The nonbinding lease and management agreement, which officials said should be completed by mid-February, means that Snohomish County Hospital District No. 2 and its elected five-person board of commissioners will no longer directly oversee operations for the hospital.
Instead, the hospital district will focus more on long-term issues such as fighting obesity, said Sarah Zabel, Stevens' vice president of operations and chief planning officer.
Stevens also will be renamed. What the new name has yet to be decided on, “Swedish” likely will be included.
“This is a momentous day in the history of this hospital,” said Marc Rosenshein, chief of medical staff for Stevens.
The public hospital district will continue to levy property taxes and oversee its own income and expenses, because it will keep ownership of the hospital and its clinic buildings.
The private, nonprofit Swedish Medical Center will lease the public hospital and its clinics for $600,000 a month over 30 years.
Swedish also pledged to commit up to $90 million in capital improvements to the hospital during the first 10 years of the lease, with an additional $60 million toward a facility upgrade, said Howard Thomas, the consultant Stevens hired early this year to iron out a deal.
Details of what would be improved would be worked out once Swedish takes over management of the smaller 217-bed hospital, Thomas said.
“That's a substantial commitment and not one Stevens could have committed to on its own,” he said.
In addition to money for construction, Swedish agreed to install a new electronic medical records system and provide specialists 24 hours a day in the intensive care unit.
The elected hospital commissioners won't directly oversee hospital operations anymore.
They'll still have control over tax levies and contract negotiations with the district's Service Employees International Union. The union supports the move, said Mary McNaughton, a nurse and member of the union's executive board.
Hospital commissioners also will focus on maintaining the independence of medical staff and seeing that medical services are properly funded, Thomas said.
Part of the transition process will include creation of a community advisory committee to help ease the blending of the public hospital with the private nonprofit.
All Stevens employees, including top management, will become Swedish employees once the agreement takes effect.
Commissioner Deana Knutsen cast the lone dissenting vote during Thursday's board meeting, where a resolution passed 4-1 to allow the hospital district to advance to the next steps with Swedish.
Knutsen said she worried whether the millions of dollars promised by Swedish for construction would be enough to modernize Stevens. “There's no way of knowing whether this is enough resources,” she said.
Cal Knight, president and chief operating officer for Swedish, said the investment should be sufficient.
“We're in the business of operating hospitals and we know how much capital it takes and how much it costs,” he said. “We have plans to look at additional expenditures as it makes sense.”
Commission chairman Charles Day said the new arrangement will help boost Stevens' ability to market itself and improve the quality of medical services.
“I think this is going to do nothing but complement what we have,” he said.
Stevens had operating revenues of $151.9 million in 2008. Of that, $3.9 million came from taxes voters approved in 1990 and 1998.
The owner of a $285,000 house pays about $44 a year in property taxes to the hospital district, which serves about 100,000 people living in an area from far north King County to north Lynnwood.
Swedish had revenues of $1.2 billion in 2008 and has 1,245 beds spread among three hospital sites. It runs medical specialty centers at Highline Medical Center in Burien and Valley Medical Center in Renton.
Since 1991, Swedish has provided both cancer care and heart and vascular services at Stevens through the Swedish Cancer Institute and Swedish Heart and Vascular Institute.
A public hearing on the arrangement will be scheduled in mid-January, though a specific date has not been set.
Oscar Halpert: 425-339-3429, email@example.com.
Q: Is Swedish Medical Center buying Stevens Hospital?
No. It's a lease agreement, similar to leasing a home. At the end of the 30-year lease, there are 10-year lease terms but the district keeps ownership of the buildings.
Q: Will the hospital district be eliminated?
Officials say there are no plans to eliminate the hospital district now or in the future.
Q: Why bother to have a hospital district if Swedish Medical Center runs the hospital?
About half of the hospital districts in the state don't actually operate hospitals, according to Sarah Zabel, Stevens' vice president for operations and chief of planning. “We really see this as a great opportunity to focus on underserved needs within the community,” she said.
Q: Will Stevens administrators continue working at Stevens?
Top administrators will become employees of Swedish. “They're pleased with the progress that this management team has made in terms of turning around this hospital.”
Q: Could the district regain management of the hospital in the future?
Stevens Hospital's roots date back to 1959, when members of the newly formed Women's Auxiliary went door to door raising money for what would become Stevens Memorial Hospital.
In Nov. 1962, Snohomish County voters approved an initiative that established Snohomish County Public Hospital District No. 2.
The new, 110-bed hospital opened Jan. 30, 1964, named after Isaac Ingalls Stevens, the first governor of the Washington Territory. It started with 200 employees and a few dozen physicians.The hospital's first baby was born one hour after the hospital opened.
Stevens expanded over the years. By 1989, the hospital's bed capacity grew to 217.
In 1990, voters approved a $25 million bond for physical improvements. Those improvements included the Sleep Center, the Center for Wound Healing and Hyberbarics, and the Stevens Pavilion.
District residents now pay 8 cents for every $1,000 of assessed property valuation
In 1998, voters approved the hospital district's maintenance and operations levy. That levy is 7.8 cents per $1,000 of assessed property valuation.
The owner of a $285,000 house — the county's median price — pays about $44 a year for all taxes to the district.