Some OC Firms Are Remaking the Healthcare Landscape

While Washington and Sacramento attempt top-down reforms of the healthcare industry such as the patient’s bill of rights and the state department of managed care, some OC companies are in the forefront of what could become bottom-up changes in the way Americans receive medical care.

Orange-based St. Joseph Health System has embarked on a much-watched attempt to redefine the relationship between its hospitals and health maintenance organizations. The Talbert Medical Group in Fountain Valley is growing by stressing quality care and patient satisfaction over short-term bottom-line issues. And Newport Beach’s TriZetto Group Inc. is bringing technology to bear to integrate doctors, hospitals, insurers and employers into a single data and communication network.

St. Joseph’s New Deal

The highest profile belongs to St. Joseph, which operates St. Joseph Hospital in Orange, St. Jude Medical Center in Fullerton and Mission Hospital Regional Medical Center in Mission Viejo, three of the top 10 OC hospitals in terms of net patient revenue (see list on page 42). St. Joseph fired its first shot in October, trimming its HMO network from more than 20 carriers to five and insisting that those five sign contracts that share the burden of increases in the costs of providing care.

“This new model mitigates the financial risks that have caused us and other providers to sustain huge losses,” said Joe Randolph, St. Joseph chief financial officer.

Healthcare observers said they wouldn’t be surprised if more hospitals in California and elsewhere moved to re-examine their managed care deals in the wake of St. Joseph’s move.

“Things started here in terms of managed care. We initiate trends. More and more hospitals will do what St. Joe’s did,” said Dr. Jack Thomas, a Long Beach physician who formerly practiced at Unicare in Garden Grove.

Some months after the paring, St. Joseph chief executive Richard Statuto discussed his system’s action in a newsletter published by Deloitte