PeaceHealth, Catholic Health seek OK for regional system

By Aaron Corvin, Columbian port & economy reporter

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PeaceHealth and Catholic Health Initiatives are asking the Washington State Department of Health for permission to launch a massive new regional health care system with operations based in Vancouver.

In their letters of intent — received by state health regulators on Dec. 3 — the two Catholic-based nonprofits say they want to transfer control of nine hospitals — four now owned by PeaceHealth and five now owned by Catholic Health Initiatives — to a new system, under which the two organizations would share equal authority over the facilities.

The move, part of an even larger reorganization plan advanced by the two nonprofits, is intended to control costs and boost efficiencies in the rapidly consolidating health care industry.

The proposal submitted to state health regulators will bring no changes to licensed beds or services, and no reduction in access, services or charity care, according to documents submitted by Vancouver-based PeaceHealth and Franciscan Health System, which is affiliated with Englewood, Colo.-based Catholic Health Initiatives.

Janis Sigman, program manager for the state Department of Health, said Wednesday the letters of intent are an indication the two nonprofits will eventually submit applications spelling out their plans in fuller detail. The two organizations have until June 3, 2013, to file the more comprehensive paperwork.

State health regulators will seek and accept public comments on the applications, Sigman said. The point of public review is to ensure that the communities in which the ownership change would occur continue to receive "high quality" medical care from PeaceHealth and CHI, Sigman said.

Part of larger plan

The paperwork submitted by PeaceHealth and CHI earlier this month only concern nine hospitals operated by the organizations in Washington, including the 450-bed PeaceHealth Southwest Medical Center in Vancouver.

The others include PeaceHealth St. Joseph Medical Center in Bellingham; PeaceHealth St. John Medical Center in Longview; St. Joseph Medical Center in Tacoma; and St. Francis Hospital in Federal Way.

The two nonprofits are actually proposing a larger deal involving sharing 50-50 control over a total of 16 hospitals in Washington, Oregon and Alaska.

That bigger venture would combine seven Catholic Health Initiatives hospitals in Washington and Oregon with nine PeaceHealth hospitals in Washington, Oregon and Alaska.

The new organization would have revenues of nearly $4 billion, nearly 26,000 employees and about 950 employed physicians. The two nonprofits have said the new health care system and partnership is aimed at increasing efficiencies, cutting costs and delivering better care. The proposed partnership is expected to be completed before June 30.

The two nonprofits' proposal is expected to be reviewed by other state and federal regulatory agencies, including the U.S. Federal Trade Commission.

Aaron Corvin: http://twitter.com/col_econ;http://on.fb.me/AaronCorvin; 360-735-4518; aaron.corvin@columbian.com.