DaVita paid $405M to buy Everett Clinic
EVERETT — DaVita Healthcare Partners paid $405 million to purchase The Everett Clinic, according to recent filings with the Security and Exchange Commission.
The Denver-based company took control of the independent medical group on March 1. The Everett Clinic kept its name and continues to be run by a physician board. It operates as a subsidiary to DaVita.
The Everett Clinic’s assets were valued about $480 million, but DaVita also assumed $75 million in liabilities with the acquisition, according to a DaVita’s quarterly report filed last month.
The most valuable asset that DaVita gained was goodwill, an accounting term for brand name, customer base and employee relations. That was valued at $249 million.
DaVita also obtained $107 million in property and another $124 million in other assets. An independent third party assessed the value of the land and equipment.
The Everett Clinic was founded in 1924 by four physicians and has more than 315,000 patients in Snohomish and Island counties. With 2,000 employees, The Everett Clinic is the fourth-largest private employer in Snohomish County.
About 250 doctors who owned The Everett Clinic voted in December to sell to DaVita, a Fortune 500 company that operates 2,000 outpatient kidney dialysis centers nationally, including one in Everett.
The cost of The Everett Clinic was higher than DaVita initially expected. In DaVita’s annual report filed in February, the company said the purchase price
would be about $385 million in cash although it would be subject to adjustments “for certain items such as working capital.”
The Everett Clinic executives said the organization wasn’t under financial pressure to make a deal. Instead, the group wanted to merge with a larger organization to be able to fund expansion. The clinic wants to double in size by 2020.
“We’re starting to pivot away from the transaction and focus on our growth plans,” said Chris Knapp, The Everett Clinic’s chief legal officer.
And those expansion plans are under way.
The Everett Clinic plans to open a $17 million, 40,000-square-foot clinic in Shoreline in King County at 1201 N. 175th St., next to the Trader Joe’s. That’s scheduled to open Sept. 26.
And the clinic recently signed a lease on a 31,000-square-foot facility that will become an ambulatory surgery center at 21401 72nd Ave. W in Edmonds, Knapp said. The clinic hopes that will open at the end of the year.
Altogether, The Everett Clinic may add as many as five more clinics and already is looking at areas as far south as Fremont and Ballard in Seattle to Kirkland and north Bellevue on the Eastside.
The deal with DaVita gives The Everett Clinic access to capital to take on the expansion. DaVita has 65,000 employees and operates physician groups in six states. It announced an adjusted net income of $828 million last year.
DaVita purchased The Everett Clinic with the idea that it wanted to learn about how the clinic runs its medical practice, Knapp said. It’s been a twoway street in the first few months.
“We’re learning a lot from the other markets as well,” Knapp said. “It’s been very rewarding to be able to spend time with our peers in California, Colorado and New Mexico. We can always improve and this gives us more information and best practices in other states.”
There’s been a frenzy of mergers, acquisitions and consolidations in health care nationally and locally. Snohomish County’s three independent hospitals — in Edmonds, Monroe and Arlington — joined with larger health-care organizations over the past few years. Former competing health care giants, Swedish Health Services and Providence Health & Services, also joined forces.
And Group Health Cooperative is being acquired by health insurance giant Kaiser Permanente, in a deal announced after The Everett Clinic-DaVita merger.
Studies show that health care costs rise in areas where a single hospital has a monopoly. The Everett Clinic executives have noted that the county still has several large, competing health care institutions.