October 1, 2007 in City

Job security the chief concern in pending sale of Empire

By The Spokesman-Review

What’s next

A purchase agreement is expected to be signed early this month.

The 2,700 employees of Deaconess Medical Center and other units of Empire Health Services have received some job assurances as the sale of the hospital system nears. Job security is a central concern in Empire’s probable sale to Community Health Systems Inc., the largest for-profit, publicly traded hospital chain in the United States.

Fueling the worry among employees is that their union contract does not contain definitive succession language that would bind Community Health to the terms hammered out two years ago between Empire and Service Employees International Union 1199NW.

Despite that, Empire Board Chairman Ron McKay said Community Health has told him that it intends to rehire all employees in good standing, at their current wages, and recognize their years of service to the hospitals.

Succession language is often a foundation of union contracts, along with grievance policies and seniority clauses.

Last month the union representing registered nurses and many of the hospital’s technical workers met with business leaders, community groups and physicians, seeking their support in slowing the sale and expressing concerns that Empire didn’t consider a sale to another nonprofit.

That request failed and a definitive purchase agreement will be signed early this month, said McKay.

Rich Hadley, chief executive of Greater Spokane Inc., said members of his staff and several board members met with the union and Dr. Fred Hyde, who was hired by the union to help persuade Empire to slow down the sale. Hadley, who was approached by the union, said he and his board found the proposed delay unacceptable.

Hadley said his board questioned whether the union leadership reflected the interests of rank-and-file employees of Deaconess and Valley Hospital and Medical Center.

Second, Hadley said, Empire’s board has kept him apprised of efforts to find a buyer or investment partner during the past couple of years. He wondered why the union was seeking an 11th-hour delay.

“My instinct on this is that the employees of Empire have been through enough,” Hadley said, “they are anxious.”

Representatives from SEIU were unavailable for comment and did not return phone messages.

Dr. Brian Seppi, president of the Spokane County Medical Society, said the consensus among many physicians is that Empire’s board has done a good enough job exploring the options for Deaconess and Valley.

“Putting this thing off for another three months, or six months or more just didn’t make sense,” Seppi said. “The union and Dr. Hyde made some good points, but we feel that for what Empire needs – an infusion of capital – that probably means someone like Community.”

The union has dropped its push for more time.

Whatever agreement is reached between Empire and Community Health will be vetted by the public and regulators and must be approved by state officials.

McKay said he understands the union’s position and insists the board sought employment security from the start.

“It’s one of the key criteria that we had,” McKay said, adding that just last week Empire management held six employee forums. “You can’t run a quality hospital system without quality people and the people at Empire Health have certainly demonstrated their commitment to quality.”

McKay also sought to deflect concerns about the role former Empire Health CEO and turnaround specialist Jeff Nelson had in the decision to sell to Community Health.

As the board began settling on a decision to find an investment partner or sell the hospital system, Nelson last year put together a private equity group and expressed interest in buying Empire.

At that point he had to be excluded from many of the board’s discussions about where to find money, McKay said.

Meanwhile the board’s executive committee pushed ahead with its planning, using Cain Brothers, a broker, for assistance.

Nelson ultimately dropped his interest in acquiring the hospital system, McKay said. With Nelson’s work completed, he and the board decided it was time for a change.

Nelson has since taken on a new assignment, attempting to help Hollywood Presbyterian Hospital in Los Angeles.

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