Snoqualmie Valley Hospital affiliation process nears decision point

On Thursday, Feb. 8, Dariel Norris, president of the Public Hospital District No. 4 board of commissioners, gave an update on the Snoqualmie Valley Hospital’s affiliation discussions with Astria Health.

The process to pursue a possible affiliation or merger with another health system began in early 2017 when the board hired Sarah Cave and Steve Huebner, consultants to help guide them through crafting a request for proposals, analysis of the proposals and discussions with responding organizations.

The board hopes to affiliate or merge with a larger hospital system to receive additional operations support as well as financial support, because a larger health system would absorb the hospital’s debt.

Over the past year, the board put out their RFP and received one response, from Regional Health which recently changed its name to Astria Health. In a meeting at the hospital in November, Astria proposed two options for affiliation. The first was a long-term lease, 25 to 30 years, with the possibility of purchase. The second was a merger option. After meeting with Astria, the board decided to continue discussions with smaller negotiation teams to work out the details behind each of the proposed models.

Board President Norris updated commissioners on the process at the February board meeting. She said the negotiating teams were optimistic about the models they were working with and said that both parties were working with a brokerage firm that issues the hospital’s bonds to determine bond-holder involvement and estimate the timeline of the process.

Commissioners Emma Herron and Gene Pollard both expressed their concern that the process up to this point had taken too long and were worried that the board was spending too much money.

Hospital CEO Tom Parker said the costs were consistent with the approach outlined by the affiliation consultants.

“We are currently now in the due diligence phase of that agreement so we are consistent with where they projected we will be,” he said.

Parker continued to explain that they are planning to come to a resolution of the deal structure with Astria by the end of February or the first week of March, and that the process is still on time and on track.

“We are working in good faith with Astria to get to that point where we know whether or not we are able to move forward,” he said. “…We are looking at the end of this month, first week of March to be able to say ‘does it still look like there is a possibility?’”

Pollard also expressed frustration with the RFP process as a whole, claiming that in the history of mergers and acquisitions in Western Washington none of them have been through an RFP process. He said he would have liked to see personal connections made as the hospital reached out individually to large health care organizations.

Norris restated that the team is working hard and being diligent with finances in order to come to the most informed decision they can.

Parker added that the intense complexity of the matter is why the process is taking weeks to be done.

“We are talking about how the proposed model affected the corporate structure and most particularly, the covenants under our revenue bonds, that is what we are dealing with now, and understanding what bond holder requirements are going to be under this model,” he said. “The complexity of the issue is high, this is not a simple transaction.”

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