CHI Franciscan and Virginia Mason move toward combining operations

CHI Franciscan and Virginia Mason move toward combining operations
Health systems Virginia Mason and CHI Fransican are exploring formation of a new joint operating company, with details tentatively set to be finalized by end of 2020. (Virginia Mason via The News Tribune)

Tacoma’s CHI Franciscan and Seattle-based Virginia Mason are stepping up efforts to merge operations.

The two health systems, along with CHI Franciscan’s parent company, CommonSpirit Health, formally announced Thursday that they have signed a memorandum of understanding to explore combining CHI Franciscan and Virginia Mason through a joint operating company.

The two networks have worked in tandem in recent years, partnering in obstetrics and women’s health and radiation oncology, according to the announcement.

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The new health system would be led by the systems’ two current leaders, Ketul J. Patel, CEO of CHI Franciscan and president of the Pacific Northwest Division at CommonSpirit Health, and Gary Kaplan, chairman and CEO of Virginia Mason.

The two spoke to The News Tribune in a phone interview about the announcement.

“This is a culmination of several years of working with Virginia Mason,” said Patel. “In 2017, we signed a strategic alliance and clinical affiliation. And during this time, we’ve had great success.

“Very soon we’ll be opening an OB unit at Virginia Mason Medical Center in Seattle. We’ve had a long history of a partnership in radiation oncology. And so this is just a culmination of that.”

“We have a lot of work to do. before we do become one organization,” he added. “In the next few months, we’re going to be spending a lot of time building a strategic plan for what we’re calling the health system of the future.”

Each medical entity would receive an equal number of board seats.

“We are excited about this opportunity. Over the next several months, we’ll be putting in the level of detail that will be required to actually implement this. We’re hoping by the conclusion of 2020,” said Kaplan.

According to the announcement, the combined organization would operate 12 hospitals and more than 250 sites of care, including same-day surgery centers, Benaroya Research Institute at Virginia Mason, Bailey-Boushay House and the Virginia Mason Institute.

The combined operation would employ more than 21,000, including nearly 5,000 employed and affiliated providers, according to a joint statement announcing the move, tentatively set to be completed by the end of the year.

The officials said it was too soon to determine whether there would be any layoffs with the combined venture, but emphasized the potential for growth.

“One of the things that’s most exciting to both organizations is the opportunity to grow,” said Kaplan. “And I see that as an opportunity for our current team members and future team members.”