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Originally published February 1, 2012 at 10:30 AM | Page modified February 1, 2012 at 11:32 PM

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Swedish alliance with Providence is now complete

Formerly independent Swedish Health Services is now part of a division of Providence Health & Services, officials announced Wednesday.

Seattle Times health reporter

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The affiliation between Swedish Health Services and Providence Health & Services is official, chief executives from the two organizations announced Wednesday.

The agreement between Providence, a much larger organization, and Swedish will create a new organization for the greater Puget Sound area, including all of Swedish's operations in King and South Snohomish counties, and Providence's operations in King, Snohomish, Thurston and Lewis counties.

Patients will see no difference in how they access care, officials said, other than having an electronic medical record available through more providers in a larger area.

Swedish's Dr. Rod Hochman, currently president and CEO, will move to an expanded role as one of two group presidents for Providence's five-state system. In that role, he will oversee clinical quality, physician services, human resources and communication for the Providence system; in addition, he will be in charge of the Oregon and Washington operations.

Kevin Brown, previously Swedish's chief strategy officer and administrator for Ballard, Issaquah, Mill Creek and Redmond facilities, will become new CEO for Swedish Health Services.

When the two systems first announced their tentative agreement in October — before receiving approval from state and federal antitrust authorities — they were careful to say it was not a merger or acquisition. However, under the agreement, formerly independent Swedish becomes a part of a division of Providence, which controls an overseeing board.

The two organizations emphasize that each system will keep its name, and Swedish will remain a nonreligious organization, despite its announcement late last year that it would no longer perform elective abortions, but instead would help underwrite a Planned Parenthood center adjacent to its Seattle hospital.

The decision, which Swedish said was made "out of respect for the affiliation," was controversial among women's rights groups and those who fear Catholic control of health-care providers will foreclose reproductive or end-of-life options. Swedish said there would be no change to its current end-of-life care policy.

Both hospital systems announced late last year that they had budget shortfalls, and subsequently each made substantial job cuts.

In an interview Wednesday, Hochman said Swedish was financially healthy and could have stayed independent. But the question, in a time of crisis for health care nationally, was "survive — or thrive," he said. "Consolidation in health care is inevitable in order to achieve some of the goals."

In a joint statement, the two systems said the affiliation would allow both organizations "to collaborate to better deliver health care to the region."

Dr. John Koster, Providence Health & Services president and CEO, said in an interview that the intent of the agreement is to improve the quality of care. "That's how costs come down," he added.

In addition, he said, the partnership creates a large "repository of intellectual capital" and the ability to disseminate bright ideas to improve care throughout a large network of providers.

Eric Earling, spokesman for Premera Blue Cross, one of the state's largest insurers, said that in the past, Premera has observed that, "mergers can create market-dominant positions that sometimes result in increased costs to our members." But in this case, he added, "we are encouraged by the stated desire by Providence and Swedish to enhance quality of care and control costs for their patients and our members."

Regence BlueShield spokeswoman Rachelle Cunningham said because cost is the top issue in health care today, Regence would work very closely with Swedish and Providence to "deliver on their commitments to lower health-care costs to our members and our community."

Swedish Health Services, based in Seattle, operates five hospitals and more than 70 primary care clinics, with about 11,000 workers.

Renton-based Providence Health & Services operates 27 hospitals and various other medical facilities throughout a five-state region from Alaska to California, and employs about 53,000 workers.

Arnie Schaffer, previously overseeing Providence operations in Alaska, Washington, Montana and California, will become chief executive of the new Western Washington Region created by the agreement. He will be responsible for affiliation operations and integration between Swedish and Providence.

Carol M. Ostrom: 206-464-2249 or costrom@seattletimes.com

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