California Attorney General Rob Bonta approved The merger of Rady Children’s Hospital and Children’s Hospital of Orange County paves the way for the pair to operate jointly under the name Rady Children’s Health, which will combine resources in San Diego and Orange counties to encompass a region that is home to more. More than 1.3 million children.

When two hospitals jointly announced the agreement DecemberLeaders of both organizations said they would maintain their current boards of directors, which would operate under the umbrella of a new “parent” company that pays tribute to the hundreds of millions of dollars Ernest and Evelyn Rady contributed to San Diego.

For two years after the agreement went into effect, Rady’s CEO, Dr. Patrick Frias and Kimberly Chavalas Cripe, CHOC’s current president and chief executive officer, will co-lead Rady Children’s Health. Cripe would retire after more than three decades at CHOC.

But the merger of these two nonprofits requires approval from the state’s top attorney and law enforcement official, and that signature includes 24 conditions, the details and specifications of which fill out the 24-page document released by the AG this week.

Many of these conditions refer to technicalities that require constant monitoring of issues (such as hospital licensure and Medi-Cal participation) that neither organization could reasonably change without significant upheaval. But others, such as setting the minimum amount of charity care that must be provided to the communities hospitals serve for 10 years, appear designed to ensure that the merged organization remains true to its mission of serving all residents in San Diego. Orange counties aren’t the only ones with excellent medical coverage.

The partner organization is required to spend at least $147 million a year on “community benefit services”; annual increases of this base value were set at 3.55 percent for Rady and 4 percent for CHOC’s hospitals in Orange and Mission Viejo. That amount includes a total of $20 million in annual charity care, defined as medical care costs that are not reimbursed to organizations.

All organizations are required to maintain financial aid policies “no less favorable” than those currently employed at Rady Children’s for the next 10 years.

Community giving, which can include spending on a range of activities such as education, research and in-kind contributions to other charities, is the cornerstone of federal requirements for nonprofit healthcare organizations to maintain their tax-exempt status.

Long-term investments in physical facilities for both organizations were announced, including $711 million and $571 million in spending for new medical towers at CHOC hospitals and $1.6 billion for new medical towers. tower and “enabling projects” is now breaking ground on the north end of Rady’s Serra Mesa campus. An additional $175 million was allocated for a new Rady mental health services building.

Bonta also gets very specific about the services, namely those that will continue to be offered at each of the three hospitals involved in the merger.

The agreement’s most flexible requirements specify how many beds must continue to be available at each facility. Of this number, 52 are in intensive care, 139 are in the intensive care neonatal nursery, 249 are in general acute care, 67 are in acute psychiatry and skilled nursing at Rady, and a total of 388 are in CHOC hospitals. Both organizations operate neonatal intensive care units at affiliated hospitals, and those locations are also listed with street addresses and available bed capacities.

The language services that must be provided to patients and their families are also detailed and financial aid program documents include “English, Spanish, Arabic, Vietnamese, Tagalog, Somali, Persian, Korean, and Mandarin.”

A list of 36 medical specialties, from allergy and immunology to urology, is also among the current services that must be maintained over the next 10 years. Any “suspension, relocation or diversion” of this core group would require prior attorney general approval.

In a statement Thursday, Rady said the circumstances “are currently under review by the leaders and Boards of Directors of both organizations.”

“If terms are acceptable, CHOC and Rady Children’s will begin the process to finalize the merger of their parent companies.”

The attorney general’s conditional approval includes as an exhibit the entire partnership agreement between Rady and CHOC. This document, which is many times longer than Bonta’s list of conditions, contains more than 300 pages of additional detail on the details of the merger; For example, he points out that the medical staff of the two organizations will remain independent and continue to operate under their existing charters.

Many people will wonder what the name of the existing hospitals will be if the merger goes into effect. There is no direct answer to this question; The affiliation agreement calls for the two organizations to jointly develop a “health system branding plan” that includes the organization’s new name, Rady Children’s Health, but also “maintains the recognition, familiarity and brand value of CHOC’s legal names” CHOC, Mission and (Rady Children’s Hospital San Diego).”

The agreement also includes how this merger will result. If all parties agree to a “dissolution” in writing, they will work together to divide the assets “in a manner that permits the parties to operate as independent companies pursuing their respective missions and purposes upon termination.”

First Publication Date: November 7, 2024 11:27 PST