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Swedish, Providence partnership faces state, federal reviews

Federal and state agencies will heavily scrutinize the proposed affiliation between Swedish and Providence to ensure it does not significantly stifle competition.

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Snohomish County could play a key role in the proposed business partnership between two of Western Washington's largest health care organizations.
The affiliation planned between Seattle-based Swedish Health Services and Renton-based Providence Health & Services will be reviewed by state and federal regulatory agencies for antitrust issues, to see if the merger significantly dampens competition.
One of the issues they might look at closely is the effect on business competition in Snohomish County. The county's two largest hospitals are operated either by Swedish or Providence.
Swedish took over administration of the former Stevens Hospital in Edmonds last year. And it opened a satellite emergency room near the 128th Street exit of I-5 south of Everett in February.
Providence Regional Medical Center Everett is the largest hospital in the county, with one of the state's busiest emergency rooms. It opened a $460 million medical tower in June.
"I think the market presence in Snohomish County is larger than the Swedish/Providence market presence in either King or Pierce counties," said Rick Cooper, chief executive of The Everett Clinic, a competing health care organization with 295,000 patients in Snohomish and Island counties. Cooper has worked in health care in Snohomish County since 1977.
One of the issues that won't be reviewed by regulators, but is getting increasing public attention, is how a collaboration between Catholic and non-Catholic nonprofit health care organizations could affect women's reproductive rights.
Last week, Swedish officials said that if the proposal goes forward, abortions would not be conducted at Swedish, but would be done at an off-site clinic.
So far, no area health care organizations have announced plans to raise questions or objections to the partnership between the two big health care organizations. Several said they were waiting for further details.
However, The Everett Clinic issued a statement last week saying it will take a close look.
The Providence-Swedish alliance "has the potential to impact the Puget Sound health care market," it said. "We will fully participate in the regulatory review process."
Many area health care organizations draw patients from Snohomish County, Swedish spokesman Ed Boyle said Thursday. These include Seattle's Northwest Hospital and Medical Center, Kirkland's Evergreen Hospital Medical Center and Bellevue's Overlake Hospital Medical Center.
"That won't change as a result of our proposed affiliation with Providence," Boyle said. "We believe Western Washington is highly competitive in terms of health care providers."
The planned business partnership is expected to be reviewed by the state attorney general's office, possibly by the state Department of Health, and either the Federal Trade Commission or the Department of Justice.
Dan Sytman, spokesman for state Attorney General Rob McKenna, said Providence and Swedish have submitted information about the proposal, which will be reviewed by the antitrust division.
The proposal will also face review from either the Federal Trade Commission or the Department of Justice, said Mitch Katz, a FTC spokesman.
"Usually, the Federal Trade Commission looks at health care and hospital-related transactions," he said.
The FTC is at the moment in court challenging two hospital mergers in Ohio and Georgia, Katz said.
As outlined last week, the two health care organizations would team up to form a new nonprofit health care system.
The proposed partnership would allow both organizations to keep their current names. Swedish would be part of a new regional division of Providence Health & Services, which operates 27 hospitals in five states from Alaska to California. It also has 214 clinics and nearly 53,000 employees.
Swedish has a total of five hospitals, based in Seattle, Edmonds and Issaquah, more than 70 clinics and 11,000 employees.
The two health care organizations have combined revenue of $3.4 billion and employ thousands in Snohomish County.
"No matter what size you are, you have to aggregate for economies of scale," said Mike Liepman, chief executive of Valley General Hospital in Monroe.
His own hospital is now involved in a proposed joint venture with Capella Healthcare, a for-profit organization based in Tennessee.
Cooper, of The Everett Clinic, said the proposed partnership between Providence and Swedish is part of national trend of consolidation among health care organizations.
"In some ways, the Puget Sound region has been slower to consolidate than many markets on the West Coast," such as Portland, San Diego and San Francisco, he said.
So it's not surprising that Providence and Swedish would make such move, he said, even though just eight months ago, they were engaged in a spirited competition in Snohomish County.
Swedish/Mill Creek, the satellite emergency room, was part of a brand new $30 million medical building that opened in February. That occurred just four months before Providence Regional Medical Center Everett dedicated its new $460 million medical tower, which had been planned for years.
Combined, the two organizations spent an estimated $250,000 on advertising in the spring, including a pointed Providence ad that asked: "If you need an emergency room, wouldn't you rather there be a hospital attached?"
The partnership move by Providence and Swedish is an indication of the challenges and uncertainty in health care throughout the nation, Cooper said.
"Their stated goal is to improve care and reduce costs," he said "They've concluded that separately that wasn't going to be possible."
Sharon Salyer: 425-339-3486;

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