o Previously: Vancouver-based Southwest Washington Health System this month announced it was entering negotiations to merge with Bellevue-based PeaceHealth.
o What’s new: The transaction might not be subject to review by the state health department’s certificate of need program.
o What’s next: Southwest and PeaceHealth will ask the health department for a letter of non-reviewability while the organizations negotiate terms of their deal.
A hospital merger proposed this month could be exempt from state review, depending on the details of the merger agreement being discussed by Vancouver’s Southwest Washington Health System and Bellevue-based PeaceHealth.
o Previously: Vancouver-based Southwest Washington Health System this month announced it was entering negotiations to merge with Bellevue-based PeaceHealth.
o What's new: The transaction might not be subject to review by the state health department's certificate of need program.
o What's next: Southwest and PeaceHealth will ask the health department for a letter of non-reviewability while the organizations negotiate terms of their deal.
At this point, no formal request for the transaction has been submitted to the Washington State Department of Health, said Janis Sigman, program manager for the department’s Certificate of Need Program, which evaluates hospital expansions and ownership changes. The program is designed to ensure that expensive health care services meet, but do not exceed, the needs of an area’s population.
Sigman said health officials are aware of the merger discussions.
However, her department might not require a certificate of need for the merger, in part, because it would not expand Southwest’s 442-bed hospital system or PeaceHealth’s 1,100-bed system.
Skipping the often lengthy — 90 days or more — state process would be ideal for the two hospital systems, said Craig Armstrong, an attorney for Southwest Washington Health System.
“That would be our hope and our goal,” Armstrong said.
He expects the two entities will ask health officials to bypass the evaluation with a letter of non-reviewability. At the same time, Southwest and PeaceHealth will negotiate their affiliation, which will create a health care company with about $2 billion in revenues.
“We will be doing all of that simultaneously, so the hope is that we will have the (state) approval before we have a signed definitive agreement,” Armstrong said.
He could not say how long it might take to complete the transaction, also subject to anti-trust review by the Washington state Office of the Attorney General.
Southwest operates Clark County’s largest hospital, the Southwest Washington Medical Center at 400 N.E. Mother Joseph Place in Vancouver. PeaceHealth has five hospitals scattered across Alaska, Oregon and Washington, including the St. John Medical Center in Longview.
Southwest’s leaders have said the merger will allow it to reduce expenses, share costs as part of the larger chain and gain better access to sources of capital. If the merger requires the health department’s certificate of need, Sigman said the review could move forward on a 50-day timeline instead of the typical 90-day period it takes to analyze development of new hospital beds.
“We wouldn’t be revisiting whether Vancouver needs the medical center,” which is already in place, Sigman said.
If allowed to merge, the combined health care system would employ more than 15,000 people, including 464 physicians.
