Dignity Health Formed

Catholic Healthcare West (CHW), the fifth largest health system in the nation, announced that it has changed its name to Dignity Health as part of a governance restructure that will position the organization to succeed in a changing health care environment.

Under the new governance structure, Dignity Health is a not-for-profit organization, rooted in the Catholic tradition, but is not an official ministry of the Catholic Church. The new structure and name enable the organization to grow nationally, while preserving the identity and integrity of both its Catholic and non-Catholic hospitals.

The organization’s Catholic hospitals will continue to be Catholic, directly sponsored by their founding congregations, and adhering to the Ethical and Religious Directives for Catholic Health Care Services.

Dignity Health’s non-Catholic hospitals will continue to be non-Catholic, adhering to the Statement of Common Values. The changes underscore the unique challenges facing Catholic hospitals in the marketplace, where there are tremendous financial pressures for hospitals to merge or form formal alliances with other health care providers in order to survive and thrive.

The change will have no effect on any patients or the medical care provided at the 25 Catholic and 15 secular hospitals in the system. But executives hope it will make it easier to merge or affiliate with other hospitals, doctors’ practices and other health care providers.

Catholic Healthcare West was founded in 1986 when two congregations of the Sisters of Mercy combined their 10 hospitals into one system. Catholic Healthcare West added its first non-Catholic hospital in 1995 and has been engaged in a battle for dominance in Northern California against Sutter Health, a secular nonprofit system.

Catholic Healthcare West’s leaders, like those at other systems, believe that as government and private insurers have moved to limit reimbursement increases, long-term survival requires becoming bigger and leaner.

CHW posted a net income of $917 million for the year ended June 30, 2011. During FY11, CHW provided $947 million in community benefits and free care for the poor, including charity care, community grants, discounted care and the unreimbursed costs of Medicaid and other indigent programs.

The 40-hospital health system posted an operating income of $198 million on $10.6 billion in revenue. As a not-for-profit system, CHW reinvests its operating and investment income in hospital improvements, technology enhancements, charity care, and community health programs. CHW’s on- going investment in its ministry also includes building upgrades, new medical equipment, and clinical information systems.

During the 2011 fiscal year, CHW invested $624 million in capital improvements, including construction of the Alex G. Spanos Heart and Vascular Center at Mercy General Hospital in Sacramento, a new medical office building and outpatient surgery center in Elk Grove, the expansion of Mercy Hospital of Folsom, a new patient tower at Sequoia Hospital in Redwood City, a replacement hospital for Marian Medical Center in Santa Maria, as well as investments in electronic medical records.

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