MONROE — Valley General Hospital, which thought it had found a business partner in Tennessee-based Capella Healthcare to help ease its financial woes, has announced that the deal is off.
Mike Liepman, Valley’s outgoing chief executive, said the lack of a business deal with Capella doesn’t mean the hospital is about to close.
But it could mean that voters will be asked in November to approve a nearly four-fold tax increase to support the hospital, from the current nine cents per $1,000 in assessed property valuation to as much as 35 cents per thousand, he said.
If approved, the owner of a $300,000 home, who now pays $27 a year in hospital taxes, would pay $105 a year.
In essence, Liepman said, the community will have to decide whether they want a hospital in Monroe enough that they are willing to support it with increased taxes.
The increase could allow the financially troubled hospital to break even, Liepman said, raising about $5 million. The hospital has lost money for the past five years.
Last year’s loss is now estimated to be between $3 million to $4 million and is one of the factors that caused Capella to back out of its proposal business deal.
The average taxing rate for public hospitals in Washington is 42 cents per $1,000 of assessed property valuation, Liepman said.
Liepman announced earlier this month that he is leaving his job in June for a job as chief operating officer of Skagit Valley Medical Center in Mount Vernon.
Hospitals throughout the state have been battling budget problems. Last month, Swedish Medical Center in Seattle announced it was losing $250,000 a day and would probably have to lay off employees.
Valley will be talking to Puget Sound-area medical groups, asking if they would be interested in a business deal, Liepman said, restarting a process the hospital first launched in February of last year.
At the time, four organizations said they were interested: Providence Regional Medical Center Everett, University of Washington Medicine, and a joint proposal by Evergreen Hospital Medical Center and Skagit Valley Hospital.
Talks began with Providence Regional Medical Center Everett but were abruptly halted in August. Valley then announced it was considering a joint venture with the for-profit Capella Healthcare.
Meanwhile, Providence Health &Services, the parent organization to the Everett hospital, announced plans for a blockbuster deal in October — joining up with long-time competitor, Swedish Health Services, to create a new nonprofit health care system.
The two health care organizations have combined revenue of $3.4 billion and employ thousands in Snohomish County.
Liepman said Valley General will likely talk again with Everett’s Providence and Evergreen to see if they are interested in a business partnership.
The end of talks between Valley and Capella came not only as the hospital sustained its fifth straight year of losses, but as the state announced it was lowering the amount of money paid to hospitals for providing health care for prison inmates.
The change will cost the hospital $800,000 this year, Liepman said, and $1.8 million next year, when the change is in effect for a full year.
The Monroe Correctional Complex is one of the state’s largest prisons.
“Most hospitals don’t have a prison in their back yard,” Liepman said. “For us, it’s huge.”
Last year, unpaid bills and charity care for people who didn’t have insurance cost the hospital $8.3 million, about 17 percent of its budget.
The hospital will be getting some unexpected revenue this year, about $1 million from the federal government in payments it was owed, but did not receive, Liepman said.
Sharon Salyer: 425-339-3486 or salyer@heraldnet.com.
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