Work cut out for new owner

Sometime later today, the final votes will be tallied from the 250 physicians and medical providers who are shareholders in The Everett Clinic to approve or reject the acquisition of the 91-year-old medical provider by Denver-based DaVita Healthcare Partners.

If two-thirds of the shareholders — 167 — approve the acquisition and the Federal Trade Commission finds no antitrust issues in its review, the sale is expected to be completed by early March.

DaVita operates similar physician groups in six states and operates more than 2,200 kidney dialysis centers nationwide. DaVita employs 65,000 people.

The sale isn’t a surprise. The Everett Clinic for the past 15 months has been seeking to partner with another company, joining a national and local trend that has seen the affiliation in 2012 of Swedish Health Services and Providence Health &Services and the pending sale of Group Health Cooperative to Kaiser Permanente. The clinic issued a request for proposals, reviewed more than 15 offers from national and regional companies, and identified three finalists, vetting those offers before it began negotiations with DaVita.

But why should a respected, independent and successful organization like The Everett Clinic, with 318,000 patients, need to seek a larger parent?

Because, explained Everett Clinic Chief Executive Rick Cooper in a meeting with The Herald Editorial Board, the clinic has to continue the growth it has started in recent years to remain financially healthy, and that growth requires capital that a company such as DaVita can provide. Had it kept to the status quo, Cooper said, costs soon would have exceeded revenues.

The purchase by DaVita allows The Everett Clinic to invest in the community, ensure a high standard for quality of care, combat the increase in health care costs as it moves from the fee-for-service model to treatment based on outcomes, and continue its plans for growth, Cooper said. The clinic recently signed a lease to open a facility in Shoreline and also hopes to open clinics in Fremont, Ballard, Kirkland and Bellevue.

The DNA of DaVita and The Everett Clinic are well aligned, said DaVita Chief Operating Officer Joe Mello, also present at the board meeting. Both are committed to “delivery of an exception level of quality of care,” Mello said.

DaVita has work ahead of it to better demonstrate that it shares The Everett Clinic’s genetic makeup.

The U.S. Department of Justice entered into settlement agreements with DaVita in 2014 and this year to resolve complaints under the federal False Claims Act that DaVita used kickbacks to physicians to refer patients to its dialysis centers and that it encouraged nurses to purposely waste medications used in dialysis to increase its billings to the federal government. In the two settlements, DaVita paid a total of $800 million.

DaVita, Mello said, is embarrassed by the settlements.

“It’s caused us to rethink how we do everything,” Mello said. “We have to be held to a higher standard.”

The Everett Clinic’s Cooper said that patients and the larger community won’t notice a change following the sale to DaVita. Cooper and Mello said the sale won’t result in a consolidation that results in local job losses. The Everett Clinic name will remain. The clinic’s nine-member board of physicians and care providers will remain. Likewise, the clinic’s commitment to the United Way and other community groups will continue as will the charitable work through its own foundation.

DaVita may be the best fit for The Everett Clinic, one that ensures that it can grow and continue to offer high-quality care to its patients. But we hope that some of The Everett Clinic’s DNA quickly rubs off on DaVita.

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