While hospitals across the country frantically are looking for merger and acquisition partners to shore up their market shares, the two hospitals that make up Affiliated Health Services in northwest Washington state are on the verge of going their separate ways.
The catalyst in this story is a community group that wants its old hospitalAffiliations
restored to its previous status as a full-service facility with a 24-hour emergency department.
"It was supposed to be an affiliation where each remained an acute-care hospital," said Floyd Allen, who heads Concerned Citizens of Hospital District 304. "That's not how it turned out."
Four years ago, 137-bed Skagit Valley Hospital in Mount Vernon, Wash., and 97-bed United General Hospital in Sedro Woolley, Wash., formed a holding company, Affiliated Health, to oversee both facilities.
The hospitals are eight miles apart in Skagit County in the northwest portion of the state, about 60 miles north of Seattle. The closest and only other hospital in the county of 90,000 people is 43-bed Island Hospital in Anacortes, about 18 miles west of Mount Vernon.
Both hospitals are district, or public, hospitals with five-member elected boards of commissioners. After the affiliation, each hospital maintained its own board, but the hospitals formed a joint 11-member board to oversee the facilities.
The joint board is composed of five board members from each hospital and the president and chief executive officer of Affiliated Health Services. Patrick Mahoney, who was Skagit Valley's administrator, became president and CEO of Affiliated as well as the administrator of both facilities.
After the affiliation, a number of consultant reports recommended that the hospitals consolidate acute-care services at one site, which they did last fall at the Mount Vernon facility. They converted the Sedro Woolley site into a primarily outpatient diagnostic facility with a 12-hour urgent-care center.
That, according to Mr. Allen and other sources familiar with the situation, angered local residents in Sedro Woolley, who felt that Affiliated Health violated the intent of the original agreement and essentially stole their hospital and moved it to Skagit Valley.
Last October, the citizens group headed by Mr. Allen sued Affiliated, claiming it violated state hospital district law by proceeding with the consolidation without a community vote. But a Snohomish County (Wash.) Superior Court judge threw out the case, ruling that the elected boards of the hospitals had the authority to manage the hospitals any way they saw fit. The case has been appealed to the state Supreme Court.
The citizens group subsequently embarked on a political, rather than legal, strategy to get its hospital back.
First, it got three of its members elected to the United General five-member board. And, last month, the board made a motion to fire Mr. Mahoney as United General's administrator, Mr. Allen said.
At deadline, United General's board was expected to consider the motion at its Sept. 15 meeting.
Meanwhile, Skagit Valley's board reacted by passing a resolution at its meeting last month that said it would support the dissolution of the affiliation if United General fired Mr. Mahoney, Mr. Allen said.
The Skagit Valley board was scheduled to meet late last week with a meeting of the joint Affiliated board to follow immediately.
One source, who requested anonymity, said the boards of each hospital have asked Mr. Mahoney to prepare an agreement that would outline how to divide the two hospitals.
Mr. Mahoney declined comment, but previously published statements indicate that he supports the continued affiliation of the two hospitals and the consolidation as it's occurred over the past year.