Sharp HealthCare and Palomar Health jointly announced Wednesday that they will collaborate on patient care in North County, working together to “establish programs across clinical service lines.”
The agreement comes as Palomar, which operates hospitals in Escondido and Poway and a medical group based largely in inland North County, works to reach financial equilibrium after Kaiser Permanente opened a medical center in San Marcos one year ago.
Plans to grow revenue have not yet borne fruit, and Palomar’s elected board approved allowing its top executives to work for a private nonprofit company in hopes that doing so would make collaborative deals with private operators such as Sharp easier.
Though the details of the agreement between Palomar and Sharp were not spelled out, it appears that the region’s largest medical provider and the state’s largest public health care district have found enough common ground to work more closely together. Chris Howard, Sharp’s chief executive, noted Wednesday that Sharp Health Plan has long used Palomar facilities to serve its North County members.
“If we have an expertise that currently Palomar Health does not maintain and if we can make that available to Palomar and if it’s affordable to both partners and improves the patient experience, then that would certainly be a goal for the partnership,” Howard said.
However, the executive stressed that this is not a takeover. Palomar’s board, he said, has consistently made it clear that it wishes to remain an independent medical provider. There are no plans, he said, for Sharp to take over the operation of certain service lines at Palomar facilities.
“This is not an acquisition or a lease of Palomar Health,” Howard said. “This is a clinical affiliation and collaboration agreement that allows our two organizations to partner and jointly establish programs that will enhance Palomar Health’s ability to offer patients greater access to health care services and allow us to expand some of our services up to North County.”
Diane Hansen, Palomar’s chief executive officer, said in the joint statement that she is honored to partner “with such an esteemed organization.”
“By working together and reimagining health care to make it even more accessible, we will be able to address gaps in health care services, providing more comprehensive care options and ensuring that our patients receive the highest standard of care close to home,” Hansen said. “We anticipate having the program solidified and ready to go within 12 months.”
According to Sharp and Palomar’s joint statement, they “have formalized a new collaboration through a fully executed Letter of Intent that will maintain Palomar Health’s public designation.”
But Palomar, a public health care district with an elected board of directors, declined to provide a copy of the document Wednesday afternoon, saying in an email that the district is unable to do so, without explaining why.
Sharp clarified in its own email that the letter of intent is with the Palomar Health Care District, not Mesa Rock, the private nonprofit management company created to employ Palomar’s management. However, Palomar did not reply when asked if its elected board approved the agreement.
Palomar has recently faced downgrades from bond rating agencies after making financial disclosures that have shown it is experiencing severe budget pain. Its most recent quarterly financial report lists an operating loss of $28.5 million against an estimate that the organization would have earned $41.6 million through March, 2024.
Though Palomar expressed a lack of concern regarding the financial effects of Kaiser opening a new hospital in its backyard, overall services volume does seem to have suffered in the current fiscal year, with total discharges through March at 17,978, 6.6 percent fewer than the 19,237 that was budgeted.
Some observers, such as local health care consultant Nathan Kaufman, have been skeptical of Palomar’s ability to accomplish a financial turnaround. After reviewing Wednesday’s joint statement, Kaufman predicted that, based on the details provided, “things will not improve materially.”
Howard, while not directly addressing Kaufman’s statement, said he sees reason for hope.
“We know that Palomar Health and its leadership team and board are doing a great job of creating plans to improve their financial position, and we believe those will greatly impact the organization in the years ahead,” Howard said.
The executive added that an important part of the plan will be helping Palomar to begin using EPIC, the same electronic medical record system that Sharp has recently installed, to make working together easier. Palomar and Sharp already work closely together, as Palomar Health Medical Group is part of Sharp Community Medical Group’s provider network.
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