Sharp, Palomar Ink Partnership Agreement

NORTH SAN DIEGO COUNTY – Palomar Health and Sharp HealthCare are strengthening their longstanding relationship to expand health services to residents in the Palomar Healthcare District.

“We’ve been in partnership with Sharp on a variety of levels going back around 20 years, including our employees in getting Sharp Health as their health plan,” said Palomar Health CEO Diane Hansen.

Sharp HealthCare CEO Chris Howard said the two healthcare entities have “been aligned to a large degree, but this takes our partnership one step forward.”

That step forward includes an executed Letter of Intent that maintains Palomar Health’s public designation while jointly establishing programs across clinical service lines, including inpatient, outpatient and ambulatory services. The collaboration agreement also gives Palomar Healthcare District patients access to Sharp’s specialized and higher-acuity services such as transplants and advanced oncology procedures that are not currently available at Palomar Health.

“It’s a win-win for both our organizations,” Howard said about the deal, which helps Palomar Health by strengthening clinical care in its public healthcare district and gives Sharp HealthCare accessibility “in both Poway and Escondido – areas where there’s need for acute care services – and it helps Sharp Health Plan continue to successfully grow its business in North County.”

The collaboration also aims to lower overhead costs and administration expenses that will allow both organizations to save money and make healthcare more accessible and affordable for patients. It is also a growth opportunity for Palomar hospitals.

“From a revenue standpoint, we would love to have the opportunity to be the hospital that Sharp can look to for services in North County,” Hansen said.

Sharp and Palomar anticipate the program will be “solidified and ready to go within 12 months,” Hansen said.

Healthcare District Experience

The partnership between Sharp and Palomar is the second agreement between the two organizations announced this year. In April, Palomar moved its behavioral health services to Sharp Mesa Vista Hospital after closing its 12-bed Behavioral Health Unit in Poway as part of Palomar’s initiative to focus on the 120-bed behavioral health facility at its main Escondido campus that broke ground in July.

In preparing for more partnerships and collaborations, which it views as vital to its growth and expanding services, Palomar Health in March initiated a unique management model aimed at streamlining the dealmaking process.

Under the new management services agreement that Palomar’s district board of directors approved in a 5-2 vote in late February, Hansen and other Palomar Health executives now operate as Mesa Rock Healthcare Management. The new structure allows Mesa Rock to negotiate partnership agreements – like this most recent agreement with Sharp – without continuous oversight of the district board.

“It gave us an ability to have conversations in a discrete and more confidential environment until we were ready to share something with the public,” Hansen said. “It’s given us the ability to have the serious conversations to do the work that we needed to do from a due diligence perspective on both sides without having to present that in a public forum before we were ready.”

Howard concurred.

“I think it’s a unique model and I think in this case it works well for both of us,” he said.
Although the unique model made for a new healthcare district negotiation experience for Sharp, working with healthcare districts is not new for the healthcare provider and Howard said Sharp’s experience in serving the East County’s Grossmont Healthcare District makes it an ideal partner for Palomar.

The new partnership is less extensive than the one with Grossmont, he added, because Sharp leases the district’s hospital – Sharp Grossmont Hospital – and will not be leasing any of Palomar’s hospitals.

“Palomar Health remains owned and operated by the Palomar Healthcare District. Sharp Healthcare remains privately owned. But we’re able to collaborate in ways that hopefully build upon Sharp Healthcare’s need for a North County hospital to grow and continue to grow and build our business,” he said, adding that the partnership with Palomar is “a wonderful opportunity under clinical affiliation to work together, even while our organizations stand alone, economically.”

Palomar Health
FOUNDED: 1948
CEO: Diane Hansen
HEADQUARTERS: Escondido
BUSINESS: Public healthcare/hospital district
REVENUE: $9 million from operations (FY2023)
EMPLOYEES: 4,200
WEBSITE: PalomarHealth.org
NOTABLE: Palomar Health is the largest healthcare district in California, serving more than half a million people.

Sharp HealthCare
FOUNDED: 1955
CEO: Chris Howard
HEADQUARTERS: San Diego
BUSINESS: Healthcare provider
REVENUE: $4.7 billion (FY 2023)
EMPLOYEES: 19,000
WEBSITE: www.sharp.com
NOTABLE: Sharp is the only system in the world to have all of its acute-care hospitals receive the Gold Certification for Excellence in Person-Centered Care.