Updated 10:31 a.m., Jan. 5, 2009
CLEVELAND, Ohio — Sisters of Charity Health System is returning to sole ownership of St. Vincent Charity Hospital in Cleveland and Mercy Medical Center in Canton.
Meanwhile, University Hospitals of Cleveland, which had shared 50 percent ownership of the two hospitals under joint venture agreements struck in 1999, will keep its half ownership of St. John West Shore Hospital but become the sole manager of the growing Westlake hospital.
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The Monday announcement completes a due-diligence process by both health systems to restructure ownership and management of the three hospitals tentatively agreed to in March 2009. Then and now, both systems will invest $30 million over three years in a new foundation to support St. Vincent operations. Both systems also will invest equally — up to $100 million in five years — in strategic expansion and growth at St. John.
The only significant change in the tentative agreement is University Hospitals’ sole management of St. John West Shore. That change came from a recognition that the hospital would be better off managed by one health system rather than two, said Sister Judith Ann Karam, president and chief executive officer of Sisters of Charity Health System.
In today’s changing and complex health care environment, the agreement “simplifies our organizational structure, and should facilitate and create a more efficient and effective decision-making process,” Karam said.
The agreement also supports the priorities of each of the hospitals. “We will have a more clear understanding of accountability and governance, and really focus our capital investment priorities to make each of the five hospitals successful,” said Karam, whose system includes two South Carolina hospitals in addition to the three in Ohio. Altogether, the Sisters of Charity hospitals employ 6,700 people.
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“We value our long-standing relationship with the Sisters of Charity Health System and believe that this new structure will provide extraordinary opportunities for growth and expansion as well as greater access to the highest quality of care provided anywhere in the country,” said Thomas F. Zenty III, CEO of University Hospitals, in a joint statement with Sisters of Charity.
“The $100 million in new strategic investments is a clear commitment by both owners to making St. John West Shore Hospital a destination hospital on the West Side,” Zenty said. “We strongly believe that by working closely with the excellent clinical staff and employees at St. John West Shore Hospital, as well as through the support of our community leaders and our volunteers we will succeed in making this vision a reality.”
The agreement could put St. John West Shore in the “best of both worlds,” uniting the compassion of ministry-driven health care with the techn0logical, clinical and research resources of a large, integrated health system, said Cliff Coker, the hospital’s president.
Having a $100 million investment commitment from its co-owners while the health care industry swirls with reform “is certainly very positive news for St. John West Shore,” Coker said.
The investment will enable the hospital in the growing Cleveland suburb of Westlake to “be able to strengthen our clinical services, that is advance the technology, modernize the facility. But more importantly, bring the clinical resources into the community. That’s huge for us and stabilizes us into the foreseeable future,” he said.
Coker sees his hospital as the “marquee for University Hospitals on the West Side” of Cleveland the way the still-under-construction UH Ahuja Medical Center is on the East Side.
The agreement restructuring reflects what’s best for each community and its hospital, said Karam, who also is president and CEO of St. Vincent Charity Hospital.
“Mercy Medical Center continues to combine the best of compassionate care with high-tech innovation” said Thomas Cecconi, president and CEO of the Canton medical hospital, in a written statement. “Currently, the hospital has plans for capital projects in excess of $80 million to continue its excellence in medical services.”
Karam said the agreement will help Sisters of Charity in its development as an operating company from its roots as a holding company. “What we have been able to do is bring added skills to our health system,” she said.
For instance, the system hired a vice president of construction management who will be shared by the five Sisters of Charity hospitals. It’s a step toward being “a more integrated system,” Karam said.
Meanwhile, Sisters of Charity is forming a new fund-raising board for St. Vincent, she said. The board will be increasingly important for St. Vincent’s operations. As the economy has worsened, the inner-city hospital’s bad debt has risen, Karam said. “Some patients may have insurance, but they are unable to pay their deductibles,” she said.
Elective surgeries also are down, which has reduced revenue, she said.
