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Valley Med, UW Medicine strategic alliance progressing; public vote rejected

An agreement to form a strategic alliance between Valley Medical Center and UW Medicine could go before Valley's commissioners on April 18.

The commissioners received a regular briefing on the alliance negotiations at their meeting Monday from their lead negotiator, George Beal.

"We seem to be headed in a common direction," Beal said of the negotiations, which began after Valley's board approved a non-binding letter of intent in January.

It's anticipated that by mid-April negotiators will have a draft agreement that has "substantial sections" acceptable to both sides, he said.

Commissioners will schedule whatever meetings are necessary to review the document. The agreement won't run into the hundreds of pages; Valley CEO Rich Roodman told the board to expect an agreement of about 50 pages.

Under the strategic alliance, the Public Hospital District No. 1 would retain ownership of all district assets – the medical center and land – and the commissioners would decide how to spend the tax dollars raised in the district.

UW Medicine would oversee operations at the medical center, train physicians there and enhance medical services, under the oversight of a 13-member board of trustees appointed by UW Medicine.

At the meeting, Commissioner Anthony Hemstad again questioned the deadlines to approve the agreement. The board agreed to act on the agreement by May 31, with an effective date of July 1. Both dates were requested by UW Medicine; July 1 is the beginning of UW Medicine's fiscal year.

"We are not an ugly bride," Hemstad told fellow commissioners, calling Valley an "attractive partner" for UW Medicine.

Earlier in the meeting, commissioners heard a near-final report on an independent audit of the medical center's policies, procedures and finances. The report will show that no "findings" of violations were found against the medical center. Valley's operating margin – the profit – was 3.3 percent in 2010. About 11 percent of its revenue goes to pay for services not covered by insurance or patients, known as charity care.

Roodman again told the board that UW Medicine has been clear from the start of negotiations that it holds firm on those dates and on appointing new trustees to oversee Valley's operations. The current publicly elected commissioners would also serve as trustees.

It's generally assumed that three commissioners likely favor the alliance, Don Jacobson, Carolyn Parnell and Sue Bowman. Hemstad and fellow commissioner Aaron Heide have been the most skeptical of the agreement.

Three votes – a majority – are needed to approve the alliance.

Hemstad suggested waiting to vote on the alliance until after the November general election, when a new board member will be elected to replace Jacobson. Hemstad and Heide were elected to the board after an attempt by Public Hospital District 1 to annex the Maple Valley and Black Diamond areas failed overwhelmingly at the polls in 2006.

Hemstad also introduced a motion to place forming a strategic alliance on the November general election ballot. He said he didn't think three commissioners should make the decision for the district, instead leaving the decision to the district's "owners," the taxpayers. Commissioners rejected the motion 3-2.

The three commissioners and Hemstad disagree over public support for the alliance. Heide did not enter into the discussion. Jacobson said there is "overwhelming support" for the alliance, a sentiment echoed by Bowman and Parnell.

Valley has held public meetings throughout the district to explain the strategic alliance. From those meetings, seven attendees formally indicated they object to the alliance.

The alliance has broad support from the region's elected officials, including the state's two U.S. senators.

"I think you are dead wrong, Anthony," Bowman told Hemstad.

Hemstad said by working with the University of Washington, the medical center could "get a better deal." But Jacobson and Parnell said the commission has yet to look at the agreement, so it's too early to judge it.

Roodman pointed out in his comments that UW Medicine lawyers and administrators watch the videotapes of Valley commission meetings. The UW, he said, has a "crisp unfiltered" understanding of how each commissioner feels.

"We will negotiate our very best deal and bring it to you," Roodman told the commissioners.

Hemstad also suggested that now is a good time to look at some of the broader issues facing the hospital district. He pointed to the recent Bellevue City Council approval of a resolution in support of the withdrawal of about 2,880 homes in the Newport Hills area in the most-northern part of the hospital district.

According to the City of Bellevue, those Bellevue property owners will pay about $645,000 in property taxes to the hospital district this year. But most seek their medical care at Overlake Hospital in Bellevue.

The same area asked to withdraw from the hospital district in 2006, but it was rejected by the Valley commissioners.

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