Valley General Hospital agreement up for vote Feb. 27.
Capella would pay Valley General to operate hospital for 40 years
After announcing several months ago that it would be partnering with an out-of-state hospital company in order to continue to operate, Valley General Hospital is now just weeks away from having a formal lease agreement in place.
Capella Healthcare, of Tennessee, will pay the hospital a lump sum of $33 million to operate the hospital for 40 years.
Last week, Valley General and Capella were working on a contract, and they were “really, really close” to finding a balance that works for both parties, hospital spokeswoman Collette Reams said.
After years of operating on millions of dollars of losses, the hospital began looking for a partner last year.
The partnership will give Valley General $29.9 million to pay off $20.6 million worth of bond debt. It also will allow the hospital to bring in more primary care services, Reams said.
“We’ll have more capital, so we’re not strapped and we can go out there in a tight employee market and recruit the big guys,” she said.
The hospital’s board of commissioners will vote on an agreement Monday, Feb. 27. The agreement will set up a new governing board, which will include Capella officials and members appointed by the hospital board.
Last week, hospital CEO Mike Liepman said he looks forward to the additional partnerships the agreement with Capella will enable and enhance.
“The clinical partnerships will allow us to continue our long standing relationship with Providence Everett for example, while exploring opportunities with other systems such as the University of Washington or Evergreen Medical Center,” Liepman said.
The public hospital’s current tax rate is expected to stay the same for now, which is the lowest in the state at about 8 cents per $1,000 of assessed home value, Reams said.
The average homeowner in the hospital district pays about $22 a year, she said.
The tax revenue “doesn’t even come close” to what the hospital spends covering charity care, she added. Patients who can’t pay their medical bills or who don’t have insurance are likely covered by charity care. The public hospital can’t turn people away from the emergency room for inability to pay.
In 2011, Valley General spent more than $3 million in charity care alone, Reams said.
“We are higher than the state average and the Northwest average as a hospital for those that qualify for charity care at our hospital. We go over and above what the state mandates,” she said.
Monroe deserves a hospital, Reams said, and the deal gives Valley General the capital not only to stay, but also to stay up-to-date.
Exactly what services will be expanded and what improvements will be made will be hammered out once the agreement goes through.
The partnership has no downside for the hospital, Reams said, so approval by the board at the end of the month is almost guaranteed.
Reams said she looks forward to the hospital being able to increase the services it offers, including specialty care.
Right now, specialists are only available certain days and hours at Valley General, but with an agreement Reams hopes the hospital will be able to offer specialty care full time.
Another potential benefit is better rates for services the hospital provides, Reams said.
In the health care business, not all hospitals are paid the same for the services they provide, she said, and smaller hospitals don’t get the best rates.
“With Capella, we are going to have huge leverage because we are going to be part of a larger organization, giving the hospital a little more oomph when it comes to marketing payer rates,” she said.
Additionally, Capella is giving the hospital $14 million over the next four years for capital improvements. These improvements will include updating patient rooms, buying new equipment and perhaps remodeling the emergency department.
“What we’re doing is coming up with our wish lists department by department. But one of the primary focuses is position recruitment and permanent primary care,” Reams said.
She said one of her personal wishes is “better signage along Highway 2 that there is a hospital on the other side of the trees.”
“We are very excited to add new medical equipment at the hospital and remodel and renovate parts of the facility to enhance our patients experience,” Liepman said.
Capella runs 15 hospitals around the country, including one in Olympia.
Last week, an independent consultant’s report was released, showing the agreement meets state law. The next step is to see the actual agreement, but that’s for the board to see, Reams said.
“Everybody’s really hungry to see the final product, but it’s not here yet because the commissioners have the final vote,” she said.
By STEPHANIE KOSONEN
Published Feb. 8, 2012