Roseville’s Adventist Health to manage Stockton’s struggling Dameron Hospital
Roseville-based Adventist Health will take over management of Stockton’s financially struggling Dameron Hospital on Jan. 1 as part of an agreement that the two companies’ executives said could eventually lead to a change in ownership and control in future.
“We’ve been looking for a partner to help support a more viable future,” said Lorraine Auerbach, president and CEO of Dameron Hospital. “Standalone hospitals nowadays are very, very difficult, and they’re a struggle to continue. We started looking for a partner to help us with resources and support and really a way to make our way into the future.”
Adventist already runs Lodi Memorial Medical Center, and even though it is located almost 20 miles north of Stockton, the Lodi institution has a bigger share of hospital discharges in the Stockton market than Dameron, according to documents filed with the California Department of Justice.
Dameron, it seems, steadily lost market share to several other hospitals in San Joaquin County. Over a four-year period between 2013 and 2016, Dameron’s share of county-wide discharges dropped to 7.9%from 15.3%. Meanwhile, market shares rose to 33.5 percent from 29.9% at St. Joseph’s Medical Center of Stockton, to 15% from 13.5% for San Joaquin General Hospital, and to 11.3% from 10.2% for Lodi Memorial.
The figures were part of a report that an independent consultant provided to the state Attorney General’s Office as the Department of Justice weighed whether to approve a merger between St. Joseph parent Dignity Health and Catholic Health Initiatives in 2018, a deal that won approval late last year.
Dameron, located at 525 W. Acacia St. in Stockton, will become the 20th California hospital Adventist operates. The company also runs a hospital in Hawaii and two others in Oregon.
Auerbach said Dameron’s board brought her in seven years ago to identify potential suitors, and now that the Adventist agreement is secure, she would be leaving Dec. 31. Daniel Wolcott, who has served as Lodi Memorial’s president since 2015, will lead both hospitals.
Will this lower cost of care?
Adventist Health “made a commitment to San Joaquin County when we affiliated with Lodi Memorial Hospital in 2015, and this partnership that we’ve formed with Dameron really ... gives us an opportunity to serve a broader population, extend our mission and collaborate,” Wolcott said. “Obviously, the cost of health care in this country is a source of major national dialogue, and we believe that by having two facilities in this region, we can improve both the quality and the cost of care over time.“
Both hospitals have strengths that they can share, Wolcott said, noting that Dameron has partnered with Stanford University to get cardiologists from its faculty performing surgeries and practicing at the Stockton hospital. Dameron, which has 202 licensed beds and 800 employees, also works with Stanford on a stroke telehealth program.
Adventist Health operates a general telemedicine program that has proven valuable to its care delivery program in both hospital emergency departments and in rural clinics around the state, Wolcott said. Lodi Memorial, which has 1,300 employees and 194 licensed beds, also secured strong A ratings for patient care quality and safety from the independent consultant Leapfrog Group, and it has been honored by the American Heart Association for its stroke care.
Roughly 80 percent of payments going to the two hospitals come from Medicare or Medi-Cal, Auerbach and Wolcott said. Documents filed with the Office of Statewide Health Planning & Development show Dameron reported operating revenue of $155.7 million in 2018, up from $113.97 million a year earlier and Lodi Memorial reported operating revenue of $245.1 million last year, up from $229.5 in 2017.
While Dameron had net operating losses of $17.4 million in 2018 and $42.8 million in 2017, the records showed, Lodi Memorial posted net operating income of $7.4 million in 2018 and $511,885 in the prior year.
Over the next 18 months, Adventist will look at creating a more formal affiliation with Dameron, Wolcott said, and if it works out, they will seek approval from the California Attorney General to allow Dameron to officially join Adventist Health.
