Hoag CEO Dr. Richard Afable, St. Joseph Health CFO Darrin Montalvo Discuss the Strategy Behind Their Affiliation

On Aug. 15, St. Joseph Health in Orange, Calif., and Hoag Memorial Hospital Presbyterian in Newport Beach, Calif., signed a letter of intent to form an affiliation that would create an integrated regional health system. The organizations have a shared vision of delivering coordinated care, improving healthcare access and enhancing the health of the community. Under the affiliation, Hoag and St. Joseph Health clinicians will work together to improve clinical outcomes, and the systems will create coordinated programs to address care for the poor, extend access beyond acute-care hospitals and develop partnerships with other healthcare stakeholders.

Here, Hoag President and CEO Richard Afable, MD, MPH, and Darrin Montalvo, executive vice president, CFO and regional executive vice president of Southern California at St. Joseph Health, share the strategy behind their affiliation.

Dr. Richard Afable explains the strategy behind Hoag's partnership with St. Joseph Health.Aligning vision
One of the key factors that led Hoag and St. Joseph Health to affiliate was their shared vision. Both are non-profit, faith-based organizations with deep roots in the community. "We have a common vision of the future of healthcare, focused not only on episodic care, but also focusing on wellness and patient population management," Mr. Montalvo says.

The foundation of a common vision may drive the success of the affiliation, as healthcare organizations with similar cultures will be able to communicate and collaborate more easily.

"Our affiliation between Hoag and St. Joseph Health is less about the business portion and much more about a very good fit of two organizations who share a common vision and common values of service in our community," Dr. Afable says. "Finding like-minded partners that fit well together is the most critical element of creating partnerships and will be the make or break for consolidation in the future."

Darrin Montalvo discusses the strategy behind St. Joseph Health's affiliation with Hoag.Meeting consumer demand
While the affiliation is partly in response to healthcare reform changes and the need for coordinated care and population health management, the partnership is also a response to consumer demand. "Individuals with chronic conditions — diabetes, musculoskeletal disorders — are looking for different types of care and means for care besides 'wait until I get sick and cure me,'" Dr. Afable says. "[The affiliation] is not so much because of the government regulations and the [Patient Protection and Affordable Care Act]; it's mostly because that's what people want.

"The consumer demand is changing, and thus organizations like Hoag and St. Joseph Health need to change as well to be essential in the community," he says.

As the demand for outpatient services and services close to home increases, Hoag and St. Joseph Health plan to extend their reach with facilities and services outside the acute-care setting. For example, both Hoag and St. Joseph Health partner with physicians in the community. They are also looking to expand into home health and work with long-term care providers. "We are taking services historically centered in an acute-care campus out to the community so we can provide services where people live and work," Mr. Montalvo says.

Top goals
The overall goal of the affiliation is to change the fragmented system of healthcare delivery and provide high-quality, low-cost care to everyone in the community. Hoag and St. Joseph Health decided to partner because they believed combining resources would facilitate this coordination of care in the community. The partnership was motivated primarily by a desire to manage population health more efficiently instead of a desire for greater market share.

"The opportunity we see has less to do with business development and everything to do with greater relevance and greater capability to improve the health of our community," Dr. Afable says.

In addition to expanding beyond acute care, Hoag and St. Joseph Health aim to reach their goals by adding more access points for vulnerable populations in the community, such as the very young, the very old and the poor. Hoag and St. Joseph Health plan to share data between healthcare providers and between providers and patients to promote care management and patient engagement and more easily reach these vulnerable populations.

Commitment to population health
St. Joseph Health is currently a member of an accountable care organization with Blue Shield of California that serves patients under the California Public Employees' Retirement System. This relationship aims to manage population health more effectively. Hoag and St. Joseph Health are still discussing whether Hoag would join the ACO. "It's still in the details, but the goal of both organizations is to immediately combine resources, and I believe that will enhance the network and enhance services to CalPERS members," Mr. Montalvo says. "We have lofty goals together to improve the health and wellness overall in our communities. We really believe that this can only be accomplished by bringing the brightest minds and biggest hearts together."

More Articles on Hospital Strategy:

Creating an Urgent Care Center That Redefines Primary Care Service Delivery
Managing the Transition to Value-Based Reimbursement: 8 Core Strategies to Mind the Gap

Managing Population Health: Where Should Hospitals Begin?

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