Two candidates in line for Valley Hospital merger

PALMER -- The search for a large capital partner for Valley Hospital Association (VHA) is still ongoing, and hospital officials say they are on track to approach the VHA membership-at-large with some sort of expansion plan at a special election this fall. The hospital is currently actively reviewing offers from two companies, Dallas, Texas-based Triad Hospitals Inc., and Providence Health Systems of Seattle. Triad is a for-profit company publicly traded on the New York stock exchange. Providence is nonprofit and operates a division called Providence Health Systems in Alaska, which includes facilities in Anchorage, Seward and Kodiak.

VHA operating board president Kathleen Kelly said Providence administrators have told Valley Hospital that they won't expand into the Mat-Su area unless the are

invited to do so.

"They feel they need to be invited into a community," Kelly said. "They don't go into any hospital venture in a community unless that community invites them in."

Kelly said if a deal is struck with either Providence or

Triad it's likely to include a combination of local board control and administrative control from the new corporate partner.

"Our biggest concern was community control. Providence typically wants a lot of control," Kelly said.

According to Triad Hospitals' corporate Web site, the company operates 47 hospitals and 14 ambulatory surgery centers in 16 states. Triad also provides management and consulting services to more than 200 community hospitals and health care

facilities in 43 states.

Valley hospital needs about $70 million to build a new hospital. The hospital will have a more central location farther to the west, according to the hospital's long range strategic plan. The location hasn't yet been chosen, and won't likely be chosen until a plan to raise capital is set. While Triad or Providence might provide the money for that plan, hospital administrators and the VHA operating board are keeping the door open for more offers. A third option also exists. Valley Hospital could continue to go it alone.

"We want to do it right and we want to do what's best for the community, so we are taking a lot of time," Kelly said.

She said grant money might come from the federal government if the hospital decides to acquire property and build on its own. The board has gone over about five proposals in the last few months, according to Kelly, who said the presentations have all been considered by the board and by VHA CEO George Larson.

"Nobody's been rejected offhand by George; we talk about it," Kelly said.

Hospital spokesperson Elizabeth Ripley said the process is on track for a special election in October or September. According to Ripley, the hospital board must call an election because of a state law that requires nonprofits to receive approval from their membership for any transaction involving more than 50 percent of their assets. The law also requires that the asset transfer pass by a two-thirds super-majority.

Even if a capital plan isn't on the ballot, the membership will be asked to vote on bylaw changes that are

designed to allow VHA to

increase its membership roles. Currently, VHA bylaws only allow for annual memberships and members must apply for membership each year in order to vote in VHA elections. The new membership rules will allow VHA to offer biennial memberships and lifetime memberships, according to Ripley.

VHA has more than 1,100 voting members this year, the most it's had since 1995. Ripley said the hospital put extra effort into the 2002 membership drive because of the expansion plan. "That's one of the reasons we pushed for a big membership drive this year. Because, from a due process perspective, we wanted to have as many members involved in this as possible," Ripley said. "When we start over each year, we start from zero."