Everett Clinic to merge with big Colo.-based DaVita

EVERETT — The Everett Clinic, with 318,000 patients in Snohomish and Island counties, announced plans Monday to merge with Denver-based DaVita HealthCare Partners. The Fortune 500 company operates physician groups in six states and has more than 2,000 kidney dialysis centers nationally.

The Everett Clinic will keep its name and continue to be led by a physician board, said Rick Cooper, the clinic’s chief executive. Patients will notice little change, he said, either in dealing with a physician or with insurance issues. “It will be business as usual,” he said.

No details of the financial deal between the two organizations were disclosed. Final approval could come early next year. It must first be approved by The Everett Clinic’s 250 physician shareholders, Cooper said.

Many Everett Clinic employees learned of the proposed merger during a companywide conference call at 6:30 a.m. Monday.

The Everett Clinic is the state’s largest independent medical group and, with just over 2,000 employees, Snohomish County’s fourth-largest private employer. It had revenue of $360 million in 2014.

DaVita has 65,000 employees. It began as a company providing kidney dialysis and now operates 2,210 outpatient dialysis centers nationally.

Big expansion came in 2012 when DaVita paid $4.42 billion for the physician group HealthCare Partners, in what The Wall Street Journal characterized as part of a trend of large health care organizations providing multiple services to patients while managing costs.

Bloomberg Business reported that DaVita, a publicly traded company, had more than $11 billion in revenue last year. On Monday its stock-market capitalization was more than $16 billion. The New York Stock Exchange symbol is DVA.

The proposed merger is part of a wave of consolidation in health care, locally and nationally. Over the past several years, Snohomish County’s three independent hospitals — in Edmonds, Monroe and Arlington — joined with larger health-care organizations. Two of the largest health care organizations in the Puget Sound region, former rivals Swedish Health Services and Providence Health &Services, in 2011 announced plans to join forces. At the time, their combined revenue was $3.4 billion.

Cooper said his organization didn’t make the move under financial pressure. “Our profitability notched up a bit this year over last year,” he said. Rather, consideration of joining another organization came as the clinic developed a five-year business plan.

“We believe there’s an opportunity for The Everett Clinic to double in size by 2020,” he said. That includes moving into new markets, such as Shoreline and Mountlake Terrace, and expanding in areas it now serves.

“I’m not even talking about other markets we’re considering,” he said. “This is the first wave.”

One of the first steps in the expansion plan, he said, is building a new clinic on the former Emery’s Garden site on 164th Street SW in Lynnwood.

What’s envisioned are services similar to those now offered at the Smokey Point office. The $24.6 million, 60,000-square-foot building there, The Everett Clinic’s largest satellite office, opened in 2012. Cooper said details of a new satellite office in Lynnwood will be announced later.

“Given our ambitious business goals, it would be very challenging for us to be successful going it alone,” Cooper said.

Marcy Shimada, chief executive of Edmonds Family Medicine, said competing clinics may have expansion plans of their own. UW Medicine already has a clinic on 205th Street in Shoreline. “I wouldn’t be surprised if they come in there in a big way,” she said.

Demand for health care will increase, both as the population grows in Snohomish County and with the aging baby boomer population. “The medical landscape right around us will change in the next couple of years with the largest systems feeling like they need their own presence here,” Shimada said.

Preston Simmons, chief executive of Providence Regional Medical Center Everett, said he wasn’t surprised by The Everett Clinic’s announcement. The organization has been open about its plans for a business partner and expansion, he said.

Providence Medical Group clinics have been undergoing their own rapid expansion over the last few years, he said. This includes the $22 million clinic in Monroe that opened in 2013.

The Everett Clinic’s proposed merger is expected to be reviewed by the Federal Trade Commission to see if it raises antitrust issues. The state Department of Health might take a look as well to see if any additional licenses are needed.

The Everett Clinic initially had proposals from about 16 businesses on how they might work together. That was later narrowed to three national and regional organizations. Cooper declined to identify them, citing confidentiality agreements. Part of the deal with DaVita is that The Everett Clinic would continue to be a physician-led organization, Cooper said.

DaVita currently operates 10 kidney dialysis centers in Washington, including a joint venture with The Everett Clinic, he said.

One of DaVita’s most recent medical clinic additions came in March with the acquisition of Facey Medical Foundation, an affiliate of Providence Health &Services, in San Gabriel, California.

“We are excited to work with the Everett team as we improve health care delivery and expand the leading independent medical group in America,” said Kent Thiry, chairman and chief executive officer of DaVita HealthCare Partners, in a statement.

Sharon Salyer: 425-339-3486; salyer@heraldnet.com.

DaVita HealthCare Partners

DaVita HealthCare Partners has two divisions. DaVita Kidney Care provides dialysis services to 184,000 patients through 2,210 centers in the U.S. and 96 centers operating in 10 countries internationally.

The other division, HealthCare Partners, manages and operates medical groups and affiliated physician networks in Arizona, California, Nevada, Florida, New Mexico and Colorado, caring for 826,000 patients.

Source: DaVita HealthCare Partners

The Everett Clinic

The Everett Clinic was founded in 1924 by four private-practice physicians. Expansion has included:

1963: Founders Building in Everett opens.

1981: Marysville clinic opens.

1987: Lake Stevens clinic opens.

1993: Snohomish clinic opens.

1996: Stanwood clinic opens.

2001: Trask outpatient surgery center opens in Everett.

2006: Mill Creek clinic opens.

2012: Smokey Point satellite clinic opens.

With 2,000 employees, The Everett Clinic is the fourth-largest private employer in Snohomish County.