PeaceHealth, CHI suspend negotiations over forming partnership

By Aaron Corvin, Columbian port & economy reporter

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Vancouver-based PeaceHealth and Catholic Health Initiatives said Wednesday they’ve suspended their discussions about forming a partnership to create a vast new regional health care network in the Pacific Northwest.

PeaceHealth, Clark County’s top private employer, had signed a nonbinding agreement with Colorado-based CHI in mid-August to explore the possibility of a 50-50 venture intended to boost both organizations’ ability to expand and to provide more care to growing populations.

But the two Catholic-affiliated health care giants “were unable to develop an integrated model that would provide the desired benefits and serve the best interests of both organizations,” both nonprofit systems said in a joint news release. “CHI and PeaceHealth will remain actively engaged in exploring other opportunities to work together to strengthen their respective ministries in the Pacific Northwest.”

Jenny Ulum, a PeaceHealth spokeswoman, said PeaceHealth “is still moving forward with our growth strategies, and we’re still open to partnership discussions” with others, including Catholic Health Initiatives.

The two organizations were exploring a deal involving equal control over a total of 16 hospitals in Washington, Oregon and Alaska. The venture would have combined seven Catholic Health Initiatives hospitals in Washington and Oregon with nine PeaceHealth hospitals in Washington, Oregon and Alaska.

The new organization would have had 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 were aimed at achieving several goals, including increasing efficiencies, cutting costs, delivering better care and broadening their access to capital markets.

The suspension of talks comes amid big changes in health care. Hospital consolidation has become the norm. Federal health care reform is prodding health care providers to coordinate and improve care, and to cut costs. It also will add tens of millions of Americans to the nation’s health-insurance pool.

The proposed partnership between PeaceHealth and CHI had its critics.

They included the American Civil Liberties Union of Washington Foundation. The group is concerned that hospital consolidations among religiously affiliated hospitals, including the partnership proposed by PeaceHealth and CHI, would significantly curtail reproductive and end-of-life services.

Ulum said the decision to suspend negotiations “had nothing to do at all” with the faith-based ethical policies of PeaceHealth and of Catholic Health Initiatives.

Englewood, Colo.-based CHI is bigger than PeaceHealth. It operates in 17 states. Its facilities include 78 hospitals; 40 long-term care, assisted- and residential-living facilities; two community health-services organizations; two accredited nursing colleges; and home health agencies. The organization, with annual revenues of more than $10.7 billion and with about 83,000 employees, ranks as the nation’s second-largest faith-based health system.

PeaceHealth, with facilities in Washington, Oregon and Alaska, operates nine medical centers, four of which are critical access hospitals; a multi-specialty medical group; laboratories; and Columbia United Providers, a Medicaid health plan.

Its annual revenues are about $2.3 billion.

PeaceHealth and Vancouver-based Southwest Washington Medical Center finalized a merger in December 2010 that transformed Southwest into a subsidiary of PeaceHealth and that renamed the hospital PeaceHealth Southwest Medical Center.

That merger also brought with it the relocation of PeaceHealth’s corporate headquarters from Bellevue to Columbia Center at Columbia Tech Center in east Vancouver.

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