October 1, 2008 in City

Sale of hospitals complete

Deaconess, Valley change hands today
By The Spokesman-Review
Dan Pelle photo

Deaconess Medical Center surgery patient Patty Tyler entered the hospital on Tuesday under Empire Health Services, but will wake up today under Community Health Systems as part of a change of ownership. Tyler was listening to Marian Menke, RN, during pre-op in the Deaconess Surgery Center.
(Full-size photo)

After months of regulatory review, public hearings and a last-minute lawsuit that threatened to derail the transaction, the deal hailed as the last chance to save a struggling hospital system is complete.

Community Health Systems Inc. started signing the paperwork Tuesday to spend $156 million to purchase Deaconess Medical Center and Valley Hospital and Medical Center.

Patients won’t notice many changes, officials say – except for new bracelets reflecting the ownership.

Spokane residents won’t notice immediate changes, either, said Deaconess spokeswoman Christine Varela. There are not even plans for new signs.

“Tomorrow there’s going to be the same nurses, and the same doctors will still have privileges to practice,” Varela said Tuesday. “What will be different is that the hospitals will have money.”

Community Health plans to spend $100 million over the next five years remodeling the hospitals, upgrading technology and buying equipment.

That promise was a major selling point. Deaconess and Valley couldn’t generate enough cash this decade to make such an investment even as rival hospitals went on spending sprees to offer more services, improve quality, raise employee pay and attract more patients.

Community says it plans to make Deaconess and Valley competitive, and ensure the Spokane region retains two large hospital systems.

The company is the nation’s largest hospital owner, with 110 hospitals in 28 states. Company executives plan to work with physicians groups to recruit more doctors.

Another important consideration in the sale: establishment of a new foundation. Proceeds from the sale, estimated at $80 million, will make the foundation the largest charitable trust in the region.

With the deal complete, a new local governing board has been appointed for the two hospitals. Community Health appointed Tony Bonanzino, the former chief executive of Hollister-Stier Laboratories, as chairman of the Deaconess board. The vice chairman is Dr. Ryan Holbrook, president of Cancer Care Northwest.

At Valley, the board chairman is Dr. Scott Nye, a surgeon with Surgical Specialists of Spokane and the president of Valley’s medical staff. The vice chairwoman is Marti Hollenback, the general manager of Dishman Dodge.

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