Citing economic challenges in the region and country, Swedish Health Services and Providence Health & Services in Western Washington announced a plan to join forces, creating a new, nonprofit entity that would operate the largest health-care system in the state.

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Citing economic challenges in the region and country, two of Western Washington’s largest hospital systems announced a plan to combine forces, creating a new, nonprofit entity that would operate the largest health-care system in the state.

The new entity would include Swedish Health Services in Washington, which operates five hospitals and clinics in King, Snohomish and Kittitas counties, and Providence Health & Services operations in King, Snohomish, Thurston and Lewis counties.

In those counties, Providence operates three hospitals and 21 senior and community-service programs, including hospice, home health, nursing homes, assisted-living facilities and senior housing.

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In a conference call Wednesday, the CEOs of Swedish and Providence portrayed the affiliation as one born of economic necessity. Insurance reimbursements are shrinking, and unemployment is persisting, and fragmented, uncoordinated care consumes an ever-larger share of budgets.

“We are in a tremendous crisis of just monumental proportions,” said Dr. John Koster, president and CEO of Providence Health & Services, speaking of the economy both regionally and nationally.

“I’ve got to tell you that with what we’re faced with in this region and in this country, if we think little incremental solutions are going to get to where we need to be, we’ve got another think coming. We’ve got to take the lead on this, and so this is the time for dramatic action — so that’s what we’re doing.”

Dr. Rod Hochman, president and CEO of Swedish, said: “I think the concept is we’re better together.”

“We think this is a local solution to a national problem” and will “dramatically improve health care,” Hochman said. And it isn’t one that can wait 10 years, he added. “We have to move now.”

Hochman said the affiliation would benefit patients by allowing the two systems to identify the most effective clinical practices and push them out more quickly to doctors and other providers. Health care must be more cost-effective, Hochman said, “and the only way you get there is clinical transformation” — change led by health providers, not by “a bunch of bureaucrats.”

Koster called clinical transformation “the best solution for affordability for our community.”

The innovative affiliation, as the two health systems have termed it, would, to some extent, also include the Providence system overall, which operates 27 hospitals and 214 physician clinics in five states, with almost 53,000 employees. It is not, the two emphasized, a merger or acquisition.

Swedish, based entirely in Western Washington, employs more than 11,000 people and works with a medical staff of more than 2,800 physicians, some of whom are employed by Swedish.

Citing a $19 million budget gap, the hospital recently announced it planned to reduce its workforce, evaluating some 300 positions.

The affiliation, which officials and board members from the two systems have been working on for several months, was made possible by their similar approaches to health care, collaboration, charitable care and not-for-profit status and their already having the same brand of medical-records system, the two CEOs said.

Hochman said patients often are frustrated by the lack of coordination among their doctors at different clinics and hospitals. With this new arrangement, he said, “we will have for all the patients one health record … integrating care across the region.”

Over the years, the two systems have, for the most part, operated in different communities with services that have not overlapped or competed for business. Providence brings in a wide network of hospice, home health, nursing homes’ assisted-living facilities and senior housing. Swedish has well-developed high-level health-care services, such as neuroscience, with 75 neurologists and neurosurgeons on staff.

“It sounds corny,” Hochman said, “but we really do believe that both organizations bring so much to the table.”

To a smaller extent, the two systems have worked together since 2000, when Swedish acquired Providence’s Seattle hospital, now named Swedish/Cherry Hill.

Their one big difference — Providence is a Catholic organization, while Swedish is a secular organization — didn’t prove to be a stumbling block, both said. Providence will keep its name and Catholic identity, while Swedish will also keep its name and remain a nonreligious organization.

“Through this unique operating arrangement, we are better able to preserve each organization’s heritage and local operations, while providing a better and more affordable level of patient care across both organizations,” said Koster in a statement jointly released by the two organizations.

The affiliation, which Hochman said is at the first step, will undergo regulatory review, likely by the Federal Trade Commission.

Carol M. Ostrom: 206-464-2249

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