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Rival questions hospital sales

Sat., June 21, 2008

The nonprofit that operates Sacred Heart Medical Center is worried that the proposed takeover of Deaconess Medical Center by for-profit Community Health Systems may risk funding for local health programs and burden Sacred Heart with too many patients who can’t pay their bills.

“We’re not suggesting Community Health will not be a good community partner,” said Dr. Andrew Agwunobi, chief executive of Providence Health’s Eastern Washington operations. “We are essentially trying to make sure that Community Health understands it is an expectation that they will continue to support all of these things.”

Providence submitted its concerns in a letter to the state Department of Health – which must approve the sale – in advance of public hearings to be held in Spokane next week. Other letters submitted have supported Community’s purchase of Deaconess and Valley Hospital and Medical Center.

Despite its concerns, Providence didn’t oppose the sale. In an interview, Agwunobi said, “We want to state unequivocally that we’re not opposed to the sale.”

Still, officials at Deaconess and Community Health called the concerns a competitor’s attempt to influence the possible sale.

“Here’s the thing: Community Health intends for Deaconess and Valley to succeed and to grow in importance to this community,” said Community Health spokeswoman Rosemary Plourin. “That may be uncomfortable for the competition, but it may be what’s right for Spokane.”

Community, based in Tennessee, has pledged to spend $100 million on construction and technology upgrades at Deaconess and Valley. The sale also would infuse a new Spokane charitable foundation with an estimated $84 million.

Community Health’s financial might is expected to reinvigorate the struggling Deaconess. Community Health is the nation’s largest hospital operator, with about 130 facilities in 28 states.

Ron McKay, chairman of the Empire Health Services board that governs Deaconess and Valley, said the board has been contractually assured by Community Health that charity care guidelines will be met.

Providence asserts that Empire’s charity care policies are less generous than its own and wants assurances that Community Health will at the very least match Empire’s policies. A Providence spokesman said the organization wants Community Health to do more than state its commitment to serve the region’s poor; it wants conditions written into the state’s sale approval.

Providence’s written comments also noted Community Health’s reluctance to commit to funding or support for all or most of the programs that Empire now backs.

Those include Project Access, a program led by Director John Driscoll that works with doctors and hospitals to provide a range of health care to the poor.

Driscoll said Empire provides in-kind hospital services worth about $880,000 each year. He wrote Community Health a letter seeking its commitment but received an answer that the company could not make such promises while undergoing regulatory review.

Still, he said he had the impression Community Health would meet Empire’s tally. He intends to submit written comments supporting the sale during the public hearings.

“I do think they are sincere about coming into town and being good community citizens,” he said. “Of course, like others, I would prefer a firm commitment to my program, but they have to do what they have to do.”

Without support from Community Health, “there’s no way we could ever replace that sort of service,” Driscoll said, “unless the burden fell entirely on Providence.”

Providence’s written comments also noted the omission of language regarding Medicaid and Medicare.

Sacred Heart President Mike Wilson said 70 percent of his hospital’s revenue is generated from the government insurance programs.

Hospital officials complain that the reimbursement rates from the two big programs are chronically low. In some cities, private “boutique” hospitals limit the number of Medicaid and Medicare patients.

Wilson said he could not foresee operating a hospital in Eastern Washington that didn’t accept such patients.

Plourin said Community Health was surprised by “the speculation and innuendo” raised by the Providence letter.

“They are talking about us doing things that neither Empire nor Providence has committed to doing in perpetuity,” she said. “This doesn’t mean that we won’t participate, but we just haven’t contemplated each one yet.”

Among the letters supporting the sale is a note sent by Tim Henkel, president and chief executive of Spokane County United Way. Others are from Dr. James Nania, who for 30 years worked in the Deaconess emergency room. He urged the health department to approve the sale in the hopes that Community Health can help the hospital add to its accomplishments in emergency medicine.

Dr. Ryan Holbrook, a surgical oncologist and president of the region’s largest cancer treatment clinic, Cancer Care Northwest, also supported the sale, writing that the quality of care at Deaconess is beginning to slip amid the hospital’s financial struggles. This, he said, “in spite of valiant efforts by administration and staff.”

“It thus becomes vital that the course of events be changed if the failure of this wonderful medical institution is to be averted,” he said.

Providence’s comments were criticized by McKay, Empire Health Service’s board chairman.

“We’re not trying to be defensive about this, but we were taken by complete surprise,” McKay said. “I can’t help but wonder why one hospital system is going after another … when all of us are trying to do the best job we can.”

Providence said it has a right to air concerns about significant changes to health care in Spokane.

“We’re not asking for something that we think places a hardship,” Agwunobi said, “and we don’t believe any of the concerns we’ve raised are prohibitive” to the sale going through.

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