Sharp Healthcare and Palomar Health jointly announced Wednesday that they will collaborate on patient care in North County, working together to “establish programs across clinical service lines.”
The agreement comes as Palomar, a medical group that operates hospitals in Escondido and Poway and is based primarily in inland North County, is trying to achieve financial balance after Kaiser Permanente opened a medical center in San Marcos a year ago.
Plans to boost revenue have yet to bear fruit, and Palomar's elected board of directors has approved allowing top executives to work for private, nonprofit companies in the hopes that it will make it easier to strike collaboration deals with private operators such as Sharp.
Details of the Palomar-Sharp agreement have not been released, but the region's largest health care provider and the state's largest public health district appear to have found enough common ground to work more closely together. Sharp CEO Chris Howard said Wednesday that Sharp Health Plan has used Palomar facilities to serve its North County members for many years.
“If we have expertise that Palomar Health doesn't currently have and we can provide that to Palomar, and it's affordable for both partners and it enhances the patient experience, then that would certainly be a goal of the partnership,” Howard said.
But the executive stressed that this is not an acquisition. Palomar's board has consistently made clear that it wants the company to remain an independent health care provider, he said. There are no plans for Sharp to take over operations of specific service lines at Palomar facilities, he said.
“This is not an acquisition or lease of Palomar Health,” Howard said, “This is a clinical affiliation and collaboration agreement that will allow both organizations to partner and establish programs together that will allow Palomar Health to provide greater access to health care services to its patients and allow it to expand some of its services into North County.”
Palomar CEO Diane Hansen said in a joint statement that the company was honored to partner “with such an esteemed organization.”
“Together we can reimagine health care and make it more accessible, addressing gaps in health services, providing more comprehensive treatment options and ensuring patients receive the highest standards of care close to home,” Hansen said. “We expect the program to be solidified and ready within 12 months.”
According to a joint statement from Sharp and Palomar, the companies “formalized their new collaboration through a fully executed letter of intent that will maintain Palomar Health's public designation.”
But Palomar, a public health district with an elected board, said in an email Wednesday afternoon that the district cannot do that and refused to provide a copy of the document, without explaining why.
Sharp clarified in its company email that the letter of intent was addressed to Palomar Healthcare District, not Mesa Rock, the private, nonprofit management company formed to hire Palomar's management team, but Palomar did not respond to questions about whether its elected board had approved the agreement.
Palomar recently faced a downgrade from bond rating agencies after making financial disclosures showing it was facing serious budgetary difficulties. The company's most recent quarterly financial report listed an operating loss of $28.5 million through March 2024, compared with an expected profit of $41.6 million.
Palomar has expressed no concern about the financial impact of Kaiser opening a new hospital on its campus, but overall service volumes do appear to be down this fiscal year, with a total of 17,978 discharges through March, 6.6 percent below the budgeted 19,237.
Some observers, such as local health care consultant Nathan Kaufman, are skeptical that Palomar can achieve financial recovery. After reviewing Wednesday's joint statement, Kaufman predicted that based on the details provided, “the situation is not going to improve significantly.”
Howard didn't directly address Kaufman's comments, but said there is reason for hope.
“I know Palomar Health and its management and board of directors have done an excellent job in developing a plan to improve its financial position, which I believe will have a significant impact on the organization over the next few years,” Howard said.
The executive added that a key part of the plan is to help Palomar get started using EPIC, the same electronic medical records system that Sharp recently implemented to make collaboration easier. Palomar and Sharp already work closely together, with Palomar Health Medical Group being part of the Sharp Community Medical Group provider network.
First published: August 28, 2024, 5:34 PM
