Swedish/Issaquah does not expect layoffs amid budget crisis

March 27, 2012

By Warren Kagarise

Swedish Medical Center executives defended the decision to open a $365 million Issaquah hospital as the health care system loses $250,000 per day and girds for possible employee layoffs.

Systemwide, Seattle-based Swedish lost $16 million so far in 2012. Executives attributed the loss to higher health-insurance deductibles and the anemic economy. Both factors cause commercially insured patients to delay health care.

Swedish is also treating more uninsured and underinsured patients as the state and federal governments cut health care funding.

Swedish has more than 11,000 employees at hospitals in Edmonds, Issaquah and Seattle, plus a network of standalone emergency rooms and clinics in the Puget Sound region.

Swedish/Issaquah is not expected to shed employees. Executives said the hospital continues to beat pre-opening estimates for patients.

“Who knows what will happen in the future, but to the extent that we’re matching the expected volumes, we won’t be laying off people,” Chuck Salmon, chief executive for Swedish/Issaquah and ambulatory care, said in March 26 interview. “It’s really one of fine-tuning what the staffing requires based on the volume.”

Swedish/Issaquah opened outpatient services in July 2011 and added inpatient beds in November 2011. Salmon said possible cuts should not impact services at the hospital.

“The service offerings that we’ve laid out and planned for have all kicked in,” he said. “The activity within those areas is running nicely ahead of budget. I think we’re pretty much trying to stay the course that we had originally laid out.”

Executives said the number of patients did not decline at other Swedish hospitals because patients opted for health care at Swedish/Issaquah instead. Swedish/Issaquah, although licensed for up to 175 patient beds, is geared for outpatient services.

Planners expected the local hospital to lose money, but executives asked leaders on the Swedish/Issaquah campus to enact measures to generate revenue more quickly.

Salmon said the process includes a more aggressive effort to enlist physicians to use the facility for inpatient procedures.

“Like anything else, it takes time,” he said. “Patterns are in place that can’t change overnight.”

Swedish/Issaquah projects 882 admissions for the first quarter of the year — or 53 percent more patients than executives planned for.

“Fundamentally, we’ve done quite well, and we’re just smoothing out the wrinkles a little bit with making sure that our staffing matches what the volumes require,” Salmon said. “That’s the principle we’re working on, and so far, so good.”

‘A sense of urgency’

Swedish/Issaquah opened to fanfare. The hospital greeted more than 22,000 guests in a public open house. Executives emphasized hotel-style amenities for patients and guests — features meant to attract more affluent patients. Such patients help Swedish offset the costs of health care for uninsured and underinsured patients.

“For us, it’s about making this place as appealing as possible to not only patients who would want to get their outpatient care here, but also to community physicians that would want to do their inpatient practice here as well,” Salmon said.

Swedish financed the Issaquah project by tapping into reserve funds and selling 30-year bonds. The hospital benefited from a $100 million fundraising campaign meant to fund capital projects throughout the Swedish system.

Swedish/Issaquah opened not long before the hospital system announced major changes meant to address uncertain economic conditions.

In September, executives announced layoffs amid a $19 million shortfall. The next month, Swedish and Providence Health & Services announced a plan to join forces. The entities formalized the alliance in February.

Executives said Providence is not behind the proposed cuts.

Swedish CEO Kevin Brown, a Sammamish resident, addressed the budget crisis in a March 19 memo to Swedish employees, physicians and volunteers.

“While we are not at a point where we need to panic, we do need to act with a sense of urgency, and I ask all of you to do whatever you can to manage expenses in your area,” he said.

In a separate Q&A sent alongside the memo, executives said the number of patients using the facility reaffirmed the need for a hospital in Issaquah, because the community and the Eastside continue to add residents.

“We’re actually very pleased with our experience so far here,” Salmon said in the interview.

Executives insisted the problem is not unique to the Swedish system.

“Swedish is not the only provider in this situation. Others locally and nationally are experiencing the same trends,” Brown said. “With the economy in a prolonged downturn and the public changing the way it uses healthcare, we do not anticipate volumes returning to previous levels any time soon.”

Warren Kagarise: 392-6434, ext. 234, or wkagarise@isspress.com. Comment at www.issaquahpress.com.

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