Lease of Stevens Hospital by Swedish approved

Affiliation with Swedish will help Stevens Hospital expand, improve quality of care and offer more services

The Board of Commissioners for Public Hospital District #2 of Snohomish County today approved an agreement for Swedish to lease and assume management of Stevens Hospital. The last phase before transition involves regulatory approvals which could be completed by early fall.  

A hospital affiliation supports the priorities of a strategic plan developed in 2008 with input from the community. The strategic plan focuses on expanded services and programs, quality of care and safety, recruitment of additional high-quality physicians and clinical staff, financial performance and stability, community relationships, and the enhancement of Stevens Hospital's status as a preferred health-care provider. When compared to other hospitals, Swedish stood out as the best choice.

"This affiliation is a win for the community and for everyone involved," said Fred Langer, board of commissioners' president for the district. "It really helps us meet the mission of the district to improve the health and well-being of the community."

As part of the definitive written agreement, Swedish has committed to Stevens between $90 and $150 million in general investments, building improvements and expansion of services including implementation of an electronic medical records system.

The hospital district will continue to exist to provide additional health services to the community. It will have initial cash reserves of $16 million and will receive monthly lease payments of at least $600,000. The district will undergo a strategic planning process to determine priority focus areas, but some ideas discussed include supporting and/or operating community clinics, supporting health awareness and improvement programs, and/or developing a collaborative mental-health provider network.

"The financial commitment Swedish is prepared to make will allow the hospital district to provide health-care services not previously possible," said Langer.

The two health-care providers are financially strong. In fact, Stevens ended 2009 with a total operating income of $11 million – money that will be reinvested into the hospital's services and programs.

"We were able to negotiate terms from a position of strength," explained Michael Carter, Stevens Hospital CEO and president. "Unlike a number of local hospitals, we had good years financially in 2008 and 2009."

Even though Stevens Hospital is financially strong, it needed to seek a strong partner to ensure it continues to improve and grow the services of the hospital to meet the growing needs of the community.

In Snohomish County, the population grew from 172,199 in 1960 to 704,300 residents in 2009 as estimated by the Washington State Office of Financial Management. The Emergency Department at Stevens was originally designed for 25,000 patients a year and now the hospital treats more than 40,000.

"We are excited about what this partnership will bring to residents of South Snohomish County," said Cal Knight, president and chief operating officer of Swedish. "Stevens and Swedish have worked together for 19 years to make specialty health-care more accessible and convenient, so it makes sense to collaborate more closely. Through a new affiliation, we will be better positioned to achieve our shared goals of increasing access to health care in the local community, enhancing the quality of care and reducing costs, all of which are critical in an era of health-care reform."

For example, Swedish will be installing a new electronic medical record system at Stevens called Epic at a cost of $15 million. Stevens could not gain access to the Epic system without becoming part of a larger health-care organization.

During the first 10 years of the lease, Swedish is committed to making significant investments in medical technology as well as evaluating various facility improvements or expansion possibilities.

"In addition, as a non-profit institution, Swedish expects to increase its level of commitment to the community through more uncompensated care and other community-benefit activities in South Snohomish County," said Knight, adding that last year Swedish provided more than $71 million in

community benefits, including $60 million in charity care and Medicaid subsidies and $11 million in health screenings, education, research and other community services.

"Together, we are creating an innovative, regional health-care delivery network that will allow Stevens to provide more health care in the local community while giving residents greater access to the tertiary and comprehensive services of the Swedish system when a higher level of care is needed," added Knight.