A plan by Providence and Kaiser Permanente to build a new medical center in the High Desert region of California is the latest example of leading hospital chains seeking a market advantage.

They plan to spend up to $ 1 billion to build a hospital in Victorville, a town of about 123,000 which is 85 miles northeast of Los Angeles. The site is just 11 miles from a hospital that Providence already owns and plans to close, in nearby Apple Valley. The new site is off Interstate 15, a major thoroughfare that runs through part of the Mojave Desert and through the San Bernardino Mountains to the more populous towns of Fontana, Riverside, and San Bernardino. This location is expected to help increase market share in a region whose population has skyrocketed over the past four decades. The population of Victorville has almost doubled since 2000.

The unusual pairing of very different healthcare giants – a Catholic chain and an HMO model only – will result in a facility available to patients of both systems. But members of Kaiser Permanente will be unable to obtain certain reproductive services, including abortion, in hospital due to Providence’s Roman Catholic affiliation.

According to a deposit with the State, the new hospital will be fully functional by 2028. KP will provide 30% of the capital for its construction, and Providence 70%. Providence and KP hope to gain state approval for their plan and sign a final agreement by the end of the year.

The new facility will help the partners take on their two main competitors in Victorville, the Desert Valley Hospital, owned by First-class health services, and Victor Valley Global Medical Center, owned by KPC Health. Prime is a large national health care system, but not as large as Providence, which is the 10th largest in the country. Kaiser Permanente, which is both an insurer and a provider, has 39 hospitals and 724 medical practices in eight states and Washington, DC (KHN, which produces California Healthline, is not affiliated with Kaiser Permanente.)

A key part of the plan is for Renton, Wash., Based Providence to close its 65-year-old business St. Mary’s Medical Center in Apple Valley. He says the expensive upgrades required under impending state earthquake mandates don’t make economic sense.

“Renovating the current hospital would cost about the same amount as building the new hospital, but you would have to do it while the hospital is in operation,” said Erik Wexler, president of Providence South, which includes operations at the hospital. group in California, Texas. and New Mexico.

Seismic warrants require that by 2030, all hospital buildings used for patient care be able to function in the aftermath of a major earthquake. The California Hospital Association, the industry’s leading lobby group, and seven other hospital advocacy groups are trying to persuade state lawmakers to relax the law. They warn it would cost California hospitals over $ 100 billion and force several to close.

The costs of complying with seismic safety codes have also been factored into the business decisions of other California hospitals.

In December 2017, Pacific Alliance Medical Center in Los Angeles firm, citing the financial burden of seismic modernization. Sutter Health said he close its Alta Bates hospital in Berkeley by 2030 because it would not be cost effective to meet state seismic standards.

But the Providence-KP agreement is as much about competition as it is about earthquake preparedness. Even as hospital lobbyists persuade state lawmakers to relax the requirements, there is no turning back on the project, Wexler said.

Although Providence has 51 hospitals in seven states, partnering with KP can strengthen its credentials. KP, for its part, would get a local hospital where its approximately 110,000 members in the region could go for more than emergency care.

This makes the deal beneficial for KP members. Right now they can use St. Mary’s, Desert Valley, or Victor Valley Global for emergency services. But for all non-emergency hospital care, they have to go to the nearest KP hospital, 40 miles away in Fontana.

If the proposal is accepted, they will have a hospital for almost all of their needs much closer to home, said Bill Caswell, senior vice president of Kaiser Permanente.

This means reduced spending on emergency care for KP members at other hospitals in Victorville – including the one owned by Prime Healthcare, with which KP has a history of mutual hostility.

And having a local hospital could help KP grow its membership in the High Desert, said Kevin Holloran, who oversees financial analysis of nonprofit hospitals at Fitch Ratings, which provides credit ratings and research. to investors.

Some employers and individuals prefer KP but are put off by the lack of a nearby hospital, so they register with other major insurance companies such as Blue Shield of California, Anthem Blue Cross, Cigna or Aetna, a Holloran said. Having a Kaiser Permanente affiliated hospital in their community could persuade them to change, which could ultimately hijack the business of Prime, KPC and even doctors affiliated with Providence, he said.

Kaiser Permanente has affiliations with 12 other hospitals across California allowing its members full access.

The KP doctors will be full members of the medical staff at the new hospital, but it will be managed by Providence, which follows Catholic healthcare guidelines prohibiting abortions, the insertion of birth control devices and certain other forms of reproductive care. KP physicians will be bound by these guidelines when working in the hospital.

Providence is currently involved in a legal battle with the Hoag Hospital in Orange County, one of its affiliates, in part because of Hoag’s claims that Providence is illegally restricting reproductive care for Hoag’s patients.

Unlike Hoag, KP can meet the reproductive health needs of its members at its existing facilities, including doctors’ offices in Victorville, near Hesperia and its Fontana Hospital, Caswell said.

The Providence-KP plan is disrupting many residents of Apple Valley, a town just over half the size of Victorville. Sainte-Marie is the city of biggest employer and has been in existence since 1956. The new hospital would be Victorville’s third, while Apple Valley would not remain.

“My main concern is that the people of Apple Valley have to go a step further for a hospital,” said Yvonne Spallino, an 85-year-old Apple Valley resident. “Why don’t they build one here?” Why is it there?

Scott Nassif, a member of Apple Valley City Council who sits on the board of directors of the St. Mary’s Medical Center Foundation, said many people in Apple Valley felt blinded by the news of their hospital closing.

“We worked so hard to have this hospital. The original Apple Valley developers donated the land for this. The residents have supported him financially, and all of a sudden, ‘Poof – thank you, but we are moving,’ ”said Nassif. “Everyone is still a bit shocked.

Losing emergency care nearby would hurt Apple Valley residents the most, Nassif said. Eleven miles doesn’t seem like much, but it can take more than half an hour to get to the new hospital site if the traffic is heavy, he said.

Nassif, who lives near Sainte-Marie, is very aware of this time factor. One night in 2016, he started having severe chest pain and was rushed to the emergency room. “Basically when I got there I was just about to go out,” he said. “If I had to go somewhere else, I probably wouldn’t be here.

There was talk of converting St. Mary’s into an emergency-only facility. Currently, state law does not allow stand-alone emergency rooms, but a movement is underway to change this law.

Wexler said if such a law were passed Providence would consider an emergency at the Apple Valley site, but added, “We cannot commit to doing this.”

KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism on health issues. Together with Policy Analysis and Polling, KHN is one of the three main operational programs of KFF (Kaiser Family Foundation). KFF is an endowed nonprofit organization that provides information on health issues to the nation.

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