Kennewick hospital system also considering enhanced relationship with UW Medicine

Trios Health is exploring a relationship with a Tennessee-based health care system and UW Medicine that could reorganize the troubled Kennewick Public Hospital District’s existing rent and debt obligations to provide long-term viability.

Trios and RCCH HealthCare Partners, based in Brentwood, Tennessee, already are working on a debt restructuring plan for Trios creditors as part of the Chapter 9 bankruptcy process.

The hospital district filed for bankruptcy protection to reorganize $221 million in debt in June, and since February has been implementing strategies to return the district to solid financial footing.

The structure of a potential deal has yet to be finalized, said Marv Kinney, president of the hospital district’s board of commissioners, in a statement.

“Until those discussions come to fruition, the specific form of transaction that will result in affiliation and capital investment cannot be finalized,” Kinney said in a release. “What’s important for people to know is that we are making great strides to return Trios back to financial health and these organizations have indicated they want to be part of our comeback.”

Seattle-based UW Medicine established a strategic collaboration agreement with Trios Health in 2015. Talks include UW Medicine continuing in the role of clinical partner to Trios Health and the Tri-City community. UW Medicine would likely increase its engagement with Trios Health via a larger relationship with RCCH, according to Trios.

“UW Medicine will continue to work with Trios to meet the needs of the community. RCCH and UW Medicine are working with Trios Health to create a platform for long-term financial viability and continued medical excellence.   At this point, the structure of our relationship with Trios and RCCH has not been finalized,” said Tina Mankowski, spokesperson for UW Medicine.

UW Medicine already has a relationship with RCCH, which owns Capital Medical Center in Olympia. Capital Medical Center is a member of UW Medicine’s accountable care network. UW Medicine and RCCH work together to provide patients access to services at UW Medicine’s Olympia neighborhood clinic and Capital Medical Center’s inpatient and outpatient specialty care facilities.

“We are very excited to be working jointly with UW Medicine to assist Trios Health. We are privileged to have an existing relationship with UW Medicine and look forward to expanding that relationship to include Trios Health. Together we are confident we could improve the quality of healthcare to the local community. We look forward to continued discussions,” said Jeff Atwood, spokesman for RCCH.

Trios said the benefit of these kinds of strategic relationships with other health organizations has been demonstrated through similar arrangements occurring in the health care sector over the last several years.

Smaller health systems have struggled to meet the increasing demands created by the Affordable Care Act and joining or affiliating with larger systems allows them to more effectively adjust to the industry’s changes while maintaining access to local care, according to Trios.

“We are already seeing it in Tri-Cities where, like many other communities throughout the Northwest and the country, stand-alone hospitals are joining other health systems. Trios Health believes a strategic relationship will allow the organization to emerge from bankruptcy earlier than expected and to further enhance and expand its clinical services, which would directly benefit the community,” Trios said in a release.

RCCH is made up of 16 regional health systems in 12 states and has more than 14,000 employees and 2,000 affiliated physicians and mid-level providers.

RCCH has built and is continuing to build a family of full-service community hospitals, each governed by a board made up of community leaders and physicians. RCCH provides expertise to the management team and significant access to capital for the entire organization to grow services, improve quality, strengthen outreach initiatives and enhance its local reputation.

“Taking all of this into account, particularly RCCH’s focus on patients and local leadership, Trios Health believes that RCCH is a great option for (the hospital district) in terms of a potential relationship,” according to Trios.

No change is anticipated in the hospital district’s tax assessments.

A timeline has not yet been set for a potential deal to be finalized, as Trios first must negotiate with creditors before the federal bankruptcy court approves a plan.

“We are pleased to be in discussions with these two esteemed institutions which see the value in what we offer and understand the tremendous opportunities within and for this community,” Kinney said in a statement.

To address the financial problems, the hospital district board last year hired Quorum Health Resources, a Tennessee-based management consultant firm.

The $395,000 contract with Quorum is for one year, and there is an option to renew another one to two years.

Quorum pointed to four areas adversely affecting Trios’ performance: debt, aggressive market competition, provider productivity and work force efficiency.

Quorum said the financial crisis followed the construction of the new hospital at Southridge and care center. The original hospital opened in 1952.

More than 65 percent of hospital district voters rejected a 2007 proposal to build a new hospital. Trios maintains the facility is “much needed” in the community.

Trios Medical Group, with nearly 100 employed physicians and providers, includes practices and services at eight care centers and one urgent care center.