After four consecutive years of financial losses, Valley General Hospital in Monroe is asking eight large health care organizations if any of them are interested in a business partnership.
The deals could include anything from providing additional medical services to leasing the hospital or b
uying it outright, said Mike Liepman, Valley’s chief executive.
Interested health care organizations will have about a month to respond, he said.
Valley will take two months to consider the proposals and then decide whether to go ahead with more formal talks or to abandon the idea and
remain as an independent community hospital, he said.
Any deal could allow Valley to join up with a larger organization that could provide more services and specialists to the hospital. The larger organization, in return, would have a way to extend its reach into the south and east Snohomish County market, in short to increase its market share of the area’s health care business.
The hospital’s board formally approved the idea Wednesday.
Eight health care organizations, most in the Puget Sound region, are being asked to submit business proposals. They are: Swedish Health Services, Virginia Mason, and University of Washington Medicine, all in Seattle; Providence Health & Services, the parent organization to Providence Regional Medical Center Everett; Skagit Valley Hospital in Mount Vernon; Overlake Hospital Medical Center in Bellevue, Evergreen Hospital Medical Center in Kirkland; and PeaceHealth, a Catholic health care system with hospitals in Alaska, Washington and Oregon.
Valley’s decision follows a string of financial losses.
Although the final audited reports aren’t yet complete for 2010, operating losses could hit $3 million, said Kevin Forster, the hospital’s interim chief financial officer. The hospital’s budget last year was $52.87 million.
In 2009, losses hit $2.43 million; in 2008, $959,729; and in 2007, $1.88 million, according to hospital records.
The goal this year is for the hospital to break even, Liepman said.
Valley, a taxpayer-supported independent community hospital, finds itself in an increasingly competitive market dominated by much larger organizations. Health care groups throughout the Puget Sound region are spending millions of dollars on new buildings and equipment.
Two examples: Providence Regional Medical Center Everett will open its new $460 million medical tower in June, and Swedish is opening a new $30 million medical building and satellite emergency room Feb. 17.
“The next generation looks at bright and shiny as a proxy for quality,” Liepman said. “If everyone else around you has bright and shiny, at some point you’ve got to match that.”
In the current tough economic climate, Liepman said he doubted that property owners in the hospital’s taxing district would be willing to approve tax increases so the hospital could fund new services on its own.
“We could bob along on the surface and do OK, but every year we don’t do something, we’ll probably fall behind the competition,” Liepman said.
The goal is to be able to provide more services at the hospital by partnering with a bigger health care organization, Liepman said.
The recession has affected hospitals in several ways. Many people have put off medical care when they can to save money.
Meanwhile, hospitals are required by federal law to treat all patients who come through their doors, regardless of whether they have health insurance or can pay for services.
As the number of unemployed grew, so did the number of uninsured people coming to hospitals for medical care.
Valley’s costs of providing care to the uninsured, unemployed and those with little or no income last year is estimated to hit $9.9 million, officials said.
Monroe isn’t the only local public hospital to lose money.
Cascade Valley Hospital in Arlington estimates its losses for last year will hit $1.7 million. Some of the reasons are the same: rising costs of medical care to the uninsured, as well building costs, according to Clark Jones, the hospital’s chief executive.
For the past decade, there has been a wave of mergers and acquisitions in health care nationally, often with smaller hospitals joining up with larger organizations.
The former Stevens Hospital in Edmonds, a tax-supported hospital, is the most recent example in the Snohomish County medical complex faced with a decision on its future.
It considered building a new hospital or at least a new emergency room to help alleviate overcrowding and long waits. Either of those options would have cost millions of dollars.
Rather than asking voters to approve a tax increase, the hospital pursued a business agreement last year to have Swedish Health Services take over management of the hospital. In return, the hospital district gets monthly lease payments from Swedish that total $7.2 million a year.
This and other income — the district will continue levying property taxes — will be used to fund health promotion programs in south Snohomish County. The first of those programs is expected to be selected later this year.
Ask the hospital
Valley General Hospital has scheduled three question-and-answer sessions for the public to get more information on the options for its future now under consideration. All three sessions will be held in the hospital’s Godard Room, 14701 179th Ave. SE, Monroe.
The sessions are set for 7:30 a.m. Feb. 14, 6 p.m. Feb. 17, and 10:30 a.m. Feb. 19.
How local hospitals compare
Valley General Hospital, Monroe
A taxpayer-supported public hospital district.
Number of hospital beds now being used:51
Number of hospital employees: 305 full-time equivalents, 475 overall
Operating budget: $55 million.
Providence Regional Medical Center Everett
Private, nonprofit hospital owned by the Providence Health & Services
Established: 1905 (merged with Everett’s General Hospital Medical Center in 1994)
Number of hospital beds now being used: 395
Number of hospital employees: 2,393 full-time equivalents; 3,299 overall
Operating budget: $600 million
Cascade Valley Hospital, Arlington
A taxpayer-supported public hospital district
Number of hospital beds now being used: 35 (will increase to 41 next year)
Number of hospital employees: 285 full time equivalents; 360 overall
Operating budget: $39 million
The former Stevens Hospital, now managed by Swedish Health Services
Number of hospital beds now being used: 156
Number of employees: 1,077 full time equivalents and 1,563 total employees
Operating budget: $200 million
Source: Information provided by the hospitals