O.C. Children’s Hospital Emancipated
Children’s Hospital of Orange County, having regained its financial footing, is striking out on its own again after little more than three years under the management wing of St. Joseph Hospital in Orange.
The mutual decision was announced Friday and came after CHOC earned $3 million from operations last year--its first profit in five years. CHOC was on its way to higher earnings this year, said Larry K. Ainsworth, St. Joseph’s chief executive.
“We’ve achieved all the goals we set out to do in our management-services contract,” Ainsworth said, noting that CHOC managers will no longer report to him. “It was time to let CHOC go on its own.”
CHOC in Orange is the county’s sole pediatrics-only, health-care provider. The 192-bed, not-for-profit hospital lost $19.4 million from operations in 1998--the year it signed a management contract with its former parent, St. Joseph. CHOC lost about $24 million in the previous three years combined as it failed to adjust fast enough to rapid changes in health-care plans.
Under the contract, Ainsworth hired Kimberly Chavalas Cripe as CHOC’s chief executive, and she brought on four top executives.
Together, Ainsworth said, they worked out a plan to revive the hospital’s finances by reducing programs that weren’t working or were overstaffed and rearranging staffing ratios so they were in line with the industry.
That put about 150 people, or about 12% of the staff, out of work. CHOC now employs about 1,200.
Cripe and her team also reworked contracts with MediCal to get more reimbursement for children who did not have insurance, and picked up an additional $5 million to $6 million in the first year, Ainsworth said. Also, after St. Joseph renegotiated contracts with five managed-care providers, CHOC pediatricians received increased payments under those agreements as well.
Finally, the executives beefed up research and clinical programs, especially in neurological, cancer and heart programs, helping CHOC gain more recognition nationally.
Under the contract, CHOC could have operated under St. Joseph’s for 18 more months.
Cripe, who now assumes direct leadership, was unavailable for comment Friday.
St. Joseph started CHOC in 1964 and CHOC operated from St. Joseph’s south wing. CHOC later became independent and built a facility next door.
The two institutions, connected by an underground tunnel, share an emergency room, outpatient clinic, operating rooms and other services, and they will continue operating under their long-term agreement to share services.
