Corporate Structure and Captial Strategy at Catholic Healthcare West

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Health Affairs - January/February 2006

This paper analyzes the evolution of capital investment strategy at Catholic Healthcare West (CHW) between 1996 and 2005, as the forty-hospital system reversed its financial losses and diversified into ambulatory services and high-growth markets. The system developed a formal process for allocating capital among profitable facilities and those providing charitable services in communities with high social needs. Capital priorities shifted from weak facilities in low-growth markets (from 35 percent to 27 percent of total investment) to strong facilities in high-growth markets (from 32 percent to 45 percent). Mission-related investments were made to sustain, but not expand, the system’s presence in low-income communities.