REGIONAL NEWS - —Bob Her­man

St. Joseph Health, Orange, Calif., re­ported it lost more than $16 mil­lion from op­er­a­tions in its most re­cent fis­cal year. But its new af­fil­i­a­tion with a re­gional provider wasn’t the cause for the de­cline.

In March 2013, St. Joseph and Hoag, a two-hos­pi­tal sys­tem based in New­port Beach, Calif., cre­ated a new sys­tem called Covenant Health Net­work. Covenant brought in Hoag’s hos­pi­tals with St. Joseph’s five in South­ern Cal­i­for­nia with the in­tent of build­ing an in­te­grated de­liv­ery sys­tem in the re­gion. St. Joseph owns a to­tal of 14 acute-care fa­cil­i­ties in Cal­i­for­nia and Texas.

The af­fil­i­a­tion sig­nif­i­cantly helped St. Joseph’s bot­tom line in 2013, as ex­ec­u­tives marked it down as a $1.7 bil­lion non-op­er­at­ing gain. But in its fis­cal 2014 ended June 30, St. Joseph had to deal with more chal­leng­ing business is­sues, namely, lower in­pa­tient vol­umes, trou­bles with Cal­i­for­nia’s provider-fee pro­gram and ris­ing ex­penses.

St. Joseph posted an op­er­at­ing loss of about $16.1 mil­lion on $5.6 bil­lion in rev­enue for 2014, ver­sus a $49.7 mil­lion op­er­at­ing gain on nearly $5 bil­lion of rev­enue in the pre­vi­ous year.

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