President and CEO of Astria Health John Gallagher, presents their proposal for affiliation to the board of commissioners on Oct. 25. (Evan Pappas/Staff Photo)

Hospital board votes to pursue next step in affiliation process with Astria Health

After a meeting with the respondent to Snoqualmie Valley Hospital’s request for proposals for an affiliation partner, the Snoqualmie Valley Public Hospital District 4’s board of commissioners voted to proceed to the next step in the affiliation process with Astria Health, formerly known as Regional Health.

That next step is drafting a letter of intent to exclusively continue discussion with Astria Health. At a special commission meeting on Thursday, Oct. 26, affiliation consultants Steve Huebner and Sarah Cave said the letter of intent is not a definitive contract, but does express intent to reach a final agreement after more information is collected and questions have been answered.

The decision came after a meeting Oct. 25, during which Astria staff presented the company’s affiliation proposal in person and answered questions from the commissioners. Astria President and CEO John Gallagher led the board through Astria’s history as a health care service, information on the organization’s three other hospitals, and the proposal to the Snoqualmie Valley Hospital.

Astria Health proposed two affiliation options, a long-term lease, 25 to 30 years, with the possibility of purchase or a merger option. The lease option would keep Public Hospital District 4 intact as a taxing authority. Astria Health would lease from the district and would become the operating entity of the Snoqualmie Valley Hospital.

In a merger, the district would stay intact and remain a taxing authority, but a new 501(c)3 non-profit would be formed by the district. All property and assets would be allocated to the nonprofit, which would govern the operations of the hospital. Astria would become the only member of the nonprofit and a new board of community residents would be composed to work with hospital staff in the operation of the hospital. The current board would continue in their roles as a board of commissioners for the taxing district.

In their presentation, Gallagher said that they would fully commit to financially and operationally supporting Snoqualmie Valley Hospital and said that Astria would make $10 million in investments within the first two years.

At the special meeting on Oct. 26, the board met with consultants to discuss the previous night’s presentation and make a decision on whether or not the board wanted to move forward. Huebner and Cave walked the board through their observations of the proposal and explained the process of crafting a letter of intent.

Huebner said that with Sunnyside, Toppenish and Astria Regional Medical Center in Yakima, Astria health has demonstrated strong financial performance and hospital turn-arounds, and if Astria can maintain their projected level of earning in the next few years, Snoqualmie Valley Hospital’s debt-to-equity ratio could fall in line with industry standards.

Huebner also said Astria has a strong recent history of physician recruitment, service line expansion and increased market share.

Cave said a letter of intent would enter the hospital board into an exclusive agreement with Astria to do deeper due diligence and ask further questions. She also outlined some alternatives including initiating discussions with other parties who initially intended to respond, issuing a new request for proposals with a different set of parameters, or staying independent. However, Cave cautioned against the alternatives stating that if the board walked away from the deal, finding another partner willing to invest so heavily in the hospital would be highly unlikely.

Commissioner Speikers stated that the board may not be able to make the decision to affiliate now, but felt that proceeding to the next step and asking more in-depth questions to progress further in understanding of the proposed affiliation options was the right choice to make.

“Whether this is right or wrong I don’t know, we don’t know that yet. Unless you look behind the door you are never going to find out what is behind it,” Speikers said. “So I would really like to move forward with that in mind to be really careful and make sure all of the commissioners would do due diligence.”

Commissioner Gene Pollard was against moving to the next step, stating that he wanted to wait to inform more of the public of the decision point the board is at before making a decision. However, when a motion was made to approve the board moving onto the next step and drafting a letter of intent, the board approved it 4-1 with Pollard opposed.

At the next regular meeting on Thursday, Nov. 2, the board will discuss developing the letter of intent done.

Board President Dariel Norris and Hospital CEO Tom Parker ask Gallagher questions about the history of Astria Health. (Evan Pappas/Staff Photo)

Commissioner Gene Pollard asks Astria Health if they are expecting any one from the district’s service area would drive east to access any of the other Astria Health Hospitals. (Evan Pappas/Staff Photo)

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