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February 2, 1998

Front Page

Evergreen/Swedish partnership terminated


Photo by Andrew Walgamott/staff photo

Evergreen Hospital Medical Center

     by Andrew Walgamott
   TOTEM LAKE--After a year of consideration, the Evergreen Community Health Care board of commissioners unanimously terminated a memorandum of understanding with Swedish Health Services of Seattle last week, ending the proposed NEWCO partnership. "The needs of Evergreen and the needs of Swedish differed from an administrative perspective," said Bruce Buckles Evergreen's chairman of the board.
   The two hospitals would have formed NEWCO, a not-for-profit corporation that would have leased the hospital facilities if the partnership had come to fruition. They had signed the memo of understanding just last July. The partnership had been proposed partly to win insurance contracts. Andy Fallat, Evergreen CEO, blamed the failure on complexities a business model was unable to address. "The deal became more and more complicated than its values," he said.
   Fallat pointed to pressures in choosing Evergreen's representation for an oversight board as an example of that. TheWoodinville Weekly reported on those troubles which included disagreements over who would represent the hospital and charges that one commissioner had moved to Arizona but wouldn't resign his post. Other problems included how to finance the debt each hospital had as well as keeping assets separate.
   The NEWCO deal was allowed under a state law that permitted public hospitals like Evergreen to establish non-profit corporations with other hospitals. But Fallat said that it was the end of Evergreen's attempts to partner on the scale of NEWCO. Evergreen has discussed teaming with Stevens Hospital of Edmonds and Overlake Hospital in Bellevue in the past. Still, Buckles said that Evergreen and Swedish would continue having conversations on partnering on programs such as oncology, cardiology and surgical services.
   The break will also give Evergreen a chance to reprioritize its programs. Fallat said that the hospital had three task forces looking at women's health issues, alternative medicine and job-force retraining. He said that as the hospital developed programs, it would look for partners. NEWCO wasn't an empty lesson for Evergreen. "We have many strong resources, beginning with exceptional community support for our programs and services. We're on sound financial footing, and our hospital has been recognized nationally and internationally for the caliber of its programs. We feel it's best for Evergreen and our community that we go forward and build on what we have for the future," Fallat said in a press release from the hospital.
   Fallat said Evergreen spent $150,000 in consultants' fees in the last year for the deal, and noted that none of the money had come from taxpayers. Evergreen was founded in 1968. It is known as King County Public Hospital District 2 and collects taxes from residents in Woodinville, Bothell, Kirkland, Redmond and parts of Bellevue.