Western union

Prov­i­dence, Swedish forg­ing new sys­tem in Wash.

Modern Healthcare - - THE WEEK IN HEALTHCARE - Vince Gal­loro

Prov­i­dence Health & Ser­vices and Swedish Health Ser­vices say their lo­cal so­lu­tion to the national prob­lem of im­prov­ing care while low­er­ing costs is to com­bine their western Washington op­er­a­tions in a new not-for-profit sys­tem.

“We don’t see a lot of bright light on the hori­zon,” Dr. John Koster, pres­i­dent and CEO of Ren­ton-based Prov­i­dence, said dur­ing a con­fer­ence call. “This is a bold step. We aren’t wait­ing for oth­ers to give us guid­ance. ACOs and health re­form, those are very ex­cit­ing, but at some point, we have to step up and lead.”

The com­pre­hen­sive de­liv­ery sys­tem that the tie-up will pro­duce “puts us in a very, very strong po­si­tion” to form an ac­count­able care or­ga­ni­za­tion and go be­yond that, Dr. Rod Hochman, Swedish’s pres­i­dent and CEO, said dur­ing the call. Seat­tle-based Swedish stud­ied many pos­si­ble part­ners, but Prov­i­dence was the best fit in terms of mis­sion and val­ues, Hochman said. The or­ga­ni­za­tions use or are im­ple­ment­ing the same elec­tronic health-record sys­tem as well, he noted.

Koster in­sisted the deal is not a merger of Prov­i­dence and Swedish nor an ac­qui­si­tion by Prov­i­dence but an af­fil­i­a­tion. Hochman said, how­ever, that five board mem­bers from Swedish will join the Prov­i­dence board, and Swedish will be­come part of Prov­i­dence’s debt obli­ga­tion group. And Koster said they will not form a new cor­po­ra­tion, such as a joint ven­ture, to own and oper­ate the com­bined op­er­a­tions, and the new sys­tem will be set up and man­aged as a re­gion of Prov­i­dence, which now has 26 hos­pi­tals in Alaska, Cal­i­for­nia, Mon­tana, Ore­gon and Washington. All of those aspects are of­ten fea­tures of merg­ers.

Both ex­ec­u­tives em­pha­sized that each sys­tem will re­tain its own gov­er­nance and her­itage. Prov­i­dence’s fa­cil­i­ties will con­tinue to oper­ate ac­cord­ing to Catholic eth­i­cal and re­li­gious di­rec­tives, and Swedish’s fa­cil­i­ties will stay sec­u­lar. Each will main­tain its own foun­da­tion. No fi­nan­cial terms were dis­closed.

Prov­i­dence will con­trib­ute its op­er­a­tions in King, Sno­homish, Thurston and Lewis coun­ties to the sys­tem, in­clud­ing three hos­pi­tals. Swedish is es­sen­tially con­tribut­ing all its op­er­a­tions, which serve King, Kit­ti­tas and Sno­homish coun­ties. The deal re­quires reg­u­la­tory ap­provals at both state and fed­eral lev­els, as well as ap­proval from the Ro­man Catholic Church. Hochman said he hopes the deal can be com­pleted by the be­gin­ning of next year.

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