The unification over the last eight years of Catholic-sponsored hospitals and other health-care entities in the Northwest operating under the Providence banner is producing broad benefits in Eastern Washington, though the complex relationship still is evolving, Providence executives here say.


The benefits they cite range from increased buying and contract-negotiating power to greater debt capacity to take on big capital projects.


Those projects include a $35.8 million expansion at Holy Family Hospital thats currently under way and a $34 million renewal of Mount Carmel Hospital, in Colville, Wash., thats expected to begin next spring. Another capital expenditure stemming from the union was the recent $1.2 million purchase of a 16,000-square-foot Spokane Valley building that will house a sizable billings and collections staff.


The integration, the executives say, also is improving the ability of Providence health-care facilities to share knowledge among themselves and to incorporate the best practices of their peers within the network.


I think its gone very well. Im absolutely 100 percent in favor of us coming together, says Skip Davis, CEO of the Spokane-based Providence Health Care network and chairman of the Providence Health & Services integration committee. He adds, though, that the transformation still is far from complete.


I call this the white-water period, Davis says. Were going through the rapids as we speak, knowing there is calm water on the other side.


Providence Health & Services is the combined entity created last Jan. 1 when Spokane-based Providence Services, the parent company of Providence Health Care, merged with Seattle-based affiliate Providence Health System.


Together, the two Sisters of Providence-sponsored nonprofit ministries constitute whats believed to be the sixth- largest Catholic health-care system in the U.S., with combined assets approaching $6.5 billion. That system includes 27 hospitals, more than 35 non-acute facilities, physician clinics, a health plan, a liberal arts university, and numerous other entities. It employs 45,000 people in five states; Spokanes 623-bed Sacred Heart Medical Center & Childrens Hospital, owned by Providence Health Care, is the largest hospital in the system.


Sacred Heart President Mike Wilson says hes pleased with how the transformation is proceeding. One of the systemwide initiatives is no preventable injuries, no preventable deaths, he says, adding, Theres no question weve seen quality improvements as weve begun this.


The big benefit is we sit here with a much broader resource and stability, he says. The more you can learn from one another to determine what works and what doesnt, the better off you are.


About the only downside, he says, is there are more approval steps to go through. You have to give yourself more lead time.


Davis says implementing all of the organizational changes resulting from the merger probably will take another two years to play out, but contrary to the concerns of some Providence employees about how those changes will affect their jobs, he doesnt expect any negative impacts here.


The reality is there have been darn few jobs transferred elsewhere. I can actually envision more people (employed here) as a result of this, rather than fewer, he says. Although the integration has shifted some of the decision-making authority for the Providence operation here to the west side of the state, he adds, I think the fear that we are going to pack up our tent is unfounded, given where we are today.


He suggests, for example, that the billing and collections facility being established in Spokane Valley, which will be staffed initially by about 50 relocated Sacred Heart and Holy Family employees, eventually could employ several hundred people as that facility takes on business-office tasks for a broader area.


That facility, at 1000 N. Argonne, is to be operated by HealthServicesNW LLC, a nonprofit enterprise owned jointly by Providence Health & Services and Swedish Health Services, of Seattle, and is considered an extension of a HealthServicesNW office in Renton, Wash., that employs 225 people. Providence Health & Services bought the building on Argonne.


Earlier collaboration


Providence Health Care, originally named Providence Services Eastern Washington (PSEW), was formed in 1998 when six hospitals operating under the Providence Services umbrella joined together formally under a single corporation.


Besides Sacred Heart, the other facilities included Spokanes Holy Family Hospital; St. Marys Hospital, in Walla Walla; and hospitals in Deer Park, Chewelah, and Colville that, together with Holy Family, make up the Dominican Network. The Dominican Network became part of Providence Services in 1993, when the Dominican Sisters transferred sponsorship of the network to the Sisters of Providence.


Along with the six hospitals, the Providence Health Care network includes St. Joseph Care Center, Emilie Court Assisted Living, Holy Family Adult Day Centers, and VNA Home Health Care Services, all in Spokane, and DominiCare, an in-home service agency in Chewelah. All of those are nonprofit entities.


Separately, Providence Health Care owns two for-profit businessesthe fast-growing Pathology Associates Medical Laboratories Inc. (PAML) and Providence Physician Services Co., both of Spokane. PAML is a big Spokane-based business that does tests for doctors, hospitals, and others, and Providence Physician Services is a physician-recruitment and office-management company.


Additionally, Sacred Heart and Holy Family are part owners of Inland Imaging LLC, a large Spokane-based provider of outpatient imaging services.


The Providence system includes a number of other Inland Northwest and intermountain facilities that arent part of the Spokane-based network. Those include hospitals in Missoula, Anaconda, and Polson, Mont.; and an educational child-care center and the University of Great Falls, both in Great Falls, Mont. The Montana facilities formerly were under the Providence Services umbrella here, but were spun up in the latest merger and now comprise Providence Health & Services separate Western Montana Service Area.


Davis, who was CEO of Sacred Heart when PSEW was formed, said then that the intent was to minimize competition between the institutions, root out unnecessary duplication, and come up with efficiencies.


He says now that the network, as the renamed Providence Health Care, has made good progress toward those goals, although it perhaps has been slower than he had hoped.


Of Providence Services Jan. 1 merger with Providence Health System, Davis says, I knew it was going to happen one day. Cost pressures on health-care providers continue to rise, he says, and if the ministry concept is to be successful long term at meeting the needs of the public, including those of modest means, it must be profitable enough to do that. Its not a greedy mentality; its a mission-oriented mentality.


Less than two years ago, Sacred Heart was rolling out a voluntary-retirement program and taking other cost-cutting steps to ease a worrisome financial crunch. The creation of Providence Health & Services, Davis says, really shoves a major cornerstone under our operation and our ability to sustain ourselves well into the future. For me, it gives me great assurance.


He says, The expectation going forward is we can perform very successfully in the 4 to 5 percent net operating income area. Thats at the low end of what industry experts regard as necessary to stay financially healthy, but its adequate, he says.


Davis and Wilson say the merger has resulted in a system of shared leadership that, despite moving some decision-making authority to the west side of the Cascade Mountains, provides plenty of room for executives here to grow and for member facilities to have a say in how that system is managed.


Absent the anxiety that goes along with change, this has been a pretty good process. Weve had a very strong voice, Wilson says.


Davis says he considers it likely that the Providence Health & Services will expand further, and adds, I see us being an aggregator rather than an aggregatee.


Contact Kim Crompton at (509) 344-1263 or via e-mail at kimc@spokanejournal.com.