EDMONDS — In an agreement viewed by many as a way to ensure a solid financial future for Stevens Hospital, Seattle-based Swedish Medical Center next year will take over management of the 45-year-old public hospital.
The nonbinding lease and management agreement, which officials said should be completed by mid-February, means that Snohomish County Hospital District No. 2 and its elected five-person board of commissioners will no longer directly oversee operations for the hospital.
Instead, the hospital district will focus more on long-term issues such as fighting obesity, said Sarah Zabel, Stevens’ vice president of operations and chief planning officer.
Stevens also will be renamed. What the new name has yet to be decided on, “Swedish” likely will be included.
“This is a momentous day in the history of this hospital,” said Marc Rosenshein, chief of medical staff for Stevens.
The public hospital district will continue to levy property taxes and oversee its own income and expenses, because it will keep ownership of the hospital and its clinic buildings.
The private, nonprofit Swedish Medical Center will lease the public hospital and its clinics for $600,000 a month over 30 years.
Swedish also pledged to commit up to $90 million in capital improvements to the hospital during the first 10 years of the lease, with an additional $60 million toward a facility upgrade, said Howard Thomas, the consultant Stevens hired early this year to iron out a deal.
Details of what would be improved would be worked out once Swedish takes over management of the smaller 217-bed hospital, Thomas said.
“That’s a substantial commitment and not one Stevens could have committed to on its own,” he said.
In addition to money for construction, Swedish agreed to install a new electronic medical records system and provide specialists 24 hours a day in the intensive care unit.
The elected hospital commissioners won’t directly oversee hospital operations anymore.
They’ll still have control over tax levies and contract negotiations with the district’s Service Employees International Union. The union supports the move, said Mary McNaughton, a nurse and member of the union’s executive board.
Hospital commissioners also will focus on maintaining the independence of medical staff and seeing that medical services are properly funded, Thomas said.
Part of the transition process will include creation of a community advisory committee to help ease the blending of the public hospital with the private nonprofit.
All Stevens employees, including top management, will become Swedish employees once the agreement takes effect.
Commissioner Deana Knutsen cast the lone dissenting vote during Thursday’s board meeting, where a resolution passed 4-1 to allow the hospital district to advance to the next steps with Swedish.
Knutsen said she worried whether the millions of dollars promised by Swedish for construction would be enough to modernize Stevens. “There’s no way of knowing whether this is enough resources,” she said.
Cal Knight, president and chief operating officer for Swedish, said the investment should be sufficient.
“We’re in the business of operating hospitals and we know how much capital it takes and how much it costs,” he said. “We have plans to look at additional expenditures as it makes sense.”
Commission chairman Charles Day said the new arrangement will help boost Stevens’ ability to market itself and improve the quality of medical services.
“I think this is going to do nothing but complement what we have,” he said.
Stevens had operating revenues of $151.9 million in 2008. Of that, $3.9 million came from taxes voters approved in 1990 and 1998.
The owner of a $285,000 house pays about $44 a year in property taxes to the hospital district, which serves about 100,000 people living in an area from far north King County to north Lynnwood.
Swedish had revenues of $1.2 billion in 2008 and has 1,245 beds spread among three hospital sites. It runs medical specialty centers at Highline Medical Center in Burien and Valley Medical Center in Renton.
Since 1991, Swedish has provided both cancer care and heart and vascular services at Stevens through the Swedish Cancer Institute and Swedish Heart and Vascular Institute.
A public hearing on the arrangement will be scheduled in mid-January, though a specific date has not been set.
Oscar Halpert: 425-339-3429, ohalpert@heraldnet.com.
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