Kaiser Permanente and Dignity Health will jointly own St. Joseph's Medical Center in Stockton, Calif., the two systems announced this week.
Kaiser, an eight-state healthcare organization based in Oakland, Calif., will buy a 20% stake in the hospital now owned by San Francisco-based Dignity Health. Dignity Health, a 21-state health system, will own 80% of the hospital, according to a Kaiser news release announcing the deal.
Kaiser declined to disclose the value of its investment.
St. Joseph's Medical Center will be governed by a joint board, with four members from Dignity and three from Kaiser.
The 366-bed hospital will keep its name, and its executive team will continue to handle daily operations and staff.
The facility is the Stockton area's largest hospital, serving 17,371 patients last year. It's also Stockton's largest private employer, with 2,085 employees.
The partnership will enable investment in services at St. Joseph's, beginning with a 50% expansion of its emergency room by December 2016, according to Lauren Davis, a Dignity spokeswoman.
The deal allows Kaiser Permanente, which has more than 100,000 Stockton insurance customers, to collaborate with St. Joseph's on service improvements and other initiatives to ensure the hospital is financially stable, said Debby Cunningham, senior vice president of strategy and business development for Kaiser Permanente Northern California. The hospital expects to serve 25 additional Kaiser Permanente patients per day after the partnership is finalized in mid-2016.
Dignity Health representatives declined to comment on St. Joseph's finances.
Greg Maddrey, accountable care solutions director at Chartis Group, a management consulting firm, said the partnership between Kaiser and Dignity Health is beneficial because they both serve the same geographic area.
“There is more creativity being put in place in deals than there has been in the past,” said Maddrey. “Health systems can start to fill in geographies and make connection points that don't require a full merger.”
Kaiser Permanente and Dignity Health do not share electronic health-record systems, an important step toward jointly caring for patients, and a plan for transition is in the works, Cunningham said.
Maddrey said combining and integrating EHRs is a complex challenge that all health systems that pursue partnerships face.
Kaiser Permanente, which has been described as being in expansion mode under its CEO Bernard Tyson, is rumored to have a deal underway with Detroit-based Henry Ford Health System, according to Crain's Detroit Business. Cunningham at Kaiser said she could not speak on the matter.
