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Should Legislature step into Spokane hospital fight?

OLYMPIA – The dispute between Spokane’s two biggest hospitals spilled over into the legislative session Tuesday as a Senate panel considered changing a law that would determine how a judge could settle any impasse.

The dispute involves Inland Northwest Health Services, a non-profit jointly operated by the companies that own Sacred Heart and Deaconess medical centers. INHS operates an electronic medical records system, an air ambulance service and other systems shared by the two hospitals as well as other hospitals, clinics and doctors in Spokane and around the region.

Each has a vote on the INHS board, but can’t agree, which presents the region with a dilemma, State Rep. John Driscoll, D-Spokane. said. Under state law, if a non-profit board is deadlocked and takes the dispute to Superior Court, a judge has few options other than dissolving the corporation.

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“This is a very valuable corporation we want to preserve and have grow,” said Driscoll, a former administrator for Sacred Heart who sponsors an identical bill in the House. “A judge should have a full range of options” to settle the dispute just as he or she would with a for-profit corporation.
Joe King, a representative for INHS, said the dispute is a result of a “culture clash” between Community Health Systems Inc, the for-profit company that purchased Deaconess and Valley General in 2008, and Providence Health Care, the non-profit that owns Providence Sacred Heart and Providence Holy Family.
INHS sued Community Health last fall in a dispute over billing. Last month, INHS threatened to pull its medical records staff out of Deaconess but backed off after the hospital agreed to make monthly payments for the services.
The dispute on the INHS board was “close to impasse,” King said. “If they end up in front of a judge, the only option the judge has is a fire sale.”
But William Gilbert, chief executive officer of Deaconess, said Community Health understands the importance of the services INHS operates: “We have no interest in damaging those services.”
Stellman Keehnel, an attorney for Deaconess’ previous owner Empire Health Services, said there is a lawsuit over INHS and the Legislature shouldn’t get involved in pending litigation. Passing this bill as proposed, with an emergency clause, is an effort to tell a judge in the case what to do.
INHS has articles of incorporation that spell out the steps to handle assets if there’s an impasse on the board, he added. “There would be no fire sale.”
Keehnel agreed the state’s non-profit statutes are “a mess”, but the Legislature should take its time to rewrite them rather than trying to cram something through a 60-day session.
Sen. Adam Kline, a Seattle Democrat who heads the Senate Judiciary Committee, said he wasn’t as concerned about the fight between the hospitals as need to address deficiencies in the statutes.
“It’s not the role of the Legislature to take parting an ongoing disputes between parties,” Kline said. “We do need to arm judges, if it ever comes to that.”

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The Spokesman-Review's political team keeps a critical eye on local, state and national politics.