PeaceHealth, which provides much of the health care in Whatcom County and operates the only hospital here, has ended its plan to combine with another Catholic health organization, both sides announced Wednesday, April 3.
The deal between PeaceHealth and Catholic Health Initiatives was to be in place by June 30. The two faith-based health care systems had signed a non-binding agreement last August to create a joint venture by combining all of their operations, which include 16 hospitals, in three states.
They agreed on Tuesday, April 2, to suspend their discussions, as they were going through due diligence and the approval process.
"Even with their common traditions of service, CHI and PeaceHealth were unable to develop an integrated model that would provide the desired benefits and serve the best interests of both organizations," the two said in a joint news release.
Under the proposal, Catholic Health Initiatives would have combined its seven Washington and Oregon hospitals with PeaceHealth's nine hospitals in those two states and in Alaska, including St. Joseph hospital in Bellingham.
All of their affiliated services also would have been combined - creating a large health care network in the Northwest that would have included nearly 26,000 employees and about 950 doctors in hospitals, physician clinics, outpatient care clinics, long-term care facilities, laboratories and private homes across the region.
PeaceHealth officials described the new entity that would have been created as a 50-50 joint venture.
The two systems said they wanted to grow in order to respond to federal health care reform and to improve health care access; reduce costs by sharing improvements such as information technology systems; and to be able to accept more financial risk in caring for certain populations, such as Medicaid recipients.
"We found, in fact, it was much more complex than we envisioned in putting two organizations together in that way," said Peter Adler, chief strategy officer for the entire PeaceHealth system, of the idea he called "really big and really bold."
The new organization would have had annual revenues of nearly $4 billion.
CHI, based in Englewood, Colo., is the nation's second largest faith-based health care system with annual revenues of more than $10.5 billion. PeaceHealth, based in Vancouver, Wash., has annual revenues of about $2.3 billion.
CHI operates in 19 states and PeaceHealth in three.
The deal would have affected all of PeaceHealth's operations and a little more than 20 percent of CHI, which operates in Washington state as the Franciscan health system.
The proposal had created concerns in Whatcom County and elsewhere among advocates who feared that patients could see their health care and end-of-life issues restricted under a new partnership, given how much larger CHI was than PeaceHealth.
Of concern was how each followed the Ethical and Religious Directives for Catholic Health Care Services, with advocates saying that CHI was stricter in its adherence than PeaceHealth. They said that could tighten access to reproductive health care, including contraceptives, and provisions of the Death With Dignity law that allows the terminally ill to obtain a lethal dose of medication to hasten their dying.
Approved by voters, the Washington state law doesn't force health care providers to participate, giving them an opt-out provision.
PeaceHealth has done so, meaning its doctors cannot prescribe lethal medication while on the clock, its pharmacies will not fill lethal prescriptions, and patients will not be able to take the lethal doses on its premises, including its Whatcom Hospice House.
PeaceHealth has not barred its doctors, nurses, social workers or other employees from talking about the law, unlike other Catholic health care providers.
"PeaceHealth is not quite so strict. Obviously, they don't allow their staff to promote it or even to support it, but they don't try to gag them. They will provide a referral to the Whatcom County Medical Society, which will then refer the patients to us or to other organizations that can provide the real information they're looking for," said Robb Miller, executive director of Compassion & Choices of Washington, in the days before CHI and PeaceHealth announced that their proposal was off.
In response to advocates' concerns, PeaceHealth officials have said they would continue to follow their own policies and that patients would see no difference - had the deal closed.
Philosophical differences didn't cause the suspension of talks, according to PeaceHealth.
"It had nothing to do with church issues or reproductive issues," said Jenny Ulum, PeaceHealth communications director.
Adler added: "Those were not the reasons we decided to suspend."
Although the proposed discussions to form the joint venture have ended, the two systems said in the news release that they "will remain actively engaged in exploring other opportunities to work together to strengthen their respective ministries in the Pacific Northwest."
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