St. Joseph to Take Financial Reins for Ailing CHOC

ORANGE — St. Joseph Hospital plans to take over management of its financially wayward offspring, Children’s Hospital of Orange County, the two institutions said Wednesday.

The two agreed to hire a consultant to help them put together a management contract this summer, though terms have yet to be worked out. Assuming both sides proceed with the plan, CHOC, the only pediatric hospital in the county, would remain an independent institution with its own board and management, but St. Joseph would oversee its financial turnaround.

Like many children’s hospitals, CHOC is straining to uphold a costly mission of caring for youngsters with rare, life-threatening illnesses, whether or not they can pay. It has lost business because it was slow to adjust to massive changes in health care, such as the transfer of local children on MediCal into managed care.

CHOC estimates it will post a loss of about $13 million for the fiscal year ending this month--the worst in its 33-year history and nearly double last year’s losses. And after its longtime chief executive, Thomas Penn Jones, resigned abruptly early this year, the board has been searching for ways to reorganize the institution.

The deal would strengthen deep historical ties between the two institutions. CHOC, which opened in 1964, initially operated out of the south wing of St. Joseph under the leadership of the Sisters of St. Joseph. CHOC, later breaking off as an independent institution, built its own facility.

The two institutions, connected by an underground tunnel, share an emergency room, outpatient clinic, operating rooms and other services.