Original Article Link: Palomar Health enters new management deal with private firm (thecoastnews.com)
ESCONDIDO — In a move to enhance its competitiveness with neighboring private medical providers, Palomar Health’s board of directors has greenlit a controversial management services agreement with a private company.
The hospital’s agreement with Mesa Rock Healthcare Management, approved by a 5-2 board majority on Feb. 29, will see Palomar Health CEO Diane Hansen and her executive team transition to working for the private, nonprofit company instead of directly answering to the board.
Palomar Health says the partnership with Mesa Rock will enable the health care district to affiliate with regional healthcare partners and hospital systems, fostering growth in primary medical care, expanding medical and surgical oncology care, improving pediatric care, stabilizing relationships with hospital-based physician groups, enhancing access to lab medicine, and strengthening the district’s ability to negotiate rates with health plans.
“In light of the financial challenges faced by healthcare districts statewide, the Palomar Health board of directors has taken proactive measures to ensure the district’s sustainability,” a statement from the hospital reads. “The agreement with Mesa Rock will position Palomar Health to maintain healthcare as a community asset by addressing financial challenges and facilitating strategic investments.”
Palomar Health is California’s largest public healthcare district, operating independently from city and county governments to provide health services to residents.
In recent years, many public healthcare districts, including Palomar Health, have grappled with financial crises. Amidst ongoing financial strains exacerbated by the COVID-19 pandemic, hospitals nationwide have faced staffing shortages, escalating labor costs, inflation, supply chain disruptions, and other fiscal obstacles.
Larger, private nonprofit entities like Kaiser Permanente and Sharp HealthCare have demonstrated greater resilience to these challenges.
Several hospitals in the region have sought partnerships with private medical providers. Last year, the neighboring Tri-City Healthcare District partnered with UC San Diego Health to enhance services. UC San Diego took over Tri-City’s property, debt, and staff and formed a new governing board.
Unlike Tri-City, Palomar Health will retain ownership of all its facilities and assets and maintain oversight responsibility for Mesa Rock.
However, critics, including Palomar Health board members John Clark and Laurie Edwards-Tate, have raised concerns about the management agreement, fearing it diminishes its authority.
“An elected official cannot relinquish vested power,” Edwards-Tate told The Coast News. “It is not ours to surrender, as it is embedded in the law.”
With the appointment of Palomar’s executive team to Mesa Rock, the company will assume responsibility for hiring or firing the healthcare district’s CEO, superseding the board’s authority.
As Mesa Rock is a private company, it is not subject to the state’s public records law. While most of Palomar’s records will remain public, records generated by the executive team will remain private.
Under the contract terms, the company will receive 1% of net revenue for its operations.
Limited information is available about Mesa Rock and its operational approach. Eric Friedlander, CEO of Starpoint Health, established the nonprofit organization in February 2024.
Original Article Link: Palomar Health enters new management deal with private firm (thecoastnews.com)
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