PeaceHealth, a Catholic health-care system, has delayed indefinitely its planned affiliations with small hospitals in Snohomish and Skagit counties, citing higher-than-expected costs in the effort to roll out a medical information-technology system.
Nancy Steiger, PeaceHealth CEO and chief mission officer for its Northwest network, said PeaceHealth could not make a final commitment at this time to Cascade Valley Hospital in Arlington or Skagit Regional Health in Mount Vernon.
Just a few weeks ago, PeaceHealth realized the heavy lifting to integrate systems with the two hospitals would come at the exact same time as the push to get the Epic medical information-technology system up and running in PeaceHealth’s hospitals around the region, Steiger said in an interview Tuesday.
“It’s mostly the cost of Epic — and it’s the timing,” Steiger said. “It’s exactly the same time when we want to deploy resources to Epic, and they’re the same resources,” meaning information-technology and systems experts and cash.
In a memo to PeaceHealth leadership and staff, Steiger said all work to collaborate will cease, with the exception of an ongoing effort to work with Skagit Regional on cardiovascular services.
Late last year, Cascade Valley and PeaceHealth signed letters of intent with both hospitals.
The tentative agreement with Cascade Valley called for PeaceHealth to take over operation of the public hospital district’s clinics and hospital. The district would lease its land and buildings to PeaceHealth. Steiger said the two had recently reached full agreement on terms.
In the case of Skagit Regional, also owned by a public hospital district, PeaceHealth proposed a “strategic alliance” to potentially operate joint ventures and consolidate some services. Under the proposal, Skagit Regional would have retained control of operations, finances and staff employment.
PeaceHealth plans to hire a Chief Operating Officer, Steiger said in her memo, who will then assess the “strategic efficacy and value” of proposed alliances such as those with Cascade Valley and Skagit Regional “in light of the rapidly shifting payment and regulatory environment.”
In the pre-Affordable Care Act days, Steiger explained in the interview, “the more people you had in the hospital the better you did” financially. But new payment systems and regulations emphasize keeping people in the community healthy and out of the hospital, which puts pressure on big health-care systems, she said. “We think of the hospital as the center of the world, and it’s not any more,” she said. “Everything is changing around us.”
Although all three hospitals have heard from residents and others who wanted to stop the affliations, saying they feared religious control or even affiliation would limit services, Steiger said the reason for the pullback was strictly about resources. She said neither the protests nor the Seattle archbishop played a part in the decision to stop moving ahead.
Skagit Regional’s CEO Gregg Davidson said the hospital is not under financial pressure to affiliate. “Skagit is healthy and growing,” Davidson said in an email.
In a memo to staff, said the hospital is a “strong, independent organization,” and will continue to move forward, including considering alternative options.
“We are in a solid financial position and our organization continues to evolve into a growing integrated health care delivery system….” Skagit plans to open an orthopedic and sports medicine clinic next month, he noted, and has a growing graduate medical education program, with 22 medical residents working and training there now.
Cascade officials were not available Tuesday for comment. Skagit partners with Cascade with programs and services through Cascade Skagit Health Alliance.
“I remain hopeful that collaboration in the future remains a possibility,” Steiger said.