Highline Medical Center in Burien and Tacoma’s Franciscan Health System on Thursday announced they are exploring a strategic alliance.
The agreement is the latest move in a health care chess game in which the region’s large health care providers have purchased or formed partnerships with most of the region’s independent hospitals.
The competition has been particularly active between the two big Tacoma-based health care systems, MultiCare Health System and Franciscan.
MultiCare recently announced it is buying the Auburn Regional Medical Center.
The motivation for smaller hospitals such as Highline and Auburn is financial. The buying power, access to lower-cost capital and large-scale efficiencies can help a smaller hospital bring its finances under control.
Highline lost $18 million last year. Hospital sources said that deficit was the result of fewer patient visits, more charity care and more uncollectable debts. The recession has left more people unable to afford medical care, said hospital executives.
“An affiliation with Franciscan Health System provides a unique and exciting opportunity for our organization,” said Highline Chief Executive Officer Mark Benedum in a news release. “We believe an alliance with such a high-caliber organization would bring incredible strength to our ability to achieve our mission and would greatly benefit the communities we serve.”
Benedum said Highline’s search for a partner began early this year when it issued seven requests for proposals to larger health care organizations. He declined to say how many responded.
“I believe that Franciscan and Highline could make strong partners because we share respect for each other’s mission and history,” said Franciscan Chief Executive Officer Joe Wilczek. “Each of our organizations is committed to excellence in patient-centered, high-quality care. These qualities could form the foundation of a partnership that would benefit the communities served by Highline for generations.”
Over the next few months, a committee comprised of Highline and Franciscan representatives will evaluate the benefits of an alliance and how best to structure a working relationship, the health care concerns said.
The result of the affiliation, the two health care providers said, could be better health care and lower costs for patients and their insurance companies. “An affiliation could also enable Highline and Franciscan to co-develop improved models for delivering care and managing chronic diseases,” they said.
One potential avenue for improved care and cost reduction is a common electronic health care record system. If Highline ties into the Epic health records system that Franciscan is installing throughout its network, it could save millions over the cost of independently creating a standalone record system for the Burien Hospital.
Highline had begun developing its own electronics records system, but halted that after the first phase, said the hospital’s chief executive. The system Highline chose was different from the Epic system, which is common to most Puget Sound-area hospitals, said Franciscan spokesman Gale Robinette.
Franciscan’s Epic system will go online in April next year. Franciscan’s parent organization, Denver-based Catholic Health Initiatives, has committed to installing the system at Highline Medical Center after installation is complete at current Franciscan hospitals, outpatient centers and medical clinics, Franciscan said.
“The soonest a formal affiliation could occur is early 2013 with the approval of a definitive agreement by the Highline and Franciscan boards. That agreement would then require approval by the Washington State Department of Health and other regulatory agencies before an affiliation could become official. The regulatory review process could take six months or longer,” said the health care groups in a joint statement.
Highline Medical Center was established in 1958 and includes a 154-bed acute care hospital, a 115-bed specialty center, more than 20 clinics across from West Seattle to Vashon Island, and the Highline Medical Center Foundation.
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