Northwest Hospital rejects Swedish merger

By Tan Vinh and Carol M. Ostrom
Seattle Times staff reporters

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The proposed merger with Swedish Medical Center has collapsed because Northwest Hospital & Medical Center administrators grew concerned over the internal conflicts brewing at the health-care giant, according to an internal memo.

In an internal e-mail to staff members Friday afternoon, Northwest President and Chief Executive Officer Bill Schneider said that in light of the "turmoil between Swedish's medical staff and administration," the Northwest Hospital Board of Trustees proposed some restructuring that Swedish rejected.

The board decided "to unilaterally terminate our intent to merge with Swedish Medical Center."

Senior administrators from each hospital declined to elaborate on what changes the board proposed.

"We are very disappointed," Cindy Strauss, Swedish's vice president and general counsel, said yesterday. "We continue to believe this merger is in the best interest for the community."

In June, both sides spoke favorably of a merger that they said would eliminate service duplication. Both boards were concerned over the skyrocketing cost of electronic medical-records systems and other medical equipment.

The merger was expected to be completed by the end of the year.

Last month, Swedish's President and Chief Executive Officer Richard Peterson barely survived a no-confidence vote — 330 to 313 — by doctors there.

Doctors began calling for a vote after Swedish announced plans for a neuroscience institute and hired neurosurgeons from outside the Swedish system. Some doctors feared that such a trend could put many private practices out of business.

Peterson later vowed to involve physicians more in business decisions.
 
In recent weeks, Strauss said, the Northwest board made some requests that the Swedish board could not agree on, and "that was when the negotiations ended."

Although Northwest plans to continue as an independent health-care provider, Schneider, in the memo, said the hospital "still strongly supports" the idea of a merger with other health-care providers if the right opportunity were to come along.

Northwest spokesman Kevin Kawamoto said senior administrators will make an announcement this week about the merger.

The collapse is a setback for Swedish, which has three campuses in Seattle and has been aggressive in acquisitions and expansion. Swedish acquired Doctors Hospital and Seattle General Hospital in 1980 and 12 years later merged with Ballard Community Hospital.

In 2000, Swedish acquired Providence Medical Center in Seattle.

Swedish also has plans to open a free-standing emergency room in Issaquah and a 175-bed hospital there, if state authorities approve.

Tan Vinh: 206-515-5656 or tvinh@seattletimes.com