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Verity Health System, St. Vincent Medical Center Health Care Impact

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Verity Health System, St. Vincent Medical Center Health Care Impact Effect of the Asset Purchase Agreement between Verity Health and Strategic Global Management on the Availability and Accessibility of Healthcare Services to the Communities Served by St. Vincent Medical Center Prepared for the Office of the California Attorney General August 16, 2019 Table of Contents Introduction & Purpose ............................................................................................................ 4 Reasons for the Transaction as Stated in the Notice to the California Attorney General ............................... 5 Timeline of the Transaction ............................................................................................................................. 6 Summary of the Asset Purchase Agreement ................................................................................................. 10 California Attorney General Conditions from Schedule 8.6 of the Asset Purchase Agreement ................... 18 Use of Net Sale Proceeds ............................................................................................................................... 19 Profile of Verity Health System............................................................................................... 20 Verity Health System ..................................................................................................................................... 20 Verity Health Inpatient Statistics ................................................................................................................... 23 Statement of Operations ............................................................................................................................... 24 Net Patient Service Revenue ......................................................................................................................... 24 Operating Expenses ....................................................................................................................................... 25 Financial Position and Debt Obligations ........................................................................................................ 25 Credit Rating and Outlook ............................................................................................................................. 26 Verity Health Payer Mix ................................................................................................................................. 27 Unionized Employees .................................................................................................................................... 28 Profile of Purchaser ................................................................................................................ 29 Overview ........................................................................................................................................................ 29 KPC Hospitals ................................................................................................................................................. 30 PHH Hospitals ................................................................................................................................................ 31 Victor Valley Hospital Acquisition, Inc. and Victor Valley Hospital Real Estate, LLC ..................................... 31 Hospital Compare .......................................................................................................................................... 34 Profile of St. Vincent Medical Center ...................................................................................... 36 Overview of the Hospital ............................................................................................................................... 36 St. Vincent Foundation .................................................................................................................................. 36 St. Vincent Dialysis Center, Inc. ..................................................................................................................... 36 Key Statistics .................................................................................................................................................. 37 Programs and Services ................................................................................................................................... 38 Accreditation.................................................................................................................................................. 39 Quality Measures ........................................................................................................................................... 39 Seismic Issues................................................................................................................................................. 40 Payer Mix ....................................................................................................................................................... 42 Managed Medi-Cal Managed Care ................................................................................................................ 43 Medical Staff .................................................................................................................................................. 44 Patient Utilization Trends .............................................................................................................................. 45 Financial Profile.............................................................................................................................................. 46 Cost of Hospital Services ................................................................................................................................ 47 Charity Care ................................................................................................................................................... 48 Community Benefit Services .......................................................................................................................... 50 Analysis of the Hospital’s Service Area ................................................................................... 52 Service Area Definition .................................................................................................................................. 52 Service Area Map ........................................................................................................................................... 53 Health Professional Shortage Areas (HPSA) .................................................................................................. 54 Medically Underserved Areas & Medically Underserved Populations .......................................................... 55 Demographic Profile ...................................................................................................................................... 57 2 Selected Health Indicators ............................................................................................................................. 59 2016 Community Health Needs Assessment ................................................................................................. 61 Hospital Supply, Demand & Market Share .................................................................................................... 63 Hospital Market Share ................................................................................................................................... 64 Market Share by Payer Type .......................................................................................................................... 65 Market Share by Service Line ........................................................................................................................ 66 Market Share by ZIP Code ............................................................................................................................. 67 St. Vincent Medical Center Analysis by Bed Type .................................................................... 68 Medical/Surgical Capacity Analysis ................................................................................................................ 68 Intensive Care Capacity Analysis .................................................................................................................... 69 Skilled Nursing Capacity Analysis ................................................................................................................... 70 Physical Rehabilitation Capacity Analysis ...................................................................................................... 71 Emergency Services Analysis ......................................................................................................................... 72 Emergency Services Capacity ......................................................................................................................... 73 Multi-Organ Transplantation in Los Angeles County ..................................................................................... 74 Summary of Interviews .......................................................................................................... 76 Reasons for the Proposed Transaction .........................................................................................................
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