PORT ANGELES — A Jefferson Healthcare commissioner has made information public about a possible partnership between the hospital and Olympic Medical Center that was allegedly discussed in an executive session and covered by a nondisclosure agreement.
“I regretfully need to inform the public that Jefferson Healthcare is in secret negotiations with Olympic Medical Center to create something called the ‘Peninsula Health Alliance,’” said Commissioner Matt Ready at the board’s regular meeting March 26.
Ready, who worked in the hospital’s Performance Improvement Department before being elected to the board in 2013, repeated and amplified his remarks in a Port Townsend Leader story published last week. In the story, Ready claimed he had been excluded from initial discussions about an alliance with OMC and only learned of it later in an executive session.
A follow-up story in Wednesday’s edition of the Leader included quotes from internal emails between Jefferson Healthcare Commissioner Kees Kolff and hospital administrators that Ready gave to a reporter. The story included details about the alliance it said were taken from OMC project documents, although it did not say how the documents were obtained.
Both stories cited an anonymous source at Jefferson Healthcare as providing the information.
Olympic Medical Center declined to confirm the existence of a potential alliance between the two health systems or if any conversations have occurred, noting it was bound by a confidentiality agreement.
“We have inquiries from several parties and are engaged in a due diligence process with all of them,” OMC spokesperson Bobby Stone said. “Our objectives in maintaining the confidential process is so we can get the best outcome.”
Jefferson Healthcare spokesperson Pranav Sharma also declined to say whether it had signed a confidentiality agreement with OMC or had engaged in discussions about a potential alliance.
“Olympic Medical Center has a process that has a strict confidentiality commitment, and Jefferson Healthcare honors that process,” Sharma said.
OMC began exploring the possibility of a potential partnership with another health care system in December as a means of improving its financial health and stability. Since the pandemic, it has lost about $50 million, primarily due to inadequate government payer reimbursement rates that do not cover the cost of care and escalating supply and labor costs. It is among the 70 percent of hospitals in the state that operate at a loss, according to the Washington Hospital Association.
Chicago-based health care strategy company Juniper Advisory has been managing the search and has said it has reached out to 24 potential health system partners.
In an update to the OMC board via Zoom at its Feb. 19 meeting, Juniper Advisory’s Chris Benson said all of them had signed confidentiality agreements.
“This allowed us to maintain confidentiality in the interest of Olympic Medical Center,” he said.
Stone said OMC is still in Phase 2 of the exploratory process timeline that includes selecting finalists, OMC site visits to potential partners and potential partner site visits to OMC. Phase three will take place in May and involve final decision-making. An agreement would not happen until at least August, Stone said.
CEO Darryl Wolfe has said OMC is under no obligation to commit to a partnership and can stop the process at any time.
Jefferson Healthcare is a 25-bed critical access hospital and as such receives more favorable government payer reimbursements than OMC, which is a 67-bed critical care facility. Although Jefferson Healthcare’s financial position is more favorable than OMC’s, it still faces some of the same challenges in terms of rising costs.
Ready’s actions could be in violation of state law (RCW 42.23.070(4)) regarding the disclosure of confidential information as well as the board’s own policies. According to board guidelines, Jefferson Healthcare commissioners are expected to comply with state statutes, such as those regarding conduct for municipal officers (RCW 42.23) and ethics in public service (RCW 42.52).
A code of conduct states that “each Commissioner will respect the confidentiality appropriate to issues of a sensitive nature” and agree to “not in any way divulge, copy, release” any confidential information. A commissioner found in violation of board or hospital policy could face official censure and be reported to the state.
Sharma would not say if the board is considering a response to Ready’s behavior.
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Reporter Paula Hunt can be reached by email at paula.hunt@peninsuladailynews.com.
