Providence Health & Services affiliates with Kadlec Health System

August 15, 2014

Catholic nonprofit Providence Health & Services announced an affiliation on June 10 with Kadlec Health System, a secular nonprofit that serves a region of more than 350,000 residents in southeast Washington and northeastern Oregon. The affiliation does not involve a sale or purchase of assets.

Kadlec Health System will be part of Western HealthConnect, which is a secular organization created to allow Providence Health & Services to affiliate with nonreligious organizations.

The same model allowed Renton,Wash.-based Providence Health & Services to affiliate in recent years with Seattle-based Swedish Health Services and Seattle-based Pacific Medical Centers, which remain secular organizations under Western HealthConnect. Affiliated organizations also maintain their separate 501(c)(3) tax status.

While Providence Health & Services has had care providers who work at clinics in the area where Kadlec Health System offers services, the affiliation extends the network's physical footprint into Washington's Tri-Cities region, executives said. That region includes the cities of Kennewick, Pasco and Richland, where Kadlec Health System is based and Kadlec Regional Medical Center is located.

Kadlec Health System leaders said the system is strong. They added that in a time of dramatic change in health care, the affiliation will allow the system to better address ways that it can improve the health of the population it serves. "We're really going to have to think differently about how do we reach out into the community and look to partnering with patients in such a way that we can help them take better care of themselves and keep the overall population healthier," said Kadlec Regional Medical Center President Lane Savitch. "That's a new role for us, and I think it's a new role for the industry."

Joel Gilbertson, Providence Health & Services senior vice president for community partnerships and external affairs, said, "What we believe these types of affiliations really empower is innovation at scale."

Providence Health & Services has 70,000 caregivers across five states. Gilbertson said the size of the system allows for knowledge to be shared through peer networks and expert-to-expert collaboration as the system determines what works best in involving patients in their care, improving access to care and in lowering costs while improving treatment outcomes in specialty medical services. He said the affiliation between Swedish Health Services and Providence Health & Services led to cost savings for both systems.

Costs declined due to the increased efficiency of shared services and the ability of Swedish Health Services to access debt in capital markets at more favorable rates owing to Providence Health & Services' credit rating, according to Gilbertson. Also, clinical programs of both systems came together to standardize their product orders, a move that yields supply chain savings.

Gilbertson said Swedish Health Services alone over the last two years has saved more than $240 million. This has enabled Swedish Health Services over the last year to reduce prices, particularly for ambulatory and outpatient services.

Under the Providence Health & Services and Kadlec Health System affiliation, the Kadlec Health System Board of Directors remains intact under a new name: the Kadlec Regional Medical Center Community Board. Board Chair Susan Kreid said the community board will share governance responsibility for Kadlec Health System with Western HealthConnect.


Copyright © 2014 by the Catholic Health Association of the United States
For reprint permission, contact Betty Crosby or call (314) 253-3477.

Copyright © 2014 by the Catholic Health Association of the United States

For reprint permission, contact Betty Crosby or call (314) 253-3490.