Hospital signs a letter with UW

PORT ANGELES — Olympic Medical Center and UW Medicine have signed a non-binding letter of intent to explore a possible affiliation between the public hospital and the Seattle-based health system.

The letter outlines a three-month timeline for a process requiring OMC to undergo an operational and financial assessment that will make recommendations for how it can become financially sustainable, including regaining its 340B federal drug pricing eligibility, and the identification and design of an affiliation model that might “include a management services agreement and could involve corporate restructuring with a capital partner.”

The letter, signed Wednesday, lays out the intentions of OMC and UW Medicine to begin conversations, OMC Board President Ann Henninger said.

There is still a great deal to be determined before any formal decisions are made.

“We’re still getting to know one another, determining what our goals are, what their goals and what we can offer them and they can offer us,” she said.

Brad Simmons, president of UW Medicine Hospitals & Clinics, said UW Medicine shares OMC’s mission of providing high-quality, accessible health care to their communities, particularly their most vulnerable members. The goal is to seek a relationship that is in the best interest of both organizations, he said.

“We are excited about the potential benefits of working together as public health institutions,” said Simmons, who attended the OMC board meeting along with Elizabeth Fleming, UW Medicine Chief Strategy Officer.

”We also recognize the current healthcare environment is complex and financially challenging, particularly those of us on the public health care side. We understand what Olympic Medical Center means to this community, to its employees and its patients. Our interest is to ensure it maintains its common identity, its local identity and also help ensure the local residents have access to care here at home.”

The UW medical system includes Fred Hutchinson Cancer Center, Harborview Medical Center, UW Medical Center, UW Primary Care, UW Physicians, UW School of Medicine and Airlift Northwest. Among its affiliates are VA Puget Sound Health Care System, Seattle Children’s Hospital, Northwest Kidney Centers and Skagit Regional Health.

The board agreed to extend a letter of intent to UW at its Aug. 8 meeting after an eight-month exploration process that began in December 2024, when it announced it was seeking a potential partnership with another health care system.

One of the motivating factors was to stabilize OMC’s finances after it lost $17.7 million in 2022 and $27.9 million 2023.

Also Wednesday, commissioners unanimously approved renewing a $3 million line of credit with First Fed that will expire on Sept. 30. The hospital has reached its borrowing limit on the account, which is guaranteed by a $3.3 million CD, interim CEO Mark Gregson said.

“We would like to continue to keep this in place, and should we need it, we can always use the CD to pay it and use it for the line of credit if we needed to,” he said.

Gregson said after conversations with senior officials at the state Department of Health and Centers for Medicare & Medicaid Services, OMC has retained the services of an advisory firm to help it resolve ongoing failures to comply with CMS standards that have triggered repeated notices of termination.

The firm, Chartis, began working with OMC last week.

CMS gave OMC an additional week in which to submit its report in response to the hospital’s most recent DOH visit, and it extended the previous termination date of Sept. 20 to Oct. 10.

“There’s a whole lot of hands on deck internally with some external help, but mostly internal because, at the end of the day, it has to be delivered by directors and, quite frankly, individuals on the floors that need to be able to document and address this appropriately,” Gregson said. “We feel very comfortable that this will help us to address this and be able to satisfy their concerns.”

Gregson said resolving OMC’s CMS regulatory issues has been a priority since he arrived on Aug. 20.

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Reporter Paula Hunt can be reached by email at paula.hunt@peninsuladailynews.com.