Adventist Health and St. Joseph Health System Final Health ...

Effect of the Master Formation Agreement between Adventist Health System/West and St. Joseph Health System on the Availability and Accessibility of Healthcare Services to the Communities Served by Adventist Health Ukiah Valley and Adventist Health Howard Memorial

Prepared for the Office of the California Attorney General

June 14, 2019

Table of Contents

Introduction & Purpose .................................................................................................................................5 Background & Description of the Transaction ..............................................................................................7

Reasons for the Master Formation Agreement.........................................................................................7 Transaction Process & Timing....................................................................................................................8 Master Formation Agreement ...................................................................................................................9 Operating Agreement ..............................................................................................................................13 Participating Ministry Agreement ...........................................................................................................16 Participating Entity Agreement ...............................................................................................................17 Use of Net Sale Proceeds.........................................................................................................................18 Profile of Adventist Health ..........................................................................................................................19 Key Statistics ............................................................................................................................................21 Payer Mix .................................................................................................................................................22 Adventist Health Financial Profile ...........................................................................................................23 St. Joseph Health Overview .........................................................................................................................24 Key Statistics ............................................................................................................................................25 Payer Mix .................................................................................................................................................26 St. Joseph Health Financial Profile...........................................................................................................27 Profile of Adventist Health Ukiah Valley......................................................................................................28 Overview of Adventist Health Ukiah Valley.............................................................................................28 Key Statistics ............................................................................................................................................29 Programs & Services ................................................................................................................................30 Accreditations, Certification & Awards ...................................................................................................31 Quality Measures.....................................................................................................................................32 Seismic Issues...........................................................................................................................................33 Payer Mix .................................................................................................................................................35 Managed Medi-Cal Managed Care ..........................................................................................................36 Patient Utilization Trends ........................................................................................................................37 Financial Profile........................................................................................................................................39 Cost of Hospital Services..........................................................................................................................40 Charity Care .............................................................................................................................................41 Community Benefits ................................................................................................................................43 Medical Staff ............................................................................................................................................45

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Reproductive Health ................................................................................................................................46 Analysis of Adventist Health's Hospital Market Share in Mendocino County ............................................47 Analysis of Adventist Health Ukiah Valley Service Area ..............................................................................49

Service Area Definition ............................................................................................................................49 Service Area Map.....................................................................................................................................50 Service Area Certified Stroke Centers .....................................................................................................51 Service Area Trauma Services..................................................................................................................52 Health Professional Shortage Areas ........................................................................................................53 Medically Underserved Area ...................................................................................................................54 Demographic Profile ................................................................................................................................55 Medi-Cal Eligibility ...................................................................................................................................57 Selected Health Indicators.......................................................................................................................57 2016 Community Health Needs Assessment...........................................................................................59 Hospital Supply, Demand & Market Share ..............................................................................................60 Hospital Market Share .............................................................................................................................61 Market Share by Payer Type....................................................................................................................62 Market Share by Service Line ..................................................................................................................63 Market Share by ZIP Code .......................................................................................................................64 Service Availability by Bed Type ..............................................................................................................65 Medical/Surgical Capacity Analysis .........................................................................................................65 Intensive Care Unit Capacity Analysis......................................................................................................66 Perinatal/Obstetrics Capacity Analysis ....................................................................................................67 Neonatal Intensive Care Capacity Analysis..............................................................................................68 Emergency Department Volume at Hospitals in the Service Area ..........................................................69 Emergency Department Capacity ............................................................................................................70 Profile of Adventist Health Howard Memorial ............................................................................................71 Overview of Adventist Health Howard Memorial ...................................................................................71 Key Statistics ............................................................................................................................................71 Programs & Services ................................................................................................................................72 Accreditations, Certifications, & Awards.................................................................................................73 Quality Measures.....................................................................................................................................74 Seismic Issues...........................................................................................................................................75 Patient Utilization Trends ........................................................................................................................76

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Payer Mix .................................................................................................................................................77 Medi-Cal Managed Care ..........................................................................................................................78 Medical Staff ............................................................................................................................................79 Financial Profile........................................................................................................................................80 Cost of Hospital Services..........................................................................................................................81 Charity Care .............................................................................................................................................82 Community Benefit Services ...................................................................................................................84 Reproductive Health ................................................................................................................................85 Analysis of Adventist Health Howard Memorial Service Area ....................................................................86 Service Area Definition ............................................................................................................................86 Service Area Map.....................................................................................................................................87 Demographic Profile ................................................................................................................................88 Medi-Cal Eligibility ...................................................................................................................................90 Selected Health Indicators.......................................................................................................................90 2016 Community Health Needs Assessment...........................................................................................92 Hospital Supply, Demand & Market Share ..............................................................................................93 Hospital Market Share .............................................................................................................................94 Market Share by Payer Type....................................................................................................................95 Market Share by Service Line ..................................................................................................................96 Market Share by ZIP Code .......................................................................................................................97 Service Availability by Bed Type ..............................................................................................................98 Medical/Surgical Capacity Analysis .........................................................................................................98 Intensive Care Unit Capacity Analysis......................................................................................................99 Emergency Department Volume at Hospitals in the Service Area ........................................................100 Emergency Department Capacity ..........................................................................................................101 Summary of Interviews..............................................................................................................................102 Reasons for the Proposed Transaction..................................................................................................102 Selection of St. Joseph Health for the JOC.............................................................................................104 Impact on the Availability and Accessibility of Healthcare Services .....................................................105 Opposition to the Affiliation ..................................................................................................................105 Alternatives ............................................................................................................................................ 105 Assessment of Potential Issues Associated with the Availability or Accessibility of Healthcare Services 106 Adventist Health Ukiah Valley: ..................................................................................................................106

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Continuation as a General Acute Care Facility ......................................................................................106 Emergency and Trauma Services...........................................................................................................106 Medical/Surgical Services ......................................................................................................................106 Intensive Care Services ..........................................................................................................................106 Perinatal/Obstetrics Services.................................................................................................................106 Neonatal Intensive Care Services ..........................................................................................................107 Reproductive Health Services................................................................................................................107 Effects on Services to Medi-Cal, County Indigent, and Other Classes of Patients ................................107 Effects on the Level and Type of Charity Care Historically Provided.....................................................107 Effects on Community Benefit Programs ..............................................................................................108 Effects on Staffing and Employee Rights ...............................................................................................108 Effects on Medical Staff .........................................................................................................................108 Alternatives ............................................................................................................................................ 108 Adventist Health Howard Memorial:.........................................................................................................109 Continuation as a General Acute Care Facility ......................................................................................109 Emergency and Trauma Services...........................................................................................................109 Medical/Surgical Services ......................................................................................................................109 Intensive Care Services ..........................................................................................................................109 Effects on Services to Medi-Cal, County Indigent, and Other Classes of Patients ................................109 Effects on Services to Medi-Cal, County Indigent, and Other Classes of Patients ................................110 Effects on the Level and Type of Charity Care Historically Provided.....................................................110 Effects on Community Benefit Programs ..............................................................................................110 Effects on Staffing and Employee Rights ...............................................................................................110 Effects on Medical Staff .........................................................................................................................110 Alternatives ............................................................................................................................................ 110 Conclusions ................................................................................................................................................111 Potential Conditions for Transaction Approval by the California Attorney General.............................111 Appendix ....................................................................................................................................................115 List of Interviewees................................................................................................................................115 Adventist Health Ukiah Valley Hospital License ....................................................................................116 Adventist Health Howard Memorial Hospital License...........................................................................119

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