YAKIMA — Yakima Valley Memorial Hospital officials dropped a bomb last week when they announced they were pursuing an affiliation with a larger medical center in the Seattle area, citing a changing medical landscape and diminishing reimbursement for services.
Some local partners are worried the new affiliation could damage some of their most important programs.
While nothing is set in stone, and officials say they’re early in the process, leaders in the medical community are on high alert for what the development will mean for their organizations and patients.
“We have long and strong partnerships with Memorial, going back more than 20 years, with substantial commitments on both sides,” said Dr. Mike Maples, CEO of Community Health of Central Washington. He was referring to the family-medicine residency-training program and pediatric-hospitalists program. “Of course, we wonder what a new partner or owner would mean to those programs.”
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Memorial, a private nonprofit, is in talks with Swedish Medical Services/Providence Health and Services, Virginia Mason Hospital and Medical Center and PeaceHealth in collaboration with University of Washington Medicine. Board members announced the plan to medical staff Tuesday evening and to the public Wednesday, though they’ve been working on the idea for about a year.
Memorial started approaching those institutions last fall, and since then, the potential partners have all submitted proposals. It’s not clear yet what kind of partnership will emerge; board members used the term “affiliation” but did not rule out a sale.
While board members emphasized that the hospital is not “up against the wall,” the move does play into the larger national trend of hospital consolidation.
“It’s becoming increasingly rare to find a free-standing hospital with no relationship to assist them,” said Adam Higman, vice president of Florida-based Soyring Consulting, which works with hospitals on deals like this. “It has to do with their own financial state — they don’t know where reimbursement’s going, except it’s probably going to go down … nobody knows how much.”
A significant portion of Memorial’s patients are on Medicare or Medicaid, which both have lower reimbursement than private insurance and are subject to frequent change at the state and federal levels. That unpredictability makes it hard for a stand-alone hospital to stay afloat, Higman said.
Also important, Higman noted, is that bigger organizations have more bargaining power to get lower prices, whether that’s with insurance companies, pharmaceutical companies or medical-supply chains.
Bigger hospitals may also command more respect: “If (Memorial is) the safety-net hospital and they’re competing with a for-profit, a part of that equation is trying to get more of the private insurance patients in your local community to come to their hospital, and hopefully that affiliation will help with that name recognition and those people wanting to go to that facility,” Higman said.
(Yakima’s other large hospital, the Yakima Regional Medical and Cardiac Care Center, is a for-profit.)
Locally, Memorial partners with community-health centers and other social-service organizations to provide care across a broad range of disciplines. Board members said they won’t partner with any institution that doesn’t share Memorial’s nonprofit mission, but acknowledge they can’t guarantee anything.