Newly formed Providence St. Joseph Health investing $100 million in mental health

St. Joseph Hospital in Eureka, California

One day after Providence Health and Services and St. Joseph Health began operating as a combined nonprofit entity, and the newly-formed health and social services system -- dubbed Providence St. Joseph Health -- said Wednesday that it will use a $100 million investment to create the Institute for Mental Health and Wellness.

The health system has established the Foundation for Mental Health and Wellness to oversee the work. The fund will support research and startup operations for mental health awareness, as well as diagnosis and treatment. Fund distributions will be made through a formalized grant process and be available internally to Providence St. Joseph Health entities, as well as other organizations within the communities it serves. Members of the expert advisory panel will provide strategic guidance on the distribution of funds.

The Institute for Mental Health and Wellness will begin operating immediately, and the expert panel will convene in the coming months, under the leadership of Chair Bisognano.

[Also: Providence Health, St. Joseph Health credit unaffected by looming merger]

"This is an important step in the right direction as we work to address the many gaps in our nation's mental health system," said Linda Rosenberg, president and CEO of the National Council for Behavioral Health. "I am confident we will make meaningful strides, bringing new hope to the many individuals and families who are affected by mental health challenges."

Two weeks ago, California Attorney General Kamala Harris approved the merger between Washington-based Providence and California-based St. Joseph could go forward as long as certain conditions were met. Those include requirements to maintain operations, levels of charity care spending and seismic compliance, and continued participation in the state's Medi-Cal program. The approval also requires several reporting requirements.

An expert advisory panel will be convened by the new system to create a blueprint for improving mental healthcare in U.S. communities. Maureen Bisognano, recently retired president and CEO of the Institute for Healthcare Improvement, will serve as the chair of the panel, working alongside Rod Hochman, M.D., CEO of the newly formed health system.

As a part of the efforts, Providence St. Joseph Health and the advisory panel will collaborate with national and local organizations who have expertise and long histories of addressing mental health.

Late last month, Standard and Poor's Global Ratings confirmed its ratings for Providence and St. Joseph would not be affected by the merger. Their long-term, unenhanced ratings were AA- prior to the marriage.

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Standard and Poor's expects to meet with senior management in early August, and will complete a review of the consolidation plan, including possible changes to the table of organization and the existing obligated group debt structures. Management has indicated that a combination of the existing two obligated groups is likely, although the exact timing and details are not yet available.

Published reports say that Providence's annual revenue will grow from $14 billion to $20 billion under the new entity, which is now estimated to be the third-largest nonprofit health system in the United States, behind only Kaiser Permanente and Ascension Health.

Twitter: @JELagasse