Increased charitable care closes Deaconess deal

The buyer of Deaconess Medical Center has agreed to more generous charitable care guidelines for the hospital.

It’s a move that seals state regulatory approval of the $156 million takeover, and soothes concerns of local organizations worried about the level of care Deaconess will provide to the region’s poorest residents when it becomes part of Community Health Systems Inc., the nation’s largest publicly traded hospital company.

The accepted charity guidelines also help Sacred Heart Medical Center, which has greatly outpaced Deaconess when it comes to writing off the bills of charity-eligible patients during the past few years.

As a result, Community Health received state licenses called Certificates of Need to run Deaconess as well as Valley Hospital and Medical Center.

Under Community Health, both Deaconess and Valley must provide charity care that equals 3.35 percent of adjusted revenues. That’s the regional average, according to statistics compiled by state health officials. The two hospitals had lagged below that level.

While the charity care issue drew most attention, Community Health agreed to several other conditions placed on the sale by the Washington State Department of Health.

Among them: Community Health must invest an additional $100 million in building upgrades and new medical and computer systems within five years. Any shortfall will be paid into the new foundation.

The sale of Spokane’s century-old hospital system will create a charitable foundation with assets of about $80 million, according to state records.

It will be run independently of Deaconess, although some of the new foundation’s board members likely will come from the ranks of Empire’s board. Such appointments are expected to be temporary as the foundation becomes established.

Washington Health Secretary Mary Selecky announced the conditional regulatory approval last month. It was a vetting process that took nearly 1 ½ years to complete and one that Community Health executives said was among the most rigorous for the company.

The financial transaction between Community Health and Deaconess operator Empire Health Systems is expected to close this fall.

Deaconess and Valley have more than 2,000 workers on the payroll, making the hospital system among the largest private-sector employers in Eastern Washington.