Stevens Hospital studying its services and finances

Published 9:52 pm Wednesday, August 6, 2008

Stevens Hospital is paying consultants more than $164,000 for an in-depth study of the hospital, including its finances, services offered and how they compare with area hospitals, and a list of options for its future.

These include asking property owners to approve higher taxes to support the hospital and seeking partnerships with other hospitals to provide new services.

One of the top items on the list is a second emergency room, estimated to cost about $40 million.

Shattuck Hammond Partners of New York City was hired to help board members and administrators analyze the hospital’s future. The final bill for the consultant’s services and expenses was $164,633, hospital officials said.

“This is such a crucial decision we needed to get information from someone independent of the administration,” said longtime board member Fred Langer.

The hospital has completed a financial turnaround, he said. Once a money-loser, the hospital is now turning a profit.

“We’ve shown that we can meet our bottom line … but we cannot come up with the capital to keep Stevens viable in the south Snohomish County area,” Langer said.

That’s because other area hospitals, such as Providence Everett Medical Center and several medical centers in Seattle, including Virginia Mason and Swedish, increasingly are treating patients from south Snohomish County, he said.

With its current revenues, the hospital may not have enough money within three years to stay up to date with the latest technologies, Langer said.

“We have to ask ourselves, ‘Do we want to remain viable or not?’” he said.

Mike Carter, the hospital’s chief executive, asked for Shattuck Hammond to do the analysis, hospital spokesman Jack Kirkman said.

“They provided an extremely valuable service to the hospital,” he said. “The things they did we could not have done ourselves.”

This included an in-depth analysis of the hospital’s finances and options for Stevens’ future.

“It’s prompted the board to move, there’s no question about it,” Kirkman said.

Last month, the board asked Carter to report back by September on possible ballot measures, such as a request for a levy to pay off a bond or an increase in its maintenance and operations tax to pay for improvements.

The board’s finance committee was told of the Shattuck Hammond contract, Kirkman said. No board vote was taken because the hiring of consultants “is largely left to the discretion of management,” he said.

A second part of the consultant’s contract, which called for the firm to get extra fees, depending on which of the options the board approves for the hospital’s future, is no longer valid, Kirkman said, because the consultants have ended their work with the hospital.

For example, the contract had called for the firm to get paid a fee for financial advisory work if a bond issue was put on the ballot.

If the firm does additional work for the hospital, a new contract will be signed, Kirkman said.

Board member Kimberly Cole said she thought some of the consultant’s work was helpful but questioned the portion of the original contract that would have given the firm a bonus for various steps the board could ultimately take on the hospital’s future.

“It made it really hard to take at face value” the analysis done by the firm, Cole said.

However, Cole said, she agrees that the board now needs to take action. “No action is just perpetuating the problem that got us here today,” she said.

Board member Bob Meador said that each of the five board members has different opinions on the hospital’s future.

“When we’re talking a fairly major decision … it was really good we had a third party present,” he said.