John Muir Health plans to invest $100 million in San Ramon Regional Medical Center so the former competitors can jointly expand services in the Tri-Valley area and gear up for changes under the national health reform law, leaders of both organizations said Thursday.
John Muir will acquire a 49 percent ownership interest in the 123-bed San Ramon hospital.
"Both of us are thrilled by the partnership," said Gary Sloan, chief executive officer of San Ramon Regional. "We really believe this will be beneficial for our communities."
The joint venture will open ambulatory care centers and other outpatient services in the Tri-Valley area and nearby communities, leaders said.
The organizations will also explore new models for coordinating patient care as the health reform law unfolds.
"There are a lot of great reasons to work together," said Cal Knight, president and CEO of John Muir Health. "This is a way for San Ramon and John Muir to take advantage of a larger scale without sacrificing their independence."
John Muir is an independent, not-for-profit health system with hospitals in Walnut Creek and Concord and Contra Costa's only trauma center. It has 885 licensed beds and has long been considered one of the East Bay's most financially successful health care organizations.
John Muir also owns a not-for-profit medical foundation that contracts with more than 925 physicians.
San Ramon Regional is part of the for-profit Tenet Healthcare Corp., and is Tenet's only hospital in the East Bay.
Both John Muir and San Ramon Regional have been operating in a highly competitive Bay Area market dominated by large health systems such as Kaiser Permanente and Sutter.
In that environment, they decided that the unusual pairing between a not-for-profit and a for-profit organization made sense.
—We will offer better, more accessible and integrated care together than we can apart," Knight said.
San Ramon Regional will keep its name, and Tenet will continue to manage the hospital.
But a new board will be formed to oversee the joint venture, with San Ramon Regional and John Muir each appointing half of its members, Knight and Sloan said.
John Muir will remain a not-for-profit organization and will continue to have its own governing board, Knight said.
Before the transaction can be completed, approval is required from several regulatory agencies. The organizations hope to complete the arrangement by March 31.
"We have a very similar culture," Sloan said. "Many of our physicians have relations with both organizations."
Sandy Kleffman covers health. Contact her at 510-293-2478. Follow her at Twitter.com/skleffman.