Daughters of Charity to ‘Take Back’ Seven Hospitals from Catholic Healthcare West
After a five-year affiliation with Catholic Healthcare West, the Daughters of Charity of St. Vincent de Paul of the West have decided to "take back" management of seven hospitals -- four in the Bay Area and three in the Los Angeles area -- which represent 18% of CHW's assets, the Sacramento Business Journal reports. The move would mark the "first major defection" of a group of hospitals from CHW -- now "in the midst of a major restructuring" -- since the mid-1980s and the first time any large hospital system in California faced a "significant loss" of hospitals since the industry began to consolidate. "We are going to form our own health care system statewide," Robert Issai, CEO and CFO of the Daughters of Charity, said, adding that the group "believes it can manage the hospitals more efficiently and provide more charity care." Wade Rose, vice president of policy and planning for CHW, said, "The Daughters have a new set of leaders, and based upon the interests of the new leaders and where we're going with the restructuring, they would create their own system." According to the Business Journal, the move will likely "complicate" CHW's efforts to "dig itself out of a deep financial hole." The CHW system lost $103.4 million in FY 1999, while the Daughters of Charity facilities "broke even." In FY 2000, the CHW system reported $307 million in losses on patient care but "pared" overall losses to $47.6 million. CHW posted $4.5 billion in revenue in 2000, up from $3.99 billion in 1999. Health care consultant Ed McClendon said that the "immediate concern" is whether other religious orders that own hospitals in the CHW system "might follow." However, CHW spokesperson Jerri Randrup said, "The other eight sponsoring congregations remain firmly committed to CHW ... They reaffirmed that a week ago."
According to the Business Journal, "philosophical differences" between the Daughters of Charity and the other orders of nuns in CHW have "made it difficult to bring the organization together." Dr. Leo van der Reis, who co-wrote a study of CHW in 1999 for the Quincy Foundation for Medical Research, said, "It could potentially be a very good plan for the Daughters. I think they have been uncomfortable with CHW from the start." He added that the move also should send a "warning sign" to CHW. "Whatever they've started in terms of reorganization is by no means finished and will require much more radical surgery for them to survive," van der Reis said. In addition, the Daughters of Charity decision will affect bond funding for seismic upgrades and managed care contracts (Doherty/Robertson, Sacramento Business Journal, 5/28).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.